TTC News Archives

2009-11-30T11:59:00.000-08:00

TTCs: Dead or Alive? [CLICK HERE]
View Trans-Texas Corridor Timeline: [HERE]
Search Articles in TTC News Archives: [HERE]
View the Trans-Texas Corridor Blog: [HERE]

TxDOT uses legal "loophole" to push more private toll roads in North Texas

2009-11-23T16:03:00.000-08:00

TxDOT has new plan to fund toll roads

11/23/09

By MICHAEL A. LINDENBERGER
The Dallas Morning News
Copyright 2009

AUSTIN – Lawmakers might have left the Capitol earlier this year without getting much done when it comes to transportation. But they were clear on one point: They wanted the Texas Department of Transportation out of the business of building privately financed toll roads.

The Texas Legislature beat back attempts to extend the authority for so-called comprehensive development agreements – 50-year contracts with private companies that agree to build roads in return for toll revenue – and the department's ability to enter into the contracts expired Aug. 31.

But less than six months later, state highway bosses may have found a loophole. And the Dallas area, already home to more toll roads than anywhere in Texas, probably is the place where they will try it first.

Last week in Austin, Texas Transportation Commission members told staff to submit plans by January for how to fast-track a roughly $4 billion expansion of Interstate 35E between Dallas and Denton. Officials say the project is a prime candidate for a new kind of financing that they concede looks a lot like the private toll deals ruled out by the Legislature.

"We've got to use all of these innovative ways of building highways or we won't be building," said commission member Ted Houghton of El Paso in an interview Friday. "It's a fact of life. If you want us to build roads, then we are going to move forward using these kinds of tools."

The tool in question is called pass-through toll financing, and is different, though not very, from the private toll deals lawmakers have put on ice.

Here's how it works: A private company, usually backed by a group of banks and other investors, agrees to use its own money to build a state road, usually with the help of at least some tax dollars. In return for the new road, Texas promises to make payments to the firm based on the level of traffic it attracts. The more vehicles that "pass through," the bigger the payment the private company will receive.

Officials say such deals involving big toll roads could last 30 years or more. So far, though, pass-through financing has only been a way for Texas to pay for a handful of smaller free roads. The per-vehicle payments simply pay back the investment by the private company, or in some cases a local government, and are not passed on to drivers in the form of tolls.

But that's set to change, as highway officials eye using pass-through financing to deliver big toll projects in North Texas and elsewhere. Doing so will require some changes in the department's rules, but is entirely within the department's authority, said John Barton, assistant executive director of the Department of Transportation.

First up? Most likely the expansion of I-35E into a mixed road with both tolled lanes and free lanes, much like the LBJ Freeway will be once the Spanish firm Cintra rebuilds it over the next five or six years.

Option to delay

The department had planned to rebuild I-35E as a privately financed toll road using a comprehensive development agreement until the Legislature failed to extend the law that made that possible. Now it sees its choices as either delaying the work for a decade or more, or using the pass-through financing to get construction started in as soon as two to three years.

Though the deals are structured differently – in a pass-through deal, private firms take on less risk, and state payments are subject to a cap set by contract – they will come across as very similar to drivers, and to many others who opposed the deals known as comprehensive development agreements, or CDAs.

"These deals look very much like a CDA, and I want to make sure you understand that," executive director Amadeo Saenz of the Transportation Department told a Senate hearing in El Paso this month. "We're getting a lot of push from Denton and Dallas County [to complete more projects there]. I want to be forthright and maybe say, 'Be careful what you are asking for.' If you look at a private pass-through model project, it is very similar to a CDA. You are using a private firm to bring equity to the project."

Sen. John Carona, R-Dallas, took that in stride, conceding that the agency had been woefully underfunded by the Legislature in recent years, and had to explore all of its options. But he lashed out at Houghton when he said the department also would be willing to shop a major Tarrant County toll project to private investors, if only the North Texas Tollway Authority first would relinquish its rights to the road.

"The community is not at all excited about you coming in and building toll roads," Carona said. "NTTA builds our toll roads. ... We don't want you running toll operations in North Texas. The Legislature has been very clear."

Houghton said Friday, "That's fine. That's a choice they can make." The trouble, he said, is that NTTA doesn't have the money to build the $1.8 billion toll project, known as the Southwest Parkway/Chisholm Trail project.

NTTA has confirmed it could need $1 billion in tax dollars or other help to keep its promise to build that road.

If that's the case, Houghton said, why not let the state take it on, and see what kind of deal it could strike with a private firm that would compete for the opportunity?

Competition

"Competition does amazing things," Houghton said. "It really causes the people across the table to sharpen their pencils."

Instead, Carona wants TxDOT to guarantee NTTA's loans to help it lower its costs, something the department has already offered to do on another area toll road, State Highway 161.

"I get the impression that you don't want to work with NTTA," Carona told Houghton in El Paso.

Houghton replied that his agency wants NTTA to flourish, but that guaranteeing both loans could cost the state as much as $40 million a year for many years to come.

On Friday, he said the department will not backstop the loans on both projects.

"NTTA has some decisions to make," he said. If it wants the credit enhancement on Southwest Parkway, then it can't have it on State Highway 161, he said. In the end, if NTTA can't afford to do Southwest Parkway, then it should let it go, he said.

Transportation Commissioner Bill Meadows of Fort Worth, a powerful advocate for the Southwest Parkway project, said Friday that negotiations over how to structure the credit enhancement have resumed in earnest, and could be headed for a breakthrough.

If the negotiations fall through and NTTA can't build the Southwest Parkway, then TxDOT will consider using pass-through financing to find a private partner who can, but only with NTTA's permission, he said. "We'll have to put every option on the table. This isn't easy. It's a billion-dollar hole they are trying to fill."

No matter what happens with the long-running talks with NTTA, Saenz said his agency is determined to seek new solutions for Interstate 35E. And he is meeting with lawmakers to give advance warning that the department is proceeding with a new way of building privately financed toll roads

"I brought this up in El Paso and said it last month in Fort Worth. I don't want to get beat up on this, but I am getting a lot of pressure ... to move this project forward," Saenz said. "I am a problem solver, and we do have a way to get these projects done."

© 2009 The Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

Greedspeak: Bailout banksters seek euphemisms for record bonuses

2009-11-23T13:29:00.000-08:00

The disappearing Wall St "bonus," but in name only

11/23/09

By Karey Wutkowski and Steve Eder - Analysis
Reuters
Copyright 2009

WASHINGTON - "Bonus" has become a dirty word on Wall Street, prompting image consultants to advise the biggest financial firms to use euphemisms that carry less stigma as the season of lavish payouts approaches.

A look at Goldman Sachs' (GS.N) quarterly filings with regulators reveals that the term "discretionary bonuses" has been replaced with "discretionary compensation" in the past nine months.

In fact, the most recent quarterly filing had no references to "bonus" at all, despite the fact that the Wall Street giant is on pace to pay out more than $20 billion in year-end bonuses and other compensation, a record level.

Alan Johnson, a compensation consultant with his own New York-based firm, said the change in language is no coincidence. He has been advising his clients, which include the largest investment and commercial banks, to banish the word "bonus" and use "incentives" instead.

"We try to avoid the term wherever we can because it is a flash point," Johnson said. "We're going back to using what it really is, it's an incentive."

Johnson said for the top earners on Wall Street, their bonuses can be anywhere from 50 to 90 percent of their annual compensation, and is a built-in part of compensation, not an extra.

He said that can be hard for the general public to understand or relate to.

The financial crisis has been littered with flare-ups over bonuses, perhaps most notably in March, when lawmakers balked at $165 million in bonuses being paid to employees at the AIG unit largely responsible for the firm getting just over $180 billion in government pledges of assistance.

The issue sparked calls for the resignation of Treasury Secretary Timothy Geithner and prompted left-leaning groups to organize bus tours to visit the homes of AIG employees.

The financial industry is now approaching another land mine as they gear up to disclose in the coming weeks the amount of year-end bonuses.

The disclosures will likely reveal bonus boosts of up to 50 percent over last year, as Wall Street earnings have come back strong, even though unemployment is at a 26-1/2-year high.

"I think everybody's holding their breath," Johnson said about potential fallout from the disclosures.

A Goldman Sachs spokesman did not immediately respond to a request for comment.

WINDOW DRESSING

Jesse Derris, a crisis communications consultant with Sunshine, Sachs & Associates, said it will take an industrywide push and public relations initiative to reduce the use of the term "bonus" and replace it with another term, or at least make it better explained.

"You are at a point now where the visual that people get is awful," said Derris, who represents Wall Street executives including former Merrill Lynch Chief Executive John Thain.

The public anger over pay and concerns that excessive pay helped fuel the financial crisis has led to a government-driven attempt to better police compensation.

The Obama administration appointed a "pay czar" in June to dictate pay at seven firms that received "exceptional" taxpayer bailouts, including Bank of America (BAC.N), Citigroup (C.N) and AIG (AIG.N).

The Federal Reserve has embarked on a deeper review of pay at the biggest financial firms, and the Securities and Exchange Commission is trying to empower shareholders with more control over executive compensation.

The goal is to encourage compensation structures that align the pay of Wall Street workers with the long-term success of the company instead of rewarding short-term gains.

In the meantime, financial giants are trying to quiet some of the furor through cosmetic means.

Brad Hintz, an analyst with Sanford C. Bernstein in New York and a former Wall Street executive, said he is hearing plenty of talk that firms are trying to use language like "total compensation" and "annual earnings" instead of "bonuses."

But some skeptics say any efforts to change the use of the word "bonuses" would come across as window-dressing on the real problem of excessive pay.

"Call it what you want -- right now it is somewhat broken," said Todd Gershkowitz, a compensation consultant with Farient Advisors in New York. "The real issue is how much do you actually make."

© 2009 Reuters: www.reuters.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

“Texans have risen up by the tens of thousands saying no to the sale of roads to private foreign toll operators...Perry continues to be tone deaf ."

2009-11-19T17:42:00.000-08:00

New Push for Toll Roads in Texas?

Critics see it in recent comments made by the Governor.

11/19/09

Bill O'Neal
KTRH
Copyright 2009

There’s no two ways about it—Governor Rick Perry sees trouble ahead.

“One of the problems is we do not have the dollars that we need to build all the transportation infrastructure needs that we have” the Governor said in a recent stop at a school in Dallas, adding “Hopefully, when we come back in 2011, both the citizens and their elected officials will come to a stronger realization that we’re going to have to expand our ability to raise some dollars…”

Perry never used the word “toll” but critics will tell you they can hear it loud and clear.

“Under his watch, it has been these sweetheart deals—50-year deals—that will cost commuters 75-cents a mile to drive Texas highways” said Terri Hall with Texans Uniting for Reform and Freedom, a group that has stood strongly against toll roads in recent years.

“Texans have risen up by the tens of thousands to tell him (Perry) no both to the Trans-Texas Corridor and to the sale of our Texas roads to these private foreign toll operators—and yet he continues to be tone deaf to what the Texas people have told him they want” Hall added. She said a properly applied gas tax increase would be a much more effective method of raising the needed cash.

© 2009 KTRH: www.ktrh.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"The fate of Interstate 35W expansion in north Fort Worth is now in the hands of a private developer. "

2009-11-19T17:05:00.000-08:00

Fort Worth, Dallas fail to bring home highway bacon

11/19/09

Gordon Dickson
Fort Worth Star-Telegram
Copyright 2009

The Texas Transportation Commission declined Thursday to spend part of a $2 billion highway bond fund on the Interstate 35W/Loop 820 interchange in north Fort Worth, despite complaints from North Texas officials that they are being punished for building toll roads.

The five commissioners said they were following the wishes of the state Legislature in spending this batch of Proposition 12 bond funds, approved by voters statewide in 2007, on nontoll projects.

The interchange is one of several projects with toll lanes being planned in Dallas-Fort Worth. Of the $2 billion in Proposition 12 funds authorized, only $126 million is set aside for North Texas — home to about a third of the state’s population and economy. But many other worthwhile projects missed out on funding, too, commissioner Bill Meadows of Fort Worth said, noting that the state received a whopping $9 billion in requests.

Meadows “This exercise is perhaps the most impactful yet on the extreme lack of resources we have available to meet our needs in Texas,” said Meadows, who was unable to persuade other commissioners to spend more of the money in the Metroplex. “We have got to find a way to bring more resources to the table. We will fail in Texas if we don’t do so.”

The Proposition 12 package was approved unanimously, after Meadows was promised that a detailed briefing of how to pay for expansion of the I-35W/Loop 820 interchange in Fort Worth, I-35E in Dallas and U.S. 77 in south Texas would be presented to the commission by January. Last week, Regional Transportation Council officials said the area was being shortchanged for aggressively pursuing toll projects in recent years to make up for a lack of state funds.

“There is a perception of punishment among some elected leaders in Dallas-Fort Worth,” Collin County Commissioner Joe Jaynes told the commission during a meeting in Austin.

But North Texas officials who traveled to Austin Thursday were outnumbered by members of Congress, the Legislature and other public offices who rose one by one to praise the transportation commission for the way it chose projects to be paid for by Proposition 12. The money will be used on expansion of I-35 in the Belton, Hillsboro and Waco areas, and other projects in the Houston and San Antonio metro areas. Some of the funding was awarded to projects that served as statewide connectors, while others were rehabilitation projects. But the biggest chunk of funding went to congestion relief projects in metro areas.

After Thursday’s action, the fate of Interstate 35W expansion in north Fort Worth is now in the hands of a private developer. The I-35W/Loop 820 interchange is part of a massive project the transportation department has dubbed North Tarrant Express. A private consortium led by the U.S. arm of Spain-based Cintra is working on a $2 billion plan to rebuild freeway lanes and add managed toll lanes.

That project includes Loop 820 in Haltom City and North Richland Hills, and Texas 121/183 in Bedford, Euless and Hurst. Negotiations are in high gear with the Cintra-led development group, known as NTE Mobility Partners, to get the I-35W/Loop 820 interchange expanded within just a few years, said John Barton, transportation department assistant executive director. Results will be announced in January. That would be a change from the original timeline by NTE Mobility Partners, which planned to rebuild the $300 million interchange no sooner than 2017.

GORDON DICKSON, 817-390-7796

© 2009 Fort Worth Star-Telegram: startelegram.typepad.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"There is a perception among Dallas-Fort Worth leaders that we are being punished for our support of toll roads."

2009-11-19T14:33:00.000-08:00

Dallas, Fort Worth get short straw in highway spending plan OKd by state

11/19/09

By MICHAEL A. LINDENBERGER
The Dallas Morning News
Copyright 2009

AUSTIN -- Texas transportation officials approved a $1.85 billion plan today to build or improve highways throughout Texas, rejecting protests from Dallas and Fort Worth that nearly all of the money will be spent in Houston and along Interstate 35 near Waco.

Quickly brushing aside those complaints, the Texas Transportation Commission voted 5-0 to accept the spending plan that just one week ago had touched off a firestorm among members of the Regional Transportation Council in Arlington.

The plan steers state money toward widening long stretches of Interstate 35 near Waco -- a project that transportation commissioners and many of the dozens of officials and business leaders present for the commission meeting likened to refurbishing "Main Street Texas."

The plan also calls for spending about $575 million on projects to ease congestion in big cities, but will be concentrated on three projects in Houston and San Antonio.

All the Dallas and Fort Worth districts will get is about $126 million in maintenance work.

That apparent slighting of the greater Dallas area enraged local officials, but their presence was hardly felt today in Austin. Of the dozen or so lawmakers, including three members of Congress from the Houston area, who spoke about the spending plan, none were from North Texas.

Representing the Regional Transportation Council, Fort Worth City Council member Jungus Jordan thanked the commission for its hard work, and rebuked it only mildly for bypassing the region. Afterward, he said in an interview that local officials haven't changed their opinion since last week.

"We're still red-hot," Jordan said. "But we've opted for a strategic repositioning."

He said the region wants to work with the Texas Department of Transportation to make sure critical highway projects are funded through other sources in the future -- something commissioners said they remained committed to doing. The commission instructed staff members to report by January on new funding strategies for developing two major road projects strongly urged by North Texas leaders: a massive expansion of Interstate 35E in Denton County and the interchange between Interstate 35E and Loop 820 near Fort Worth.

Only Collin County Commissioner Joe Jaynes spoke out directly against the commission's decision -- while conceding that his was a "minority report," given the large number of powerful Texas players on hand to support it.

"There is a perception among Dallas-Fort Worth leaders that we are being punished for our support of toll roads," he told the commissioners. Echoing arguments made last week in Arlington by regional transportation director Michael Morris, who was not at today's meeting, Jaynes urged commissioners to award future bond proceeds by the same formula that state law provides for distribution of most of gasoline-tax revenues collected in Texas.

State law forbids the transportation department from reducing the amount of road money a region gets because it has embraced tolling. Some North Texas officials said Dallas was snubbed this time only because the region's coffers are still full of money paid by North Texas Tollway Authority for the right to build State Highway 121.

But top TxDOT officials testified that that simply was not the case.

In any case, it was clear almost immediately that the anger expressed last week had failed to turn into an effective campaign to change the funding decision.

Even the one member of the Transportation Commission who is from North Texas, former Fort Worth City Council member Bill Meadows, strongly defended the plan as proposed by transportation staff members.

"I absolutely favor the staff recommendation," he told a packed room at the Art Deco-inspired Greer Building across the street from the Texas Capitol, where the 12,000-employee Texas Department of Transportation is headquartered.

He said Dallas and Fort Worth have received big shares of previous allocations, including larger-than-average awards from the federal stimulus package, and is certain to receive its fair share in the future.

He said complaints raised in North Texas last week that the commission was violating the law by not awarding the funds by formula were wholly without merit.

"That was something I asked myself immediately," he said. "But I am not a lawyer. So I asked, and I got a very specific answer on that question and am fully convinced that the commission is free to use its discretion to award these ... funds. We're violating neither the spirit nor the letter of the law."

Still, Morris was not alone in arguing that the department should award more of its funds -- whether derived from taxes or borrowing -- by a formula that shifts to local planning agencies like the Regional Transportation Council the discretion to decide which projects get built. Rep. Joe Pickett, D-El Paso, chairman of the House Transportation Committee, has vowed to renew legislative efforts in 2011 to would strip TxDOT of much of its discretionary role.

Several lawmakers present today, however, said they'd fight hard to keep the transportation department strong, arguing that Texas needs an entity charged with creating a statewide approach to setting priorities.

Commissioner Ted Houghton of El Paso noted that it would take decades to find the funds to widen Interstate 35 if all of the funds made available by the Legislature were awarded by existing formulas.

© 2009 The Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"The public isn’t likely to fall for this charade."

2009-11-18T17:18:00.000-08:00

Goldman’s $500 Million Is Day Late, Dollar Short

11/18/09

Mark Gilbert
Bloomberg
Copyright 2009

So now we know the value Goldman Sachs Group Inc. places on salving its conscience for screwing up what Chief Executive Officer Lloyd Blankfein called “God’s work.” It seems that $500 million is all it takes to compensate the world for Goldman’s role in creating the credit crunch.

Goldman said yesterday it’s setting up a “10,000 Small Businesses Initiative.” It will shell out $200 million to educational institutions to help guide business owners, with a further $300 million invested for lending and philanthropy aimed at community development groups. Billionaire investor Warren Buffett, whose Berkshire Hathaway Inc. is the largest Goldman shareholder, is joining the initiative.

Here’s another way of looking at this sudden burst of supposed generosity. Goldman has $16.7 billion stashed in its bonus pot from the record profit earned in the first nine months of the year, which works out at $527,192 per staffer.

That means those 10,000 small businesses the securities firm says it wants to help are worth the equivalent of about 1,000 Goldman employees. Alternatively, a Goldmanite’s average contribution to society is pitched at the equivalent of 10 small enterprises, based on that bonus-versus-charity calculation.

False Gods

Even at the Stakhanovite work rates the firm legendarily squeezes out of its staff, that’s quite a stretch. The idea that one banker is worth 10 businesses is the kind of math that got us into this mess, with finance falsely elevated until it became an end in itself, rather than a means to providing services to the real economy.

The public isn’t likely to fall for this charade. The financial community has already spent too many years parading its charitable contributions to help divert attention from its risk-taking adventures.

Tax-deductible gestures are no longer sufficient to comfort those who have seen their pension pots devastated by the credit crisis; even with this year’s rallies, the total value of the major global stock exchanges is still a bit less than $45 trillion, down from a peak of almost $62 trillion at the end of 2007, before the subprime meltdown wrecked the global economy.

Potentially more valuable than the charity fig-leaf is the apology Blankfein made yesterday. “We participated in things that were clearly wrong and have reason to regret,” Blankfein, 55, said at a conference in New York hosted by a magazine called Directorship. It would be nice to think that banking chiefs truly -- albeit very belatedly -- recognize that their reckless propagation of alchemical securities must never be repeated.

Fawning Adoration

Blankfein’s apology might ring truer, however, if he hadn’t been named CEO of the year by the magazine whose conference he was gracing with his presence. The fawning adoration for the multimillionaires who run the banking industry has only been diminished, not destroyed, by the damage their actions wrought.

If he worked for anyone other than Goldman Sachs, Blankfein would probably be out of a job by now. His remark earlier this month to the Sunday Times magazine that bankers are “doing God’s work” is the kind of indiscretion that loses you the key to the executive bathroom at most public companies.

No matter how many charitable donations it makes, Goldman will struggle to shake off the moniker bestowed on it by Matt Taibbi in Rolling Stone magazine earlier this year. Taibbi described the firm as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Goldman and its peers need to practice humility and contriteness for an extended period, rather than seeking image-buffing headlines with token gestures.

(Mark Gilbert is the London bureau chief and a columnist for Bloomberg News. The opinions expressed are his own.)

© 2009 Bloomberg: www.bloomberg.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"The 20-cent-a-gallon state gasoline tax hasn't been raised since 1991."

2009-11-13T05:15:00.000-08:00

Raise gas tax 10 cents a gallon? It's on table

But Dallas senator’s idea for road projects isn't on Perry's agenda

11/13/09

By PEGGY FIKAC
Houston Chronicle Austin Bureau
Copyright 2008

AUSTIN — The Senate Transportation and Homeland Security chairman Friday suggested a 10-cent-a-gallon increase in Texas' gasoline tax for a system that's soon to run short of money for new roads.

The proposal touted by Sen. John Carona, R-Dallas, got a cold reception from GOP Gov. Rick Perry at a conference by the Texas Taxpayers and Research Association.

“I'm not real fond of raising taxes when there's a recession going on. We ought to be looking at ways to cut taxes, not raise them,” Perry told reporters when asked about Carona's proposal.

Carona said there's no way around the need for new funding to relieve congestion and meet the transportation requirements of the state's growing population.

No cash by 2012

As he did during this year's legislative session, Carona noted that the highway fund at the Texas Department of Transportation will be out of money for new construction contracts in 2012.

During the session, Carona pushed unsuccessfully for local-option funding options after, he said, “current leadership made clear that there would not be support for a statewide increase at this time.”

The problem must be faced head-on in the 2011 legislative session, he said.

“By 2012, there will be no money left at TxDOT to build new roads. We'll only have enough money to maintain what we presently have. That is mismanagement on the part of the Legislature, and a situation that has to be corrected before we adjourn the next legislative session,” Carona said.

“The problem could be addressed in a responsible fashion if we raised the tax by 10 cents a gallon and then provided some sort of modest future indexing for inflation,” he said.

Any other options?

Carona said he's willing to listen to any other ideas, but added, “At this point, there's just no other solution to it.”

In order for such an idea to pass, however, Carona said it would need the support of the governor, lieutenant governor and House speaker — noting tax increases must originate in the House.

Perry — who has talked often of the need for more transportation funding and pushed what proved to be an unpopular plan that included a strong component of private investment in toll roads — sounded anything but supportive.

“Going to Lubbock, Texas, and telling ‘em ‘Hey we're gonna raise your gas tax out here a dime so they can build some more roads in East Texas' is generally not a real good political sell,” Perry said.

“So it's there, and it's talked about, and it'll probably have about the same result as it has had in the last four or five years, and that's not a very ... warm welcome in the Legislature.”

The 20-cent-a-gallon state gasoline tax hasn't been raised since 1991.

Democratic candidate for governor Hank Gilbert has called for an 8-cent-a-gallon increase with automatic annual increases.

Budget pressures

The need to raise money for transportation is just one of the budget pressures facing lawmakers when they next write a two-year state budget.

The current $182 billion budget includes $12 billion in federal stimulus money that's not expected to be available next time.

In addition, a school funding measure has left the state picking up a bigger share of public education spending than it did years ago.

State revenues also are being dampened by the recession.

Sales and natural gas tax collections together fell more than $1 billion short of projections in the 2009 fiscal year, which ended Aug. 31.

State Comptroller Susan Combs said Friday that despite the slide, she doesn't expect that she'll need to change the revenue estimate for the current budget — at least not at this point.

Combs said spending also was down in fiscal year 2009, offsetting the lower tax collections. Combs said she wants to see what happens with holiday shopping and revisit the figures in February or March.

pfikac@express-news.net

© 2009 Houston Chronicle: www.chron.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"Why would the feds want to promote the sale of our public roads to private corporations?"

2009-11-12T17:36:00.000-08:00

End the grip of BIG MONEY on Transportation Policy

11/12/09

Terri Hall
San Antonio Transportation Policy Examiner
Examiner.com

We applaud the Greasing the Wheels report released today by TX PIRG because it affirms what we already knew...that the road lobby is driving transportation decisions and policy not the taxpayers.

In California, Governor Arnold Schwarzenegger tried to oust his own transportation board appointee for objecting to the Governor's proposal to sell a CA freeway to private investors. His appointee called the deal "too risky for taxpayers." In Idaho, the Governor had the Director of their DOT fired in a "political powerplay to help Governor Butch Otter and his big campaign donors." Her crime? Saving the taxpayers money by steering money away from high-paid outside consultants back to the highway department who can do the work far cheaper.

Even worse, federal transportation agencies are using OUR taxpayer money to both lobby to and waive provisions in the law to handover our public highways to the private sector. Most of these changes were authorized by the Bush Administration, but the Obama Administration has allowed this controversial policy to stay in place, which is public private partnerships (PPPs, also called CDAs in Texas). PPPs are the most expensive way to fund roads.

A recent article in the Bond Buyer exposed that: "...there are a number of tolling and P3-related programs administered by the Federal Highway Administration. One is the Special Experimental Project Number 15, or SEP-15, which gives the transportation secretary the ability to waive certain rules of the current transportation law on a case-by-case basis. The program allows the FHWA 'to experiment in four major areas of project delivery' including project finance, and one of its goals is to promote P3s, according to the FHWA."

Why would the feds want to promote the sale of our public roads to private corporations? To enrich the highway lobby who's been greasing the wheel.

Perry's behavior in Texas has been equally deplorable: stacking his commission with goons who rabidly promote the sale of TX infrastructure to his cronies, payments of up to $3.6 million to losing bidders on CDAs, withholding highway funding from local communities until they capitulate to tolling existing freeways, illegally hiring registered lobbyists with taxpayer money to lobby to relax and even remove prohibitions on tolling, the revolving door between his office and Cintra lobbyist Dan Shelley, the list goes on and on.

When our elected representatives are bought and paid for by road building interests, how can the citizens stand a chance? It's no wonder why our politicians are so tone-deaf to the public outcry against enormously expensive, unwanted toll roads and privatization schemes that will break the backs of the middle class. It's time to clean-up Texas politics, By exposing the link between the BIG MONEY and the types of road projects that get priority, the taxpayers can then hold their politicians accountable in the ONE way they can...at the ballot box.

We also think it's time to consider TX PIRG's recommendation of publicly-funded elections. It may be the only way to shatter the vice grip special interests' wield over our politicians and public policy.

Transparency is the first step toward accountability. May this report and our efforts to shine the light on the today be the first step toward citizen-driven transportation policy in the great State of Texas!

© 2009 Examiner.com: www.examiner.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"The public is chafing at rising tolls and the spread of toll roads across the region."

2009-11-11T17:56:00.000-08:00

Oversight for NTTA

11/11/09

Editorial
The Dallas Morning News
Copyright 2009

State lawmakers have an obligation to make sure the business practices of the North Texas Tollway Authority do right by the public.

The NTTA began in 1997 with a narrow focus: Take over operation of one toll road and plan a second. Its business practices paralleled that limited scope. The agency started with a small in-house professional staff and contracted out nearly all of the costly engineering and legal work to outside firms.

Today's NTTA has a breadth of activity that includes projects in operation, under expansion, under construction or on the drawing boards across all four counties of its service area.

Yet NTTA's business model has changed little from when it took over from a successor agency in 1997. Outside contractors and consultants now cost tens of millions of dollars more a year than if the agency had the professional work done in house, as reported by Dallas Morning News transportation writer Michael Lindenberger.

With the public chafing at rising tolls and the spread of toll roads across the region, state and local transportation leaders must demonstrate a stewardship of transportation dollars that is beyond reproach. To their credit, the NTTA's top leaders acknowledge that change has been overdue, and they have begun bringing on more staff and curtailing payments of marked-up services to outside contractors.

But like all public agencies, the NTTA would benefit from greater outside analysis of its operation.

This year, state lawmakers filed measures that would have put the agency under review in Austin. The provisions passed the House but died later. Lawmakers ought to take up the matter again in the 2011 legislative session.

The NTTA is a state agency, but since its budget relies on toll revenue – and not state appropriations – the agency is not subject to review by the state auditor.

Still, the NTTA typically uses significant amounts of state fuel-tax dollars and public right of way to build its toll projects. That gives the taxpayer a legitimate stake in the matter.

Legislation requiring the State Auditor's Office to review the NTTA's business practices is one option for added scrutiny. Another is a review by the Texas Sunset Commission, a process that subjects most state agencies to a thorough going-over every few years – even to the point of addressing whether the agency needs to exist.

The sunset process could be dicey, since the NTTA performs a vital function and has ongoing obligations to bondholders for billions of dollars. But the sunset process still could yield solid recommendations on how to improve efficiency.

Members of NTTA's nine-member board are appointed by county commissioners courts in the agency's service area. But they are not legally answerable to commissioners or voters.

Elected state lawmakers should step into the picture and ensure the taxpayer's interests are properly represented.

© 2009 The Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"New Texas law is one of a long series of eminent domain reforms that fall short of actually forbidding the kinds of abuses they supposedly target."

2009-11-10T16:08:00.000-08:00

Texas’ Amendment 11: Another Post-Kelo Eminent Domain Reform that Falls Short

11/10/09

Ilya Somin
The Volokh Conspiracy
Copyright 2009

It hasn’t gotten much media attention, but last week, Texas voters overwhelmingly approved Amendment 11, an eminent domain reform measure that purports to ban “economic development” takings of the kind the Supreme Court upheld in Kelo v. City of New London.

Texas badly needs stronger protection for property rights, since it has a long history of eminent domain abuse, including recent examples documented by the Institute for Justice (the libertarian public interest firm that represented the property owners in Kelo) in this report.

Unfortunately, the new Texas law is one of a long series of eminent domain reforms that fall short of actually forbidding the kinds of abuses they supposedly target.

The amendment does forbid the taking of property for “the primary purpose of economic development or enhancement of tax revenues.” , But it continues to permit condemnations in areas with “urban blight.”

And, as I document in this article (pg. 2124), Texas is one of many states where the definition of “blight” is so broad as to include virtually any property that the government might want to condemn. Indeed, Texas’ definition counts as “blighted” any area that, due to a wide range of possible causes, creates an “economic or social liability to the municipality” where it is located.

This includes any area that creates an “economic . . . liability” because of insufficient development. Furthermore, the new Amendment still allows the power of eminent domain to be wielded by private organizations if they are “granted the power of eminent domain under [state] law.”

Amendment 11 is a small improvement over Texas’ previous almost completely toothless post-Kelo reform law (which I discussed in this article, pp. 2124, 2135–37).

The major is that “blight” now has to be shown on a property by property basis. Previously, local governments could simply declare an entire area blighted and then condemn any property within it, even if there was nothing wrong with that particular tract.

However, the impact of this improvement is likely to be minor, at best, given the ease of proving the existence of proving “blight” under Texas’ definition of the term. Amendment 11 also closes the previous law’s loophole allowing takings for “community development.” However, the broad blight exemption undercuts this improvement as well. “Community development” takings can easily be couched as “blight” takings.

Why did Amendment 11 turn out to be so ineffective? One possible explanation is that, under the Texas Constitution, a proposed amendment has to get the approval of two thirds of the state legislature before being submitted to a popular referendum. In my recent article on post–Kelo reform, I found that eminent domain laws that go through the state legislature are far less likely to impose meaningful constraints on condemnation than those that are enacted by an initiative process in which citizen groups can place propositions on the ballot directly.

State legislators have strong incentives to water down eminent domain reforms so that takings that benefit influential interest groups can continue. And widespread political ignorance makes it difficult for voters to tell the difference between laws that actually ban economic development takings and those that merely pretend to do so, while allowing them to continue under a different name.

© 2009 The Volokh Conspiracy: www.volokh.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"I seriously feel like all of our cooperative efforts ... are now resulting in a stab in the back."

2009-11-10T15:40:00.000-08:00

DFW Leaders Fuming Over Lack Of I-35 TxDOT Funding

11/11/09

Jack Fink
CBS 11 News (Dallas /Fort Worth)
Copyright 2009

LEWISVILLE-- There are some things that are just out of your control. We all pay a tax every time we fill up our gas tanks. Part of that tax is supposed to help improve existing North Texas roads and build new ones.

Perhaps no road in North Texas could use more help than Interstate-35 -- particularly in Tarrant and Denton counties.

While the Texas Department of Transportation (TxDOT) has earmarked an impressive chunk of change for an I-35 widening project, there's one small problem – the section of I-35 is in Waco. The North Texas sections of the interstate aren't getting a dime for expansion.

Every morning, April Perez can plan on sitting in traffic on I-35E in Lewisville for at least 20 minutes. "It's horrible," she said. "It's the only way to get to work. It'd be nice if we had some relief."

Under a new plan by TxDOT, there's no relief in sight for Perez or the hundreds of thousands of other commuters along I-35E in Denton County or I-35W in Tarrant County.

TxDOT is proposing to spend $1 billion to build new lanes on I-35 in the Waco area. The new construction would run from Hillsboro to the Killeen area. "We could use that here in the DFW area," said Perez.

The Dallas/Fort Worth area is only getting one-tenth of the amount the Waco area is from the state's general fund. The fund consists mostly of sales taxes. The money earmarked for North Texas isn't for new expansion, but mostly for repairs.

The Waco widening project has some DFW leaders fuming. "As a region, we're being punished. We're being punished because we went along with TxDOT's recommendations and plans and what they told us to do," explained Senator Wendy Davis, D-Fort Worth.

The TxDOT plan called for more toll roads. Just about every new or newly expanded highway in our area is either a toll road or will have some toll lanes built next to free ones.

In return for agreeing with the plan, the state promised to give priority to future North Texas roads.

Now area leaders accuse TxDOT of going back on its word. "I seriously feel like all of our cooperative efforts and innovative thinking is now resulting in a stab in the back," Denton County Judge Mary Horn said with frustration. "And I'm not very happy about it."

TxDOT is spending most of its general fund money in Waco even though the area has much less traffic than North Texas. The average daily traffic on I-35E from Denton down to Lewisville is 126,000 vehicles. On I-35W from Fort Worth down to Burleson, the average daily traffic is 120,000 vehicles.

Comparatively, on I-35 in Hillsboro to Waco the average daily traffic is about 60,000 – less than half of either section in North Texas.

TxDOT officials say they have to look at the interests of the entire state. "We have to move goods and people from here to there in lots of cases and we can't neglect that area," TxDOT spokesman Mark Pettit said, speaking of the Waco area.

That logic doesn't sit well with April Perez. "They need to get out with the other working people at 8 a.m. and sit in traffic with the rest of us and see what needs to be done."

TxDOT says the legislature developed the criteria to decide which projects would be eligible for the general fund revenues. And TXDOT says I-35E in Denton County wouldn't be eligible because the expansion plans for that part of the highway include some toll lanes. TxDOT says projects with toll lanes aren't eligible.

There is no money at all to expand I-35W in Fort Worth.

The Texas Transportation Commission, appointed by Governor Rick Perry, will be voting on TxDOT's controversial plan next week.

© 2009 CBS TV: www.cbs11tv.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"This shows the folly of redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain."

2009-11-09T20:38:00.000-08:00

Pfizer abandons site of infamous Kelo eminent domain taking

11/9/09

Timothy P. Carney
Washington Examiner
Copyright 2009

The private homes that New London, Conn., took away from Suzette Kelo and her neighbors have been torn down. Their former site is a wasteland of fields of weeds, a monument to the power of eminent domain.

But now Pfizer, the drug company whose neighboring research facility had been the original cause of the homes' seizure, has just announced that it is closing up shop in New London.

To lure those jobs to New London a decade ago, the local government promised to demolish the older residential neighborhood adjacent to the land Pfizer was buying for next-to-nothing. Suzette Kelo fought the taking to the Supreme Court, and lost. Five justices found this redevelopment met the constitutional hurdle of "public use."

The Hartford Courant reports:

Pfizer Inc. will shut down its massive New London research and development headquarters and transfer most of the 1,400 people working there to Groton, the pharmaceutical giant said Monday....

Pfizer is now deciding what to do with its giant New London offices, and will consider selling it, leasing it and other options, a company spokeswoman said.

Scott Bullock, Kelo's co-counsel in the case, told me: "This shows the folly of these redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain."

© 2009 Washington Examiner: www.washingtonexaminer.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

Cintra en Canada: Death, toll taxes, ghost riders and "mafia shakedowns."

2009-11-09T18:10:00.000-08:00

Anger over Hwy. 407 bills

Star readers tell of huge bills sent years after supposed trips

More than 200 readers responded with angry emails after The Fixer asked about billing problems with the 407 Express Toll Road. Some simply gave up fighting and paid the bills.

Read more about 407 ETR Toronto's privatized Spanish toll road [HERE]

11/9/09

By Jack Lakey The Fixer
Toronto Star
Copyright 2009

Invoices for thousands of dollars – mostly interest fees – have been received by hundreds of drivers years after charges were incurred for using the 407 Express Toll Road.

Some got invoices intended for long-dead spouses or parents, in one case billed to a plate that's been mounted on a garage wall since it was cancelled nearly five years ago.

Others said they were far away from Ontario when they were supposedly driving on the toll road.

More than 200 readers responded with angry emails after we asked about 407 billing problems.

Many drivers who tried to fight unfair bills gave up and paid, rather than risk being denied a licence plate renewal – an unparalleled power included in the 99-year lease granted to the private consortium that runs the 407. (In other words: Pay what we say or you don't drive your vehicle.)

One email compared 407 billing to a "mafia shakedown."

Lisa Thompson got a 407 invoice in September billed to a licence plate that belonged to her father, who's been dead for two years and last held an active plate in 2004. The trip allegedly occurred Aug. 9.

The bill said they couldn't record "either the entry or the exit point" for the mystery trip, but still demanded payment of $6.58, Thompson said. She was also asked to fax a copy of a death certificate as proof of his demise.

"If the 407 could not record the entry or exit point," she wonders, "how could they send a bill to a deceased man with expired plates?"

Robert Kelly said he got a bill last February for $4,297.25, including $194.97 in fees and $2,813.99 in interest, on $1,288.87 in toll charges.

"I have not even owned a car since 2002 or 2003, and even then I was only on (the road) once when it was free," Kelly said.

"I am in a nursing home now on a fixed income and my inquiries have been ignored. I don't know what to do."

The 407 says there is nothing wrong with its billing methods, insisting customer service is a priority topped only by safety.

"It is not an indication of a billing problem," 407 spokesman Steve Spencer said of the complaints we received, adding he could not discuss individual cases.

"Your article did ask for people to tell you their bad stories," he noted.

Customers have made more than 500 million trips on the 407 in the past five years, said Spencer, and "the great, great majority of those drivers are happy with our service.

"We're not saying we are perfect. ... But then if the customer does have an issue, we want them to give us a call and we'll try to sort it out."

Of the complaints we received, which were forwarded to the 407, only a few readers said the company's dispute resolution process cut them a break. Others got nowhere, even after appealing to the 407 ombudsman.

Gary Stracina says his overdue 407 bill was sent to collection more than 10 years ago. He had paid it, "but the money was never applied to my account," he writes, "and now, with interest on a dead account, I owe $1,200.

"Numerous trips to their offices on Steeles with a copy of the cashed cheque and promises to resolve the situation have led nowhere. They did, however, mail me a file one-inch thick with invoices they claimed I received."

The most common complaint, like Stracina's, is that a bill arrived out of the blue, demanding an eye-popping amount from drivers certain they owed no money, with no supporting documentation on the invoice.

The 407 charges annual interest of 26.82 per cent on unpaid balances, as well as collection fees and other charges that can swell the total enormously.

Some readers suggested the 407 is in no hurry to collect on outstanding balances, since the clock is ticking on huge interest rates and the company can simply bill later with the potent threat of licence plate denial.

"The 407 billing system sucks," said Shirley Poon. "It sounds like it will suppress the billing and randomly send out the bill after X number of years so they can claim a ridiculous amount of interest."

"My blood comes to a slow boil every time I try to deal with the arrogance at 407 ETR," said Darko Mesich, who recently received bills from early 2005 that grew from $79 to $246, "with no activities besides interest charges and one enforcement fee of $18."

Like many others, including people who have lived at the same address since before the 407 existed, Mesich said he didn't get any bills until the recent invoice, while the 407 maintained he was repeatedly billed but didn't pay.

Erin Lumley said she got a $216.34 invoice last January for an unpaid charge of $5.97 from 2000, adding that she had reported her changes of address in between to the provincial transportation ministry, "but never had an invoice sent to my correct address."

She was told to pay $55 and that an investigation would be done on her account. "In September I received a notice saying the ministry has been instructed not to issue me new plates and my account was being sent to collection."

Spencer says the 407 sends out an unpaid bill for at least a few months and eventually stops mailing them if it isn't paid, but didn't explain why it often stops billing for several years, then manages to find the customer and send a new bill.

"We really do try to get a hold of them as best we can," he said. "When we're getting no response from an invoice, so it's gone out and there's an amount owing still, we actually go to the MTO and we check every month to see if there's been a change in the address."

It may come as a surprise to users that the 407 considers anyone who has used the road even once to have entered into an "implied contract" requiring drivers to promptly notify it of all future changes of address, licence plate or vehicle.

"A new account is opened each time a new licence plate travels on 407 ETR," said Spencer, who then referred to a standard notice on all invoices: "New plate? New address? New car? Remember, we don't receive automatic updates from the Ministry of Transportation, so keeping us up to date will ensure you receive your 407 ETR bill promptly and avoid interest or collection activity."

© 2009 The Toronto Star: www.thestar.com

Death, taxes and now, 407 bills

Woman incredulous after highway bills her late husband for trips taken after his death

Diane Tobin says the 407 took money from her bank account to pay for bills supposedly accumulated recently by her late husband, who died in 2004.

11/9/09

By Jack Lakey The Fixer
The Toronto Star
Copyright 2009

Diane Tobin's husband died in 2004, but he's taken up driving on the 407 this year, according to bills sent to her by the toll road.

His licence plate was cancelled in early 2006 and has since been tacked to the wall of their son's garage in Oshawa, but bills from the 407 say he got on several times at Brock Rd. in June and July and cruised over to Airport Rd.

"I'm pretty sure he's dead," said the 64-year-old Tobin, laughing. "He was cremated and we buried his ashes, but he had a real sense of humour. Maybe he's having some fun with me."

When she didn't pay, the 407 twice went into her bank account and withdrew $40 to cover the ghostly trips, even though she thought his automatic-billing arrangement with the 407 was cancelled when she returned his transponder by registered mail soon after he died.

Frank Tobin was battling cancer in 2004 and had to drive from their Port Perry home to Sunnybrook hospital. The 407 was the quickest route, so he got a transponder and arranged automatic withdrawals from their joint bank account.

She thought Frank's business with the 407 had ended with his death, until an invoice billed to his cancelled plate arrived last summer for $13.61.

Incredulous, she got on the phone to the 407. "The guy said, `Don't worry, we'll take care of it,' but later on I got my bank book updated and saw that they'd taken it out of my account."

A second bill for $26.77 showed up in September, she said, which claimed Frank had twice driven from Brock to Airport Rd.

"My son went out to his garage to check, but the plate had been there all along." After the 407 went into her bank account a second time, Tobin hired a lawyer and complained to the Bank of Montreal, which managed to retrieve the cash. Even after the money was recovered, she says, 407 tried to go back into her account and take it again, which was blocked by the bank. Only after the lawyer intervened did the 407 concede it had erred and had no right to take money from her account, she said.

"They offered me the $40 back and another $150 for my trouble, as long as I signed a waiver saying I wouldn't come after them legally and wouldn't talk to anyone about it." She didn't take them up on the offer.

ROAD RANTS

When I first moved into my apartment, July/03, I received mail from for 407 ETR for (a deceased former tenant) and I returned it to them stating the person had died. I am still getting mail for this person from them.
– Alma Anderson

They said I had a bill for $20 from years ago, which they say I didn't pay. Now, with interest, it was $68. In fact, I don't take the 407. Ever. Never did. I tried to argue with them, so they assessed me more late-payment charges, bring the total to over $80.
– Zev Berkovich

One day they sent me a mystery bill for $5 and change. ... I sent them a cheque for the $6. A few weeks later they sent me a cheque back for the same amount (with no explanation).
– Julius P.

We returned our transponder some years ago and, at the time, there was a credit balance of $3 or so on our account. For five years following return of the transponder, we received an invoice EVERY month saying we had a credit balance of $3.
– Gaynor Reader

I finally after years of being a 407 customer sent back my transponder last year and paid my bill. Suddenly last month, I got a bill for, get this, 34 cents!
– Doug Benavidez

I received a mystery 407 bill this summer dating back 5 years for $200! I called and according to their records the unpaid bills stem from months when I wasn't even in the country: I was in Germany on exchange for a full year.
– Karen Brusso

We bought a new house and inherited the 407 bills of the previous owner. That person used the 407 daily, accumulating bills of many thousands of dollars. In the meantime, those bills all kept coming to us – every month. This went on for over three years ... The only way I was finally able to resolve the issue was to contact the ombudsman.
– Anita Thomas

I received numerous bills for a plate number that was sitting on a shelf in my garage. After numerous calls they sent me photos of the vehicle in question. It was a BMW. Never had one. I took the plates to the MTO. The person had modified his plate with blue paint.
– Paul Mackie

© 2009 The Toronto Star: www.thestar.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

Contract engineering firms and lawyers benefit from NTTA's creeping toll tax bureacracy and ballooning debt

2009-11-08T15:48:00.000-08:00

Outside contract work taking bigger toll on North Texas Tollway Authority

11/8/09

By MICHAEL A. LINDENBERGER
The Dallas Morning News
Copyright 2009

The North Texas Tollway Authority spends hundreds of millions of dollars each year to design, build and repair its roads, to market itself, and to solve its legal problems.

But only a fraction of the hundreds of professionals who perform those tasks actually work for the toll authority, whose impact on North Texas drivers has soared in the past few years as it has increased its debt to about $7 billion to vastly expand its network of toll roads.

Instead, NTTA relies on a handful of gold-plated firms that for decades have given that work to their own employees, routinely charging NTTA three to four times what a staff member might earn to do it.

Hundreds of firms are paid to do work for NTTA each year, including some small outfits and some that are national engineering powerhouses.

But five legacy firms, each of them among the nation's best at what they do, have held key roles for NTTA since long before it was created in 1997 out of the old Texas Turnpike Authority.

Three of those firms have worked for the toll authority and its predecessor since the 1950s, and one since 1962. NTTA's financial adviser, RBC Capital Markets, a subsidiary of Royal Bank of Canada, is the newcomer, working for the authority since 1983.

National toll road behemoth HNTB has been the agency's general engineering consultant since the authority's creation in 1953 and occupies an office building owned by NTTA across the parking lot from the authority's sprawling Plano headquarters. It billed NTTA $30 million last year.

And for more than 50 years, when NTTA has needed a lawyer, it has called one of the most prestigious, and most expensive, law firms in Texas, Locke Lord Bissel & Liddell. One of the founders wrote the statute to create the turnpike authority in 1953 to build the Dallas-Fort Worth Turnpike, which is now part of Interstate 30. The business has stayed with the firm ever since.

The long tenure is more than just institutional. Senior partner Frank Stevenson has worked on NTTA legal matters for 29 years and been its outside general counsel since 1995.

"There is an incredible amount of personal loyalty to NTTA here," Stevenson said. Beyond that, his firm has developed exceptional expertise, he said. "We're the best there is at this. We just are. We're really, really good at this."

Excellence at a price

Those long-standing relationships provide NTTA with unquestioned expertise, flexibility to ramp up during an emergency and to cut staff loose during a slow time, as well as guaranteeing deep familiarity with its work.

But they come at a steep price.

That's become especially so during the last couple of years, as elected officials in North Texas have increasingly turned to tolling as a way to pay for new highways, instead of relying on gas taxes and the state Department of Transportation. As NTTA's portfolio of projects has grown, it has hired relatively few employees and instead has increased its spending on outside firms.

Last year, for instance, Locke Lord billed NTTA nearly $7.7 million in legal fees, three times more than it billed in 2006. About $3 million paid for NTTA's aggressive pursuit of right of way, a program that has seen it go after 200 parcels of property for its planned expansions. As NTTA's borrowing soared, payments to McCall Parkhurst, its bond counsel since 1955, jumped to $3.4 million, up from $233,148 just two years before.

But NTTA also paid millions for other legal chores, many of which could have been done far more cheaply by smaller firms or by a lawyer on the NTTA payroll.

Until last month, NTTA had no attorney on staff. It hired a new general counsel last month at a salary of $215,000, and both NTTA officials and Stevenson said legal bills should be much smaller next year as a result.

On the engineering side, NTTA, like all heavily leveraged toll entities, is required by agreements with its creditors to employ a general engineering consultant, usually a top-notch design and construction management firm that oversees much of its road work. But after nearly 60 years of working for NTTA, HNTB's job duties have grown far beyond than what is required by the agreements.

Currently, HNTB provides senior engineers, including managers, who direct nearly all aspects of some of NTTA's top projects.

It also keeps scores of other employees on call, many of whom fulfill routine roles. For instance, it has the equivalent of five full-time employees to augment NTTA's communications staff.

That's a form of mission creep that NTTA executive director Allen Clemson said the authority is reviewing. Some of its largest contracts have grown to include work that smaller, less expensive firms could probably do easily – a fact that Clemson and his bosses on the board of directors have acknowledged.

"Here's how it works," said Clemson, who five months ago became the agency's fifth top boss in as many years. "Somebody here needs something done, and they get on the phone [to HNTB]. Maybe they need a map or a glossy presentation, and need something produced quickly. Well, pretty soon some of the brightest, most creative people in the business come across the street and start working on it. That happens too much."

It's not the companies' fault that NTTA had grown too lazy in its use of them, NTTA Chairman Paul Wageman said.

"It's our fault," he said. "We needed to find a competent, experienced public administrator to the run the agency the way it ought to be run. I think we've done that. We're maturing as an agency. Candidly, it may not have been happening as quickly as it should have. But it now commands the full attention of our board and our staff."

Adding it up

How expensive are consultants? In NTTA's case, very.

By Clemson's estimate, much of the work NTTA pays to have done by someone else costs about three times more than if NTTA did it.

It adds up in ways both big and small.

In August, for instance, two HNTB communications staffers assembled routine packets that board members receive before each meeting – booklets that sometimes are hundreds of pages long and explain each item on a board meeting's agenda.

One HNTB employee, whose salary is about $38 an hour, spent 21/2 hours putting the packets together, and another, paid about $20 an hour, spent nine hours, including some time being "on call for packet assembly."

Together, they were paid $273 to assemble the packets, but when the bill got to NTTA, adjustments for profit and overhead – standard multipliers common in most consulting contracts – meant that the bill totaled $757.

At the other end of the scale, NTTA pays engineering firms such as HNTB and others to provide top-paid professionals to build, manage and maintain its roads. The most senior engineers earn up to $150,000 a year or more, but when NTTA pays their employers for their time, the bill for each can reach nearly a half-million dollars per year.

In all, NTTA relies on the full-time equivalent of about 150 professional engineers to manage its workload, though that number can jump or drop, sometimes with little notice.

It has eight engineers on staff.

Longtime NTTA executive Rick Herrington, who recently left to rejoin his old firm, HNTB, to help lead its toll road operations nationwide, defended NTTA's approach to contractors.

He said that when the new agency was formed out of the old turnpike authority in 1997, its mission was smaller, and the officials who created it wanted to avoid creating a big, costly agency. "They didn't want to create a miniature TxDOT," he said.

Instead, the NTTA followed a model used in dozens of other toll authorities across the country. It kept the professional staff small and brought in outside firms capable of quickly adding – or shedding – workers and expertise as required.

"We could ramp up our staff, and then bring it down," Herrington said. And until the State Highway 121 deal, NTTA had little need for a large, permanent engineering staff. After all, its responsibilities included maintaining the aging Dallas North Tollway, still its largest cash generator, and building the Bush Turnpike.

It's mostly been ramping up since 2007, when NTTA agreed to borrow about $5 billion to build the Highway 121 toll road, a deal that also required it to pay Texas some $3.2 billion in cash for the right to collect tolls on the road forever.

It also promised local elected officials that it will aggressively build a growing roster of other costly toll roads.

When Clemson arrived earlier this year, he was surprised to see how few engineers NTTA employed, and how big its payments to contractors were each month.

With encouragement from the newly expanded nine-member board of directors, he began to wonder whether NTTA could get by with hiring more employees who could perform the routine tasks it pays some of the most expensive firms in the industry to do.

"The numbers are big, very big," he said. "Sometimes you need an all-pro professional, and sometimes we just need a good solid professional."

Changes ahead

Some changes already are being made. By 2010, NTTA plans to hire about 25 positions, including 10 information technology staffers, a few engineers and a landscape architect.

After paying those new salaries, it expects to save nearly $4 million in fees to contractors.

"There is a palpable effort being made to see that the NTTA has the staffing in place to perform what are seen as areas of core competence," said Stevenson, the Locke Lord lawyer who said the new general counsel will reduce payments to his firm significantly.

"In the cases where NTTA can look at what its contractors are doing and say, 'We're always going to need this guy doing this job,' then it makes sense [to bring it in house]. I applaud that, and it's something I've told them they ought to be doing."

But the savings aren't likely to be seen by drivers who are just getting used to higher toll rates. Next year, NTTA expects its revenue to be $410 million, including $377 million from tolls.

Its biggest expense – some $158 million – will be to service its fast-growing debt load. It will spend about $102 million on operations and maintenance, and an additional $128 million for capital improvement projects, maintenance reserve and other items.

By 2013, NTTA expects to spend about $400 million a year to service its debt.

Contracts up for grabs

Clemson said he has not yet completed a review of how NTTA spends its money. He said some additional staff members may be brought in house in the future.

But the biggest opportunity for change arrives next year, when each of the five firms must compete for new five-year contracts.

When they bid, they will bring enormous advantages to the table. Making a change to that roster would be difficult, and at least one attempt by NTTA board members to do so has failed in the past.

But Clemson said he wants NTTA to approach the new contracts with a new focus on efficiency. That will include unbundling some of the biggest contracts to make sure that the top-priced firms are only used for the sophisticated, highly specialized work that requires top dollar.

Even some of the professional work, such as more routine legal and engineering help, could be broken off into smaller contracts. That could have the bonus, board members said, of helping NTTA improve the diversity among the firms that it pays to do its work, including adding firms owned by minorities or women and companies in Tarrant County.

"I am new at this organization," Clemson said. "I don't have a single relationship with anybody in the law firms or the engineering firms. So we are going to make sure that our request for proposals are properly structured, and cover the body of work that we need to have, and don't have a bunch of tricks in them. I want to encourage, and hope to get, good firms to compete. We will evaluate them in very open and transparent way and see what happens.

"I would think that of all the times these contracts have been in place, that this is a very likely time for changes to happen."

© 2009 The Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"NTTA has always relied on a small number of legal and consulting firms."

2009-11-08T14:05:00.000-08:00

NTTA'S LEGACY FIRMS

11/8/09

The Dallas Morning News
Copyright 2009

NTTA has always relied on a small number of legal and consulting firms to provide manpower for its projects.

HNTB

Founded in 1914, and the developer of the first modern turnpike, HNTB is a giant engineering and architecture firm that serves as general engineering consultant for dozens of toll authorities across the U.S. It has $800 million a year in sales, employs 3,700 workers and has more than 60 offices. It has worked for NTTA since 1953.

RBC Capital Markets

RBC Capital Markets has been NTTA's financial adviser since 1983. It is a subsidiary of Canada's largest company by market share, Royal Bank of Canada.

Wilbur Smith Associates

Since 1962, Wilbur Smith Associates has been NTTA's traffic and revenue engineer, studying population, traffic and economic trends to forecast likely traffic and toll revenue for each NTTA project. NTTA relies on those projections to borrow billions of dollars to build its roads.

Locke Lord Bissell & Liddell

Locke Lord Bissell & Liddell and its predecessor firms have been NTTA's outside general counsel since the agency's founding in 1953. Charles Purnell, a partner in one of the predecessor firms in Dallas, is credited with writing the statute in 1953 that formed the Texas Turnpike Authority, which became the NTTA in 1997.

McCall Parkhurst & Horton

McCall Parkhurst & Horton has been NTTA's bond counsel since 1955. Founded in 1919, the firm has three Texas offices and focuses exclusively on public finance law. It was the first Texas firm to issue an approving opinion for a bond issue in Texas that was accepted by the national financial markets.

© 2009 The Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

Perry appointee Houghton pushes for a private developer to build and toll Texas 161

2009-11-05T16:20:00.000-08:00

Official says tollway authority should bow out of Southwest Parkway

11/5/09

By GORDON DICKSON
Fort Worth Star-Telegram
Copyright 2009

A Texas Transportation Commission member wants the North Texas Tollway Authority to withdraw as the lead partner in the Southwest Parkway project and let the state seek a private developer to build the toll road from Fort Worth to Cleburne.

Commissioner Ted Houghton of El Paso discussed his recommendation about Southwest Parkway in an interview a day after the tollway authority said that the toll road is expected to cost $2 billion but that only $1 billion is available. The tollway authority said it would needs state aid to start construction next year.

Houghton wrote in an e-mail to Commissioner Bill Meadows of Fort Worth this week that his "recommendation on the project on the western end of the Metroplex is that NTTA turn that project back to us and we utilize the private pass-through tool that would bring in private equity."

A third party would pay for Southwest Parkway upfront and be repaid over time with tolls from the road.

Pass-through financing has built smaller city- or county-funded projects in other cities and would not be covered by the Legislature’s ban on comprehensive development agreements between the Texas Department of Transportation and private developers, Houghton said.

Concession fee

Houghton, one of five state transportation commissioners, also said that the Plano-based tollway authority had requested a $200 million discount on another Dallas-Fort Worth toll project: Texas 161, which is under construction in Irving and Grand Prairie and is a gateway to Cowboys Stadium in Arlington.

Last year, after months of intense negotiations, the state Transportation Department and the tollway authority agreed that the market value of the Texas 161 toll road from Texas 183 to Interstate 20 was $458 million. That would be the "concession fee" the authority would have to pay the state to take over the project.

The authority hasn’t decided whether to take over Texas 161.

But Houghton and other state officials have balked at the authority’s requests for financial aid, including a request for the state to use its gas-tax-supported Fund 6 as a guarantee against certain authority debts, and a loan of $300 million to $500 million from the state infrastructure bank.

State law gives the authority primacy, or first dibs, on toll projects in Dallas-Fort Worth, and the Transportation Department can’t pursue private development of a toll project unless the authority declines it.

The first portion of Southwest Parkway, an eight-mile stretch from Interstate 30 in west Fort Worth to Dirks Road in an undeveloped part of the city’s southwest side, was expected to be under construction in 2010.

'I’m all ears’

Tollway Authority Vice Chairman Victor Vandergriff of Arlington said Thursday that he was unaware that a pass-through tolling arrangement with a private developer could even be done.

"I’m all ears," he said. "I would be pleased to understand that, and be supportive of that, if it will get the project done."

But Vandergriff reiterated that the authority wants to build Southwest Parkway.

Negotiations between the authority and Transportation Department are reaching a crucial phase, and Vandergriff said he doesn’t want to "point a finger" of blame for the Southwest Parkway funding gap.

But he did say that part of the problem is that the Transportation Department withdrew about $211 million in gas-tax-supported funds from the project to make ends meet on other Tarrant County projects, including the proposed expansion of Northeast Loop 820 and Airport Freeway.

That funding loss is part of the reason the authority is seeking a state loan, Vandergriff said.

Earlier this year, Johnson County officials, who refer to the project as Chisholm Trail, warned that moving gas tax funding out of the project could delay it.

"We’ve got a very tough finance market and very financially challenged agency" in the Transportation Department, Vandergriff said. "It really doesn’t do any good for one side or the other to point fingers unduly. I think it’s premature to say the parties can’t work together to get it done."

GORDON DICKSON, 817-390-7796

© 2009 Fort Worth Star=Telegram: www.star-telegram.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"Never underestimate the stupidity of the Texas electorate."

2009-11-04T23:36:00.000-08:00

Hypocricy Thy Name Is Rick Perry

11/4/09

by Jeff Prince
Forth Worth Weekly
Copyright 2009

The Fort Worth Star-Telegram article on the 11 propositions passed by voters yesterday contained a quote that would be funny ha-ha if it weren’t so funny weird/tragic.

The story describes how Texans stood tall in favor of property rights by voting a whopping 81 percent in favor of Proposition 11, which restricts government entities that want to nab your private property at a pittance by using eminent domain, and then turning it over to private developers who make a fortune at your expense.

Texans began clamoring for the added protections after the U.S. Supreme Court’s controversial decision in 2005 to allow using eminent domain for private development purposes.

The Star-T article quotes Gov. Rick Perry saying the voters “sent a clear message: Don’t mess with private property rights.”

What the article failed to mention was that Perry vetoed a similar proposition in 2007 even though it was passed overwhelmingly in the state House and Senate.

At the time, Perry was touting the Trans-Texas Corridor.

In other words, he wanted to allow a foreign-owned company to rely on eminent domain powers to take private property from farmers, landowners, and homeowners, and then turn that land into a toll road that most Texans didn’t even want.

So he vetoed a proposition that had been handily passed by your elected representatives. That was the first insult. Now, he’s using the old “don’t mess with property rights” blah-blah-blah while basking over the passage of a proposition that could have been established two years ago if not for him.

But Perry’s got good hair… and he’s so handsome that even a hottie like Sarah Palin (okay, a mentally disturbed hottie) looks awed by his visage. So voters will probably re-elect him again.

© 2009 Fort Worth Weekly: www.fwweekly.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"The State can still condemn Texans' land against their will and hand it over to private developers for toll roads using public private partnerships."

2009-11-04T17:54:00.000-08:00

Texans vote for eminent domain reform, Prop 11 falls short of giving it to them

11/4/09

Terri Hall, San Antonio Transportation Policy Examiner
Examiner.com
Copyrigtht 2009

Texans overwhelmingly voted for Proposition 11 in hopes that it sends a strong message that Texans want eminent domain reform. However, Prop 11 didn't get the job done.

The Texas Legislature needs to continue the push for further reforms and to prevent abuses. TURF didn't support Prop 11 because it still allows a governmental entity to take Texans' private property for "urban blight" and "certain economic development or enhancement of tax revenue purposes," nor did it include:

Strong definition of public use limiting eminent domain for ANY economic development and tax enhancement purposes

Good faith negotiations (prevent entities from low-balling landowners and forcing them to hire expensive lawyers to get fair market value)

Compensation for diminished access to a landowner's property

Limit the granting of eminent domain to any further entities without a vote of the people

Relocation assistance for displaced landowners

Ability to buy land back at original cost after 10 years if the State doesn't use it

Bottom line, the State can still condemn Texans' land against their will and hand it over to private developers for toll roads using public private partnerships called Comprehensive Development Agreements.

The Trans Texas Corridor, originally slated to gobble-up massive swaths of private property (4 football fields wide, biggest land grab in Texas history) through rural Texas, along with dozens of toll projects in urban areas are precisely why Texans have yet to get a strong eminent domain reform bill.

When foreign corporations get controlling interest in public highways in such sweetheart deals with guaranteed 12-19% annual profits, non-compete agreements that guarantee congestion on the free routes, etc., they become defacto taxing entities and charge Texans hefty tolls to access their own public roads.

It's private profits in the name of public use.

© 2009 Examiner.com: www.examiner.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"Taxpayers are still left with the struggle to get elected MPO representation undiluted by appointees who don't answer directly to the voters."

2009-11-03T19:55:00.000-08:00

Non-toll plan still makes the most sense

11/3/09

By Tommy Adkisson - Guest Commentary
San Antonio Express-News
Copyright 2009

The recent Oct. 26 meeting of the San Antonio Bexar County Metropolitan Planning Organization (MPO) was lobby politics over sound public policy.

The MPO policy board specifically asked its Technical Advisory Committee to do a side-by-side comparison of TxDOT's 2001, $100 million non-toll freeway plan to fix 281 with the Alamo Regional Mobility Authority's $475 million (or $1.3 billion with interest) toll road plan.

It failed to do so, I submit, largely because of a lack of cooperation by TxDOT and the push for toll roads by the special interests in the road building industry.

When duly elected representatives that are tasked with allocating state and federal transportation dollars, and making transportation decisions for our region, cannot get open public records, straight answers, or cooperation from our state highway department, we have a problem.

I've made no secret about my position against tolling our existing freeways. Our highway department, in my opinion, is not the final word in the question for or against tolling.

It is failing to cooperate with those on the policy board who want to see non-toll options implemented to keep our freeways toll-free.

The MPO, set-up by federal law, is an equal player in transportation decisions and so is the Federal Highway Administration that administers the National Environmental Policy Act.

When the current Texas governor's re-election (and hence TxDOT's continued pro-toll policy) is anything but reassured, the Sunset process awaits TxDOT in the next Legislative Session.

John Carona (the Chairman of the state Senate's Transportation Committee) also says we can do without tolls by proper reliance and stewardship of our gas tax, then one has to wonder about the dogmatic pro-toll direction of TxDOT.

An obvious obstacle in moving forward is the composition of the MPO policy board itself. Its un-elected 9 appointees from various agencies nearly equal its 10 elected officials.

Last Monday's vote was a close 6-5 vote in favor of tolls if you isolate elected officials, versus a distant 13-5, when you add-in the non-elected appointees.

One non-elected member abstained. Despite attempts to remedy this in the courts and in the Legislature, the taxpayers are still left with the struggle to get elected MPO representation undiluted by appointees who don't answer directly to the voters.

The National Environmental and Policy Act which requires consideration of social, economic and environmental effects of roadways, requires an environmental impact study that is underway but is estimated to take three years.

I submit that non-toll is less intrusive (10 versus as many as 20 lanes into our Hill Country), less expensive ($200 million ballpark versus $475 million), least threatening to the nation's most vulnerable aquifer and our nearly sole source of drinking water.

And because of its scale, a non-toll plan is more likely to be able to be built quickly. A comparative study, as we had requested before, would likely reveal the same conclusion.

Tommy Adkisson, Bexar County Commissioner for Precinct 4, can be reached at 100 Dolores, suite 1.2, San Antonio 78205, by e-mail at tadkisson@bexar.org or by calling 335-2614.
.

© 2009 San Antonio Express-News: www.mysanantonio.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

The 'Macquarie Model': A ripping success for the Banksters. Not so much for the investors (think pension funds).

2009-10-31T11:30:00.000-07:00

Dismantling the MIG machine

10/31/09

STUART WASHINGTON
The Age (Astralia)
Copyright 2009

IT WAS once the flagship of Macquarie Group’s satellites, a toll-road fund that embodied the bank’s ambitions to become a globally dominant listed infrastructure funds manager.

In a flurry of transactions, Macquarie’s super-smooth bankers ranged the globe to create what Macquarie extolled as a new model, the Macquarie model, of listing infrastructure.

Yesterday, historically,Macquarie Infrastructure Group reached the end of the road at Sydney’s Westin Hotel.

Brought down by an astonishing $35 billion in debt over its road assets in North America, Europe and Australia, directors in Sydney, Britain and Bermuda agreed late on Thursday night to split MIG into separate ‘‘mature’’ and ‘‘active’’ funds.

Given that ‘‘mature’’ MIG has a debt level of 31 per cent and ‘‘active’’ MIG has a debt level of 86 per cent, the descriptions ‘‘good’’ and ‘‘bad’’ could also be used.

Pivotally, Macquarie is being kicked out as manager of good MIG, ending the Macquarie-sourced deal-making, refinancings, revaluations and fee-ripping since MIG was renamed in 2000.

While Macquarie is leaving ‘‘Good MIG’’ with a $50 million kiss-off, plus a 1 per cent advisory fee likely to be in the realm of $20 million, the exit fee pales in comparison to the hefty $345 million it stripped from Macquarie Airports on its way out.

Macquarie also remains as manager of ‘‘Bad MIG’’, with elevated base fees paid to the mothership because of the need for extra work on problem assets that include some with a 100 per cent level of debt— South Bay Expressway in the US and Warnow Tunnel in Britain.

Macquarie Bank chief executive Nicholas Moore protested yesterday that its model had been a success.

And indeed it had, for the bankers at least. For investors, however, the evidence from the past two years shows many of its major funds underperformed the S&P/ASX 200 Index (see graphic).

‘‘On the issue of the performance of the listed funds, I believe (they) will have to be judged as successful to date,’’Moore said at the bank’s interim results.

‘‘The performance of the funds— not all of them—but if you go through them one by one it has been a question of outperformance rather than underperformance.’’ But there is no doubt Macquarie is edging towards the door.

‘‘It was fun while it lasted,’’ Brett Le Mesurier, an analyst with Axiome Equities, said yesterday. It was Macquarie Infrastructure Group that made Macquarie what it is today.

No doubt, Macquarie’s stranglehold over once-public assets, with fees regularly ratcheting up on various formulas, have got up the nose of some users.

A Macquarie executive lost his job in 2003 when he crowed to investors about Britain’s M6 toll road: ‘‘We can put up the tolls by whatever we like and, almost as importantly, we can start the tolls on day one by whatever we like.’’

But the same boast helped make the toll-roads operation an investor darling, and Macquarie’s listed infrastructure fund model took off and spawned a host of imitators, including Macquarie Airports, Macquarie Media Group,Macquarie Capital Alliance Group and Macquarie Communications Infrastructure Group.

And with Macquarie Airports paying its parent $941 million since its birth in 2002, it’s little wonder Macquarie enjoyed the fees it dragged from the funds.

In late 2008, then JPMorgan banking analyst Brian Johnson found fees earned by Macquarie from its satellite business had grown from $376 million in 2002-03 to nearly $1.4 billion last financial year.

Among MIG’s heady early promises were predictability of cash flow, natural hedges against inflation from the pricing power in toll roads and the opportunity to refinance assets at more favourable rates as they entered revenue-earning phases of their development.

And the big sell for investors was a steady flow of distributions as MIG’s financial structuring of ‘‘greenfields’’ developments ‘‘brought forward’’ their distributions.

But the model carried the seeds of its own demise right from the start.

MIG’s toll-road operations never paid for itself: it was always a fiction of smart bankers being able to revalue assets, borrow more money and pay that money to investors.

Effectively, the bankers had come up with a formula for ‘‘bringing forward the cash flow’’ from infrastructure assets—and then dropping it straight into their top executives’ $30 million-plus salaries.

Anthony Kahn, a former chief executive of MIG, told BRW in 2002 that distributions to shareholders would move from payments out of capital to payments out of operations.

They never did. Not one distribution from MIG has been completely backed by operating cash flows.

Fast forward to yesterday’s annual meeting and MIG’s chairman,Mark Johnson, was promising distributions would be aligned with operating cash flows.

In practice, MIG became a spinning door that bought 33 toll roads and flogged 22 off on the way through.

Then a credit crisis made borrowing difficult, and a resulting asset deflation made revaluations for refinancing impossible.

Macquarie’s interim report revealed that since April 2007 it had made $592 million in write-downs to its listed managed funds. Its unlisted funds have fared little better, with a $410 million write-down over the same period. Now investors have had enough.

At MIG’s annual meeting yesterday chairman Mark Johnson noted the deal on good MIG removed the ‘‘external management hurdle which has existed for many institutional investors who no longer prefer that model’’.

The split of MIG puts its remaining nine roads into two separate funds: the Australian M7 Westlink and Toronto’s 407 ETR make up good MIG. The other seven—the M6, the Chicago Skyway, the Indiana Toll Road, the Dulles Greenway, APRR,Warnow Tunnel and South Bay Expressway—are bad MIG.

Johnson, a former deputy chair of Macquarie Group, provided the rationale for not only paying Macquarie, but paying it more as a percentage of assets to manage bad MIG.

‘‘Macquarie is one of the preeminent global organisations with regard to the management of infrastructure assets,’’ Johnson said.

‘‘Consequently it was a logical decision for the board that Macquarie be enlisted to help generate value for security holders.’’

(Note to board: the problems for MIG’s security holders have occurred under the watchful eye of these selfsame managers.)

MIG is the latest in a series of transactions as it substantially exits or re-structures its funds: Macquarie Capital Alliance Group via privatisation, Macquarie Leisure removing Macquarie as manager, the sale of Macquarie Communications Group, Macquarie Countrywide’s sale of US assets and Macquarie Airports punting Macquarie as manager.

On the way out, Macquarie has come under scrutiny for its exit strategy, with further related-party transactions and hefty exit fees as the funds’ boards confront costly poison pills. Macquarie sold MCAG to a related fund, collecting fees along the way.

Macquarie Countrywide sold assets, paying fees to Macquarie. Macquarie Group collected a separate fee from the buyers of Macquarie Communications Group for its management rights.

Macquarie also found itself in a storm of investor discontent when Macquarie Airports revealed it would pay a $345 million exit fee to the mothership as an exit fee.

The underperforming Macquarie Media Group also this week revealed plans to internalise its management agreement, cutting ties with the mother ship at a cost of $45 million, plus a $2.8 million advisory fee and the chance of another $11 million in management fees until the deal is finalised.

Even though a shareholder vote was all that was required, had Macquarie been removed as manager, a poison pill would have been activated in the form of a similar 1.5 per cent base fee plus a performance fee.

Yesterday MIG’s lead independent director, Paul McClintock, said the MIG transaction had been a different transaction from MAP’s exit.

He refused to comment on whether negotiations on the $50 million fee had included a demand from Macquarie to be compensated for its loss of management rights for the good MIG assets.

Johnson said that two agreements over ‘‘active’’ MIG assets would not need to be triggered because Macquarie retained management of active MIG.

Now eyes are turned towards Macquarie Group to find out how Moore intends to replace its lost revenue streams.

As noted, the stop-gap measure has been to put the squeeze on its listed funds.

Tim Buckley, head of research at Shaw Stockbroking, said Macquarie booked $414 million in fees from listed fund initiatives, including internalisation, sales and recapitalisations at Macquarie Communications Infrastructure, Macquarie Leisure and Macquarie Airports.

‘‘Clearly they’re booking significant profits at the expense of the listed vehicles that they’ve run for a long time,’’ Buckley said yesterday.

‘‘(They are) forgoing a long-term earnings stream but the reality is that it’s now history.’’ And that new reality may have some implications for shareholders in funds that, to the present time, have had Macquarie as one of their largest shareholders.

Johnson and McClintock said yesterday the MIG deal did not include any arrangement about Macquarie’s 17 per cent stake.

Buckley said Macquarie could be expected to eventually exit its stakes over time.

‘‘They’ve got $500 million in capital tied up in the vehicle . . . they recycle capital pretty aggressively,’’ Buckley said.

When those sell-downs occur, it’s vale the Macquarie Model.

© 2009 The Age: www.smh.com.au.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"Hank Gilbert has the only transportation plan out there among challengers to Rick Perry from either party."

2009-10-30T20:02:00.000-07:00

Will voters buy a tax increase for roads?

10/30/09

Rodger Jones/Editorial Writer
The Dallas Morning News
Copyright 2009

And maybe put a guy like Hank Gilbert in the governor's office?

The rancher Democrat announced his transportation plan yesterday in Fort Worth, including an 8-cent gas-tax hike and permanent indexing of the tax to cost of construction.

It came on the same day as doomsday scenarios laid out elsewhere in Fort Worth, before the Texas Transportation Commission. Money for roads continues to slide by the billions as cars use less fuel.

Coincidentally, regional transportation guru Michael Morris suggested to commissioners that traffic and roads might get so bad that voters could end up supporting raising taxes for roads.

Enter Gilbert. Does he have a chance with voters with his tax plan, as Morris might suggest? One trade-off Gilbert offering is to make it very tough to get more toll roads built. He has strong backing of anti-tollers across the state.

Gilbert said his gas tax plan would cost the average commuter between $1.20 and $1.60 a fillup. Say that's $10 a month for a lot of people. It could sound like a bargain for those who pay as much in tolls as they do to the electric company each month. A Frisco resident who commutes downtown on the tollway pays more than $8 a day if they have a TollTag.

Other things to like about Gilbert from the standpoint of local transportation officials: He is bullish on mass transit. (Aside: That could win him points with this newspaper's editorial board, considering our years-long push for expanding regional rail transit.)

The Gilbert plan says:

Improving and further integrating additional transit models into Texas' transportation infrastructure makes both financial and environmental sense. Hank proposes making more state funds available to cities to improve existing transit systems in the state's major metropolitan areas.
Hank also proposes funding more "ring line" transit routes and commuter/light rail systems to allow commuters to travel around a city's center without going through it, and connecting these ring lines to existing transportation infrastructure to make public transportation more efficient and consumer-friendly. ...

Hank proposes expanded high speed commuter rail lines. Hank proposes funding to allow cities with large suburban populations to create (or expand) commuter rail to help commuters get in and out of major metro areas faster and more efficiently.

Like it or not, Gilbert has the only transportation plan out there among challengers to Rick Perry from either party.

© 2009 Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

“I think the city is talking out of both sides of its mouth. The city wants to use the defense they won't allow citizens to use.”

2009-10-30T11:59:00.000-07:00

City's defense for not paying up sounds familiar

Explanation for toll-road fines is the same one Houston rejects when motorists contest red-light violations

10/30/09

By JAMES PINKERTON
Houston Chronicle
Copyright 2009

The city has avoided paying county toll road fines using a defense it does not want motorists to use when contesting red-light camera violations.

Earlier this week, city officials again asked Harris County Commissioners Court to help them collect millions by blocking the registration of vehicles involved in red-light camera violations in which the fines have not been paid. Meanwhile, Harris County Toll Road Authority lawyers were continuing a fruitless effort to make the city pay tolls racked up by more than a hundred non-emergency city vehicles.

A city finance official claimed the toll fines are owed by the individual employees rather than the city, which owns the vehicles.

But the city's efforts to block registrations are aimed at the owners of vehicles involved in red-light camera violations.

“I think the city is talking out of both sides of its mouth. The city wants to use the defense they won't allow citizens to use,” Precinct 3 Commissioner Steve Radack said.

“They need to be better neighbors,” said Precinct 2 Commissioner Sylvia Garcia, adding that the only exemptions from the toll fees are for firetrucks, ambulances, law enforcement and military vehicles. “The city of Houston should make good on this and find a way to pay these dollars that are owed on any of their vehicles.”

A resolution appeared to be in the works Thursday, although how much is owed may be in dispute.

Frank Michel, a spokesman for Mayor Bill White, said the city will pay the toll road authority fines and is taking action to improve its internal monitoring of citations issued to non-emergency vehicles.

“It is our position the city is responsible to make sure these fines are taken care of,“ Michel said. “Our internal policy is to hold the driver responsible or accountable, and we haven't done a good job of doing that and we're going to work on it.”

He added: “Whatever is owed outstanding, we are working with the county to get it resolved .”
How much is owed?

Toll Road Authority spokesman Eric Hanson said there are 552 violations involving unpaid tolls for 122 different vehicles owned by the city. To date, the city owes $13,851 in unpaid tolls, fines and collection fees, he said.

Michel said the city's tally showed 81 vehicles totaling about $1,000 in tolls, along with fines and penalties of about $11,000.

Last Friday, four days before city officials went to Commissioners Court seeking approval of a contract to block the registration of vehicles of red-light camera scofflaws, a city finance employee sent an e-mail to the county attorney's office.

“Harris Co. have (sic) been sending individual tickets without pictures (no proof) and expecting someone to pay,” finance department employee Al Owens wrote. “That someone would be the driver and not the City of Houston. The City of Houston is not responsible for tickets incurred by employees with city vehicles.”

He also wrote that it would be impossible to determine who was driving the city vehicles at the time of violations.

The e-mail was in response to a demand earlier that day by Assistant County Attorney Clarissa Bauer, who informed Owens the Texas Transportation Code requires the Toll Road Authority to send the delinquent notice to the registered owner of the vehicle, not the driver.

“HCTRA has hundreds of photographs of City vehicles using the Toll Road system without paying,“ Bauer wrote, adding, “For years, HCTRA has been sending violations notices to the City of Houston but the City has failed to pay.“ Bauer said some fines have been sent to a law firm for collection.

james.pinkerton@chron.com

© 2009 Houston Chronicle: www.chron.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"An extremely ambitious experiment."

2009-10-28T18:38:00.000-07:00

Feds to Convince DC Area Taxpayers to Embrace $4.8 Billion Mileage Tax

Washington, DC regional officials seek federal gas tax money to study political implication of $4.8 billion mileage tax on motorists.

10/28/09

TheNewspaper.com
Copyright 2009

Officials are looking to convince residents in the Washington, DC metropolitan region that converting local streets into toll roads would be good for them.

The National Capital Region Transportation Planning Board last Wednesday voted to seek federal gas tax funds to bankroll a $400,000 study on how best to sell the public on a controversial per-mile tax proposal that would raise up to $4.8 billion in new revenue.

"A comprehensive road-use pricing initiative in the Washington metropolitan area would be an extremely ambitious experiment," Brookings Institution authors Benjamin K. Orr and Alice M. Rivlin explained in a policy paper designed to garner the interest of regional authorities.

"Leadership and upfront investment from the federal government would also be essential to get the experiment off the ground and ensure comprehensive implementation. Some recent indications of interest at the federal level suggest that this might be possible. Transportation Secretary Ray LaHood has recently stated that, due to the failure of the Manhattan congestion pricing initiative, the US Department of Transportation still has funds available for pilot congestion pricing programs."

Brookings, a left-wing think tank, will complete the study entitled, "Public Acceptability of Regional Road Pricing: Can it be Designed to Garner Public Support?" by December 2010, presuming the Federal Highway Administration (FHWA) approves the request. The funds will pay for a series of telephone surveys and focus groups with residents and special interest groups with an eye to determining how best to package ideas that have generated significant public opposition when proposed in other areas around the world.

In the UK, for example, 1.8 million residents signed an official Downing Street petition urging the prime minister to scrap plans to implement a GPS-based mileage tax. In Manchester, 79 percent voted against congestion charging in a referendum last year as 74 percent of voters did in Edinburgh, Scotland in 2005. The proposed Washington toll system raises many of the privacy concerns identified by UK opponents of congestion charging.

"Vehicles would be fitted with a GPS transponder device similar to an E-ZPass, perhaps as part of the registration process," Orr and Rivlin explained. "This device would record the type of vehicle, the distance traveled, and the time and location of travel."

Despite the privacy issues, DC officials insist that tolling is necessary for making up for the shortfall in gasoline tax revenues. The proposed mileage tax would solve this problem by increasing motorist taxation levels by a factor of ten. The additional revenue would be diverted to spending on buses and rail service.

"State gas taxes raise approximately $420 million in the Washington urbanized area every year," Orr and Rivlin wrote. "Revenues from the road-use pricing scheme described above would be between $2.96 billion and $4.79 billion, depending on the average fee... Net revenues could be split between improving mass transit (particularly buses), a need-based refund or discount, and roadway maintenance."

The federal and state excise tax is only one component of money raised from motorists in the DC and its Maryland and Virginia suburbs. Other taxes imposed on motorists include Virginia's personal property tax on automobiles, vehicle licensing and registration fees, a tax on car insurance, special taxes on commercial vehicles, as well as parking and speeding tickets. The total of all motorist-related taxes in Virginia exceeds the amount spent on road building and maintenance in the state, according to TheNewspaper's analysis.

Copies of the tolling resolution and Brookings report are available in a 600k PDF file at the source link below.

Source: Approval of Submission of a Value Pricing Grant Proposal (Metropolitan Washington Council of Governments, 10/21/2009)

© 2009 TheNewspaper.com: www.thenewspaper.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE

"There is a viable non-tolled option."

2009-10-28T16:51:00.000-07:00

Viewpoint:

Reasons non-toll option is best bet for MPO

10/28/09

By Tommy Adkisson - Guest Commentary
San Antonio Express-News
Copyright 2009

Here are just some of the reasons why I believe the non-tolled option in our Metropolitan Planning Organization short- and long-range plans is so important:

The only way to have a non-tolled option considered is to have our plan reflect that.

Seemingly endless court battles over economic and environmental issues that must be addressed under the National Environmental Policy Act.

There is a viable non-tolled option. Using the 2005 Zachary proposal and actual cost of the three-mile plan used by Clay Smith on Oct. 9 at the TAC meeting yields a $26 million per mile cost and, when multiplied by this project's length of 7.8 miles, equals a total project cost of $202.8 million.

In contrast, the Regional Mobility Authority has yet to justify its much larger projected cost of $475 million, $70 million of which accrues to acquisition of right of way. Because the RMA is taking over a portion of the state highway system, it is obligated to pay the right of way costs. By contrast, the MPO does not have to pay right-of-way costs for a non-tolled scenario because TxDOT has its own separate fund for right of way.

On Oct. 19, the RMA testified that they plan to enter into risky multi-leveraged debt financing of the Texas Mobility Fund money in order to finance the toll road. This is the sort of multi-leveraging (second, third and fourth mortgages) that created the financial crisis we have experienced of late nationally.

Just for the total interest on the $330 million in toll revenue bonds alone, the RMA said it needs $864 million over 40 years!

The minimum toll project cost is $1.3 billion.

The U.S. 281 market valuation says the toll plan requires 200,000 cars per day in the out years in contrast with an existing 86,000 cars per day, on average. As if these assumptions requisite for this toll plan's solvency were not risky enough, the requisite level of traffic guarantees ongoing legal battles over environmental impacts to our aquifer.

I am asking for your support for the non-tolled option. I look forward to working with you to move our community forward.

Tommy Adkisson, Bexar County Commissioner for Precinct 4, can be reached at 100 Dolores, suite 1.2, San Antonio 78205, by e-mail at tadkisson@bexar.org or by calling 335-2614.

© 2009 San Antonio Express-News: www.mysanantonio.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE