HB 2861 - Coalition Opposed to CDAs, P3s & More Toll Roads

April 17, 2017

The Hon. Governor Greg Abbott
The Hon. Lt. Governor Dan Patrick
The Hon. Speaker Joe Straus
The Hon. Members of the Texas State Legislature

Thank you for serving the great State of Texas! We understand that you have an enormous job as you work to address significant challenges and numerous issues critical to our state.

Please be advised that a broad coalition of leaders of grassroots groups across Texas and citizens stand with us in strong opposition to HB 2861 and all related bills that approve any type of Comprehensive Development Agreements (CDAs) or public private partnership toll projects. A signed statement detailing this significant block of opposition is attached; however, we, and the signers of this letter, do not stand alone in our opposition to CDAs and P3s.

The opposition is actually bi-partisan and spelled out in both the state Democratic and Republican Party Platforms. 2016 Texas Democratic Party Platform, page 13: “We oppose foreign-owned U.S. toll roads that require Americans to contribute to the balance-of-trade deficit when they travel on local roads.” On page 21 of the 2016 Texas GOP Platform, you will find:

Toll Roads — We believe that tolls should come off the road when the debt is retired, and if debt is ever restructured or refinanced, the pay-off date needs to remain the same or receive voter approval in order to extend the toll tax longer. Maintenance should then revert to the Texas Department of Transportation (TxDOT). We oppose public-private partnerships, specifically regarding toll projects. We oppose conversion of existing roads or lanes to toll roads.

Toll Road Funding — We oppose the use of taxpayer money to subsidize, guarantee, prop-up, or bail out any toll projects, whether public or private, and we call upon both state and federal lawmakers to adequately fund our highways without hidden taxes, tolls, or raiding emergency funds.

Additionally, in campaign ads and again when addressing the September 23, 2015, Transportation & Infrastructure Summit, Governor Greg Abbott said his plan for transportation, which calls for ending diversions, “adds billions for new road construction without raising taxes, fees or tolls. We pay for it by ensuring that money dedicated to roads will be spent only on roads.”

Ladies and gentlemen of the legislature, while we may not agree on everything, authorizing CDAs should be one thing every legislator abhors. A plank opposing such toll projects appears in BOTH the GOP and Democratic platforms for good reason – CDAs are the most expensive, oppressive, and anti-liberty type of toll project. Evidently, our Governor is not fond of this funding scheme either.

Please don’t hesitate to contact us with questions, concerns, or suggestions.

Sincerely,

Coalition of Texas Grassroots Leadership & Citizens
Opposed to CDAs, P3s & More Toll Roads

April 17, 2017

The Hon. Governor Greg Abbott
The Hon. Lt. Governor Dan Patrick
The Hon. Speaker Joe Straus
The Hon. Members of the Texas State Legislature

A strong coalition of grassroots leaders and their members from across Texas urge you to oppose HB 2861 and any legislation that contains a Comprehensive Development Agreement or public private partnership toll project. Frankly, we were shocked – based on the public’s hostility toward toll roads and the Governor’s well-documented opposition to more toll roads, that HB 2861 would get a hearing before a SINGLE toll road reform bill! We respectfully lay out the following reasons we strongly oppose continuation of these schemes:

Issue #1: Eminent domain for private gain.

> Texans are vehemently opposed to eminent domain for private gain. While these private toll corporations do not have the direct power to condemn land, they gain access to the governmental power of eminent domain for their private, for-profit toll projects. Public-private partnerships blur the line between public use and private use and give cover for what amounts to private, for-profit ventures under the guise of a public use — a road. This erodes and threatens the property rights of every Texan and cannot be tolerated in a free society.

Issue #2: Require massive public subsidies that amount to corporate welfare.

> Every Texas CDA has required public money. Examples: SH 130 – $430 million federal TIFIA loan. I-635 – $490 million in state gasoline taxes, plus $1.4 billion in federally backed TIFIA and PABs. North Tarrant Express/I-820/SH 121 & 183 – $590 million in state gasoline taxes, plus $1 billion in federally backed TIFIA and PABs. SH 288 – $17 million in state funds, plus $657 million in federally backed TIFIA and PABs. (SOURCE: Federal Highway Administration, Office of Innovative Finance Support, Project Profiles)

When the taxpayer is footing the majority of the bill and then is asked to repay their own money back with interest, plus profit for a private toll company, it’s offensive, enormously expensive, and Texans have said ‘No!’ from the beginning. This is corporate welfare on a massive scale with the private equity firms putting in a tiny fraction of their own money and the majority of funding still coming from taxpayers.

Issue #3: Punitively high toll rates.

> There is no cap on how high toll rates can go in a CDA arrangement. No elected official approves the toll rates — they’ve outsourced that job to unelected bureaucrats at TxDOT. The state simply gives a green light to a toll rate ‘methodology’ that imposes dynamic pricing, which allows tolls to rise and fall based on the level of congestion on the roadway. This gives private companies free-rein permission to charge whatever they want in order to maintain the arbitrarily chosen speed and performance requirements (usually 50 MPH). If that means the toll is $1 a mile in peak hours, then that’s what they’ll charge! Once that contract is signed, no elected official can step-in to give taxpayers relief from such punitively high toll rates. This kind of legislature-endorsed highway robbery hurts families and small businesses!

Commuters in the Metroplex already report having to pay $30-$40/day to take the North Tarrant Express and LBJ toll lanes to get to work in peak hours. This is an unacceptable level of taxation, and it’s the fastest ticket to destroying the Texas economic miracle. CDAs allow elected officials to outsource the business of tax hikes to a private company that the public cannot hold accountable. It’s the biggest taxation without representation scheme to hit public infrastructure since the railroad robber barons!

Issue #4: Gotcha provisions that come back to haunt commuters. These corporations have an army of lawyers to ensure their investors get a return on their investment, so aside from the public subsidies, they find creative ways to further socialize every potential loss through compensation events, non-compete clauses, manipulation of speed limits on free routes, and adverse event triggers.

Texas taxpayers are also paying to subsidize truck toll rates to get truckers to take these toll roads ($18.7 million/yr, per TxDOT Minute Order #114528, March 2016). While the subsidies only technically apply to TxDOT’s section of SH 130, it still provides indirect relief to the private section of SH 130 by increasing the number of truck toll payers. Private equity firms also force taxpayers to pay for other losses like uncollectible tolls, and they use the state as their toll collector – giving them access to the power to block vehicle registration for failure to pay a toll.

Giving that kind of power to private corporations that the people cannot hold accountable gives up the state’s sovereignty over our public infrastructure and critical corridors that are the very lifeblood of the Texas economy — like Interstate-35 that has segments that run through Dallas, Austin, and San Antonio in HB 2861. No elected official should ever vote to cede control of our public infrastructure and hand the keys of the Texas economy over to private corporations simply because they want to get a project built.

Prioritize the new Prop 1/Prop 7 funding that the voters overwhelmingly approved, and get these major bottlenecks fixed without harming commuters and WITHOUT RAISING TAXES through tolls, as Governor Greg Abbott promised in his Texas Clear Lanes Initiative (Press Release, September 2015).

(SOURCE: SH 130 segments 5 & 6, I-635, and North Tarrant Express CDA contracts.)

Issue #5: Excuses, excuses, excuses — ‘CDAs are the only way to fund the big projects’

Through Prop 1 and Prop 7 and ending non-education diversions, TxDOT now has approximately $5 billion more in funding per year. The people were promised if they voted for Prop 7 in 2015, there would be plenty of funding for transportation. No more toll roads and no more debt is what we were promised. To refresh your memory about the promises, we encourage you to review the Texas Infrastructure Now Investing in Our Future website at https://www.infrastructuretexas.org/prop-7/

Yet, the very next legislative session after the passage of Prop 7, we’re still being told none of the major projects can be fixed without more debt and tolls, particularly CDAs. This is in direct contradiction to what the Governor (and other officials) promised and what the voters voted for when they approved Prop 1 & Prop 7. One of our strongest and most well known grassroots leaders has even gotten a call from a member of the Transportation Commission asking her if she could support either raising the gas tax or more low interest debt!

At the local level, we hear even more excuses. For instance, Garland elected officials testified before the House Transportation Committee April 12, stating there was ‘no way’ to get LBJ E done without a CDA. Yet, Senator Bob Hall’s bill, SB 84, would utilize the state’s portion of the sales tax adjacent to the highway to pay for the road improvements on LBJ E. But rather than support his Expiring Revenue Enhancement (ERE) bill and coming to Austin to advance this solution that doesn’t raise taxes, local officials came to Austin to advocate for increasing taxes and putting the power to impose toll taxes in the hands of a private company the taxpayers cannot hold accountable. This is outrageous!

We respectfully remind you that in October 2014, the Texas Legislative Council documented that the cost to build Texas roads actually DOUBLED from 2003 (pre-toll road era) to 2013, while the national highway cost increase over the same period was just 12%. This demonstrates just one more reason special interests continue to push tolls despite public opposition. Tolls drive up the cost to build, necessarily putting more money into the pockets of road builders at great expense to Texas taxpayers. By continuing on this path, the price tags on these big projects are made to look so out of reach that it causes legislators to cave to tolls because they perceive it’s the only way to get a project done. By rejecting this toll-debt-increased cost spiral, you can help put the cost of road building back in line with the national average and force project costs to return to more reasonable levels!

We, the undersigned, understand the tricks and the excuses, and many of us have read the Sunset Advisory Commission’s most recent report on the Texas Department of Transportation. From any reasonable person’s analysis, the report is damning in its acknowledgement of what we already know: — TxDOT has a reputation for “persistent over-time and over-budget highway projects.” The Report flatly states, “As currently structured, TxDOT’s project development process is not meeting expectations and is not prepared to effectively handle the influx of new transportation funding projected to double over the next decade.”

Knowing this, it is utterly amazing that TxDOT has been allowed to consume all of the Prop 1/Prop 7 funds on low priority projects and thus put lawmakers in a box to push CDAs and force them to cast a bad vote to raise taxes in order to get Texas’ most congested roads fixed.

Not using Prop 1/Prop 7 as the Governor promised and as the voters intended is a violation of the public trust. We ask you to decisively act to protect taxpayers from further betrayal and misuse of billions in new road funds by first rejecting HB 2861.

We thank you for your service to the great state of Texas. In order to keep Texas an economically sound and an attractive place to live, work, and raise a family, the legislature must protect Texans from this oppressive level of taxation, restrictions on freedom to travel, and loss of sovereignty over public infrastructure that occur with CDAs. Feel free to contact us with any questions or concerns.

Sincerely,