PPP planned for Oregon bypass through farmland

Link to article here.

It shouldn't surprise that the pro-toll crowd sees farmland as fair game fro condemnation for toll roads and preferable to residential and commercial property. With this attitude, how will we feed America if we continue to pave over our country's farmland to make way for urban "congestion relief"? The Trans Texas Corridor is a perfect case in point. Studies showed that a bypass through rural Texas would do NOTHING to relieve urban congestion.

It was too out of the way, plus the fact that people would have top pay a toll to access it, made traffic volumes too low to be toll viable. Yet to listen to this industry article, they live in a world of their own reality. One that promises rosy traffic projections but will likely end in massive taxpayer bailouts when the road goes belly-up as the South Bay Expressway PPP contract just did in San Diego.

Oregon businessman, engineer developing P3 for I-5 to 99W connector
Fri, 2010-04-09
Toll Road News

A group of local businessmen, engineers and roadbuilders in Oregon are developing an approximate 20km (12 mile) $350m to $400m tollroad project designed to improve connections between Portland and the coast. Called the Coastal Parkway the project would provide a high quality connection between I-5 and the 99W or Southwest Pacific Highway near Dayton. They hope to get a toll concession from the state under its Public Private Partnerships law of 2009.

Principals of the group Coastal Parkway LLC are Bob Youngman, a developer based in Newberg and Phil Martinson PE, a consulting engineer. Also involved are some local construction companies.
We had a long talk with Youngman this afternoon.He says the new P3 law in the state is a great improvement on previous law, and he has been encouraged by support offered for the project by state and local officials.

He says the project is sorely needed but state and local officials say there is no prospect for financing the project with tax revenues.

They also have no stomach for taking it on as a public toll project.

Oregon is one of the few states in the union without any toll road or crossing.

Previous studies

The 99W corridor has been studied several times in the past for upgrades.

It is currently a 4-lane surface arterial with little access control and no grade separations. Previous planning for upgrades has focussed on sticking close to the southwest-northeast axis of 99W and bypassing the towns of Tualatin, Sherwood, Newberg and Dundee. The bypasses have been studied right on their fringes, and sticking to the north side of the Williamette River.

This is a corridor about 40km (25 miles) long but quite heavily developed and the improvement to expressway standard was costed at close to $1 billion for the length of the corridor.

Concession with Macquarie only generated study

Macquarie and Bechtel competed for a toll concession for this route (and for two others around Portland area) in 2005 and Macquarie won.

But Macquarie concluded in 2007 the traffic and revenue wouldn't support the cost of the 99W bypass upgrade. The project languished.

More economical than the fringe bypassing

Youngman says his group's proposal is far more economical because rather than attempt the fringe bypasses along 99W, it makes use of some 22km (14 miles) of I-5 south to the Donald/Aurora area and involves a much shorter new east-west tolled link through rural land to meet 99W in Dayton.

That proposed east-west link is being called the Coastal Parkway.

Five alternative alignments are being shown at meetings. They range in length between 18km (11.3mi) and 23km (14mi). The longer alternates take off from I-5 further north but make for a slightly shorter run Portland to the coast, although because of the dogleg of using I-5 all are a few miles longer than the old plan for hugging the towns of the 99W corridor.

An advantage however is that they involve almost no resumption of residential or commercial properties like the fringe bypass plans, since the routes for the Coastal Parkway go through farmland.

Williamette River bridge

They do involve a decent sized bridge over the Williamette River. This has to have a span of around 180m (600ft) so it would probably be a cable-stay bridge. However the river is not used by major ships and the Coast Guard only requires a clearance of 15m (50ft).

Otherwise the Coastal Parkway involve three interchanges, one at each end, I-5 and 99W and another at River Road NE serving the small town of St Paul. They also propose a recreational bike/hike trail along the river.

With just one intermediate interchange there would be just two toll points and all-electronic tolling sounds the likely choice.

Youngman says they estimate project cost will be in the range $350m to $400m - less than half the cost of previous schemes in the 99W corridor itself.

The route should attract 99W car travelers between the Portland area and the coast plus a lot of lumber, chip, plant nursery, and produce trucks as well as motor coaches. Indian reservations at Grand Ronde to the southwest have tourism and casino activities swerved by coaches.

Traffic volume

As for traffic volume they are confident that the tollroad can attract more than the 24k vehicles/day they estimate is the break-even traffic for the project.

Youngman, who was born and raised and is still based in the Newberg area, says the congestion is so bad through the small towns along 99W that economic opportunities are limited. He says the project is gaining support with the promise of traffic relief and improved travel for the cities and towns of Newberg, Dundee, McMinnvile, Dayton, StPaul, Lafayette and Donald.

He is interested in partnering with larger companies.

pdf of a powerpoint presentation by Coastal Parkway LLC:

http://www.tollroadsnews.com/sites/default/files/PowerPt.pdf

Contacts Youngman This email address is being protected from spambots. You need JavaScript enabled to view it. Martinson This email address is being protected from spambots. You need JavaScript enabled to view it.

Transportation Secretary: End to favoring motorized transportation with gas taxes

Link to article here.

Perhaps the most disturbing part of this policy shift is that we already have a litany problems caused by diverting gas taxes AWAY from roads. Diverting yet more money away from roads is stealing from Peter to pay Paul. We pay gas taxes to build and maintain our roadways. It's supposed to be a dedicated fund that cannot be touched for other purposes. Mass transit, bike lanes, walkways need to be paid for through other means, particularly when the road funding shortfalls have caused massive new tax hikes through tolling (75 cents a mile to drive our public roads compared to 1-2 cents per mile under the gas tax system).

LaHood's cavalier attitude about government intrusion and its attempts to coerce people out of their cars by starving their gas taxes to pay for non-road uses is equally disturbing.

“It is a way to coerce people out of their cars,” said LaHood...“About everything we do around here is government intrusion in people's lives...So have at it.”

Obama Transportation Secretary: ‘This Is the End of Favoring Motorized Transportation at the Expense of Non-Motorized’
Wednesday, March 24, 2010
Terence P. Jeffrey, Editor-in-Chief
CNS News.com

(CNSNews.com) - Transportation Secretary Ray LaHood has announced that federal transportation policies will no longer favor “motorized” transportation, such as cars and trucks, over “non-motorized” transportation, such as walking and bicycling.


LaHood signed the new policy directive on March 11, the same day he attended a congressional reception for the National Bike Summit, a convention sponsored by a bicycling advocacy group, the League of American Bicyclists. LaHood publicly announced his agency’s new direction four days later in a posting on his blog—“Fast Lane: The Official Blog of the U.S. Secretary of Transportation”--where he effusively described it as a “sea change” for the United States.

“Today, I want to announce a sea change,” LaHood wrote. “People across America who value bicycling should have a voice when it comes to transportation planning. This is the end of favoring motorized transportation at the expense of non-motorized.”

LaHood’s policy statement not only called for this change to take place in programs funded by the federal government, but also said the federal government would “encourage” state and local governments to do the same in their own programs.

“The establishment of well-connected walking and bicycling networks is an important component for livable communities, and their design should be a part of Federal-aid project developments,” said LaHood's policy statement.

“Because of the benefits they provide, transportation agencies should give the same priority to walking and bicycling as is given to other transportation modes,” it said.

LaHood's policy statement envisions the development of a transportation system in which people walk and bike for short distances and rely on mass transit for longer trips. “The primary goal of a transportation system is to safely and efficiently move people and goods,” said LaHood's statement. “Walking and bicycling are efficient transportation modes for most short trips and, where convenient intermodal systems exist, these nonmotorized trips can easily be linked with transit to significantly increase trip distance.”

On May 21, LaHood told reporters at the National Press Club that the “Partnership for Sustainable Communities’ his department had formed with the Environmental Protection Agency and the Department of Housing—sometimes known as the “livability initiative”--was designed to “coerce” people out of their cars.

“Some in the highway-supporters motorist groups have been concerned by your livability initiative,” said the moderator at the National Press Club event. “Is this an effort to make driving more torturous and to coerce people out of their cars?”

“It is a way to coerce people out of their cars,” said LaHood.

The moderator later asked: “Some conservative groups are wary of the livable communities program, saying it's an example of government intrusion into people's lives. How do you respond?”

“About everything we do around here is government intrusion in people's lives,” said LaHood. “So have at it.”

Motorists now pay a federal tax of 18.3 cents on every gallon of gasoline they buy, and 24.4 cents on every gallon of diesel fuel. These taxes fund the federal Highway Trust Fund. According to a study by the Heritage Foundation, 26 percent of the money in this trust fund was diverted in fiscal 2008 to pay for things other than highways and roads. Of the total of $52 billion spent that was spent that year, $9.7 billion went to mass transit, even though mass transit passengers accounted for only 1.6 percent of surface-transportation passengers. The highway trust fund also gave $80 million that year to build trails.

Trinity toll road farce


Link to article here.

TxDOT insisted NO work could commence to retrofit decaying bridges near the Trinity River in Dallas unless the Trinity toll road was built first. Now they've changed their tune saying work CAN begin on the unsafe overpasses BEFORE the Trinity toll road is built. So once again, TxDOT used deceptive tactics to force voters into supporting an unwanted toll road only to do a bait and switch post-election.

This is why insisting on a public vote on toll roads is a recipe for failure. The big money armed with the aid and comfort of a corrupt highway department know how to get these ill-conceived projects past the voters. If nothing else, they know it's a waiting game...they won't fix our roads and we'll be stuck in endless gridlock until we finally capitulate to their toll agenda.

TxDOT: Key phase of downtown Dallas road project can start Trinity toll road

Saturday, April 3, 2010
By RUDOLPH BUSH and STEVE THOMPSON / The Dallas Morning News
Part of the city's tangled Mixmaster interchange downtown, including two key bridges spanning the Trinity River, can be rebuilt without constructing a toll road through the Trinity levees, a top transportation official told regional planners and elected officials Friday.

Bill Hale, Dallas district engineer for the Texas Department of Transportation, said the city and state need to move forward with rebuilding the bridges over Interstate 35E and I-30 because they are rapidly deteriorating.

He urged Dallas officials to focus on finding funding for those projects as soon as possible.
The Mixmaster interchange is a key piece of the $2 billion Project Pegasus, which city and state officials have long said could not get under way until the toll road between the Trinity levees was built.

Speaking to the Dallas Regional Mobility Coalition, Hale said Friday that was TxDOT's view for many years.

"We knew the best way to get it built was to have the extra lanes built first, meaning the Trinity [toll road], then secondly coming in with the Pegasus project," Hale said.

The condition of the bridges has changed that, he said.

"The issue that we're working with on this thing [now] is the safety of the thing. And that's what I'm concerned with," he said.

City officials hope to replace both concrete bridges with soaring white steel bridges designed by famed Spanish architect Santiago Calatrava.

Calatrava has designed the I-30 bridge, also known as the Margaret McDermott Bridge. The I-35E bridge has yet to be designed, and neither is funded for construction.

In 2007, during the run-up to a referendum that would have killed the toll road, backers of the road repeatedly cited transportation officials' tying of funding for Pegasus to completion of the toll road.

In a November 2007 article in The Dallas Morning News, Timothy Nesbitt, a Transportation Department project manager, said the toll road was the key to nearly $5 billion in other badly needed highway improvements in downtown Dallas.

"Without the Trinity, the other projects go away," he said.

And in an opinion piece in The News, Mayor Tom Leppert, who led the successful fight for the road, wrote that "TxDOT has flat out said it will not proceed with the state and federally funded Project Pegasus, the Mixmaster fix, if a reliever route – the Trinity Parkway – isn't in place."

Now, it appears the Transportation Department is eager to go forward with much of the Mixmaster – which includes the I-35E and I-30 interchange southwest of downtown – even if it cannot yet construct the entire Pegasus project. This portion would cost an estimated $500 million to $600 million, or more than a quarter of the cost of Pegasus.

Hale said the toll road or some other reliever route must be built before the so-called Canyon – a depressed portion of I-30 south of downtown – can be rebuilt.

In an interview after his presentation, Hale said his comments weren't intended to represent a major shift in plans.

"It's not a shift. There are portions of the Pegasus that can't begin before [a reliever route] happens," he said.

Leppert and City Manager Mary Suhm said they too don't view Hale's recommendation on the bridges as a sweeping change to the project.

"Can we do stuff around the edges and periphery? Absolutely," Leppert said.

He compared reconstruction of the bridges to the city and state's decision to go forward with the reconstruction of Dead Man's Curve on the S.M. Wright Freeway. That was originally intended to be rebuilt in tandem with the toll road.

But opponents of the toll road, led by council member Angela Hunt, see it differently.

"First, it was we cannot do any part of Project Pegasus; we are going to lose hundreds of millions in funding" without the toll road, she said. "Now it comes to light that we certainly can get started on a major part of the project and move forward without having this detour in place," she said.

Hunt, who has long urged the city and state to complete the Pegasus project without the toll road, said the decision to move forward now flies in the face of representations by toll road backers during the 2007 campaign.

She said she believes that the toll road project – hampered not only by concerns about the safety of the city's levee system but also by a $1 billion funding gap – is dead, and that the Transportation Department has no choice but to move on with Pegasus now.

In her view, Hale's urging of the city to focus on funding construction of the bridges instead of the toll road is telling.

"TxDOT does not like to be on the wrong side of Dallas city politics. To even express that in conservative terms, I think, is pretty significant," she said.

Leppert called that blatantly false and said the city has been working constantly to secure funding for the bridges.

"You don't just do one thing at a time. In terms of the importance of the bridges, I was in Washington [recently] to make a push," he said.

Privatized toll road goes bankrupt using taxpayer money

San Diego's South Bay Expressway foreign-owned toll road has become the new poster child for the failed policy of road privatization. Up until now, most "conservative" and libertarian think tanks have promoted PPPs (public private partnerships) as the "free market" solution to road building. I've said all along it's no such thing. They're government-sanctioned monopolies and the Editorial Board of a leading conservative national newspaper, the Washington Times, agrees.



The editorial also notes the flaw in raising toll rates when traffic drops, which is the exact opposite of a free market response to fewer customers. To increase demand they need to lower not increase toll rates. Yet what did the North Texas Toll Authority, a publicly run toll entity (so this problem isn't just isolated to privatized toll roads), do when its toll road system experienced a decline in traffic? Raised its rates by 32%!



The new generation of toll roads that have relied on "innovative financing" (ie - taxpayer subsidized toll roads, often co-mingled with private money) find themselves consistently upside down on their debt despite the taxpayer bailouts that help front the construction costs. The foreign toll operator of the South Bay Expressway was one of the first to snag a federal, taxpayer-backed, low interest loan called a TIFIA loan (think public money for private profits). Now that the toll road went bankrupt, will the taxpayers EVER be paid back? The taxpayers long, sordid history of being fleeced by politicos who are nothing more than putty in the hands of special interests gives us the answer.


Taxpayer-funded lobbying for Wall Street's sweetheart deals



The Texas Department of Transportation (TxDOT) has twice directly lobbied Congress for PPPs, but also to relax any federal restrictions on them. Their latest lobbying push (see pages 5 & 6 here, draft only available, the final was adopted by the Commission but has not been posted on TxDOT's web site) tells Congress not to mess with Texas (let us do whatever we want, even if it means fleece our own citizens without their consent), yet it also asks them to aggressively fund the TIFIA loan program and other means to maximize the use of taxpayer money to subsidize private profits using these PPP toll roads.



Our insolent, taxpayer-funded highway department has become a wholly-owned subsidiary of the Chamber of Commerce, PPP crowd, particularly when Texas law specifically prohibits state agencies from using public money to lobby. TURF still has a pending lawsuit to stop TxDOT's illegal lobbying. Perry vetoed the bill the Texas Legislature passed last year, HB 2142, to close TxDOT's perceived loophole it exploited to wage PR campaigns to persuade the public to accept PPPs and the Trans Texas Corridor. However, the bill only sought to clarify that advertising toll roads to seek to change public opinion against toll roads was indeed illegal. The law still very clearly prohibits lobbying, yet onward TxDOT marches with impunity.



Our sold-out politicians are creating an infrastructure bubble that will be deemed "too big to fail" requiring even greater taxpayer bailouts if we allow this tax raid to continue. I have yet to see any data that shows increasing the cost of transportation (toll taxes on top of high gas prices) is good for the economy. All available data shows the opposite is true. When the cost of transportation goes up, driving and, subsequently, gas tax revenues go down, a principle that translates to toll roads. When the price of gas and or tolls go up, the usage of toll roads goes down.



Bogus traffic projections the norm with toll roads




Also, the Washington Times piece mentions a study TxDOT did that admits toll roads are based on FLAWED traffic projections (that are kept secret until after the contracts are signed). The foreign toll operator, Macquarie, based in Australia, was off by nearly 40,000 vehicles per day! Such overblown traffic forecasts are the norm with this new generation of toll roads, so much so that the bond investors and toll operators are suing the traffic modelers when the traffic projections are so obviously akin to a fairytale than reality.



The Editorial sums up why politicians like Rick Perry and his fellow so-called fiscal conservatives in the Texas Legislature support these deals -- outsourcing the tax hikes: "Bureaucrats and politicians turn to public-private partnerships because they, in effect, outsource unpleasant revenue-raising duties to private companies. As we see from the South Bay Expressway, the deals governments strike with companies to perform this task frequently are based on faulty, unsustainable assumptions."



Second mortgage on our highway system



Yep, government gets quick cash up front to build yet more toll projects in exchange for generations of debt and sky-high toll taxes in the hands of private companies to whom they defer all blame for the draconian tax hikes. This is precisely what we tried to stop in a bill that passed the Texas Legislature (SB 792) in 2007. SB 792 was the counterfeit PPP moratorium, which replaced a genuine moratorium, HB 1892 that was vetoed by Rick Perry, with the Governor's version that grandfathered the Trans Texas Corridor contracts along with close to a dozen others.



A provision known as market valuation also forced public toll entities to jack-up toll rates as high as the private ones using toll rates as high as the "market" will bear in order to suck some speculative future "surplus revenue" out of the deal up front so they could go spend the money, today, building more toll roads (leveraging these projects to the hilt, never mind that surplus revenue has yet to show-up using "innovative finance" techniques). It's like taking out a second mortgage on our public highway system using the worst and most costly financing schemes.



Housing bubble turned infrastructure bubble



Essentially politicians, at Perry and the banksters behest, enshrined in law known risky multi-leveraged debt financing schemes using OPM (other people's money)...YOURS AND MINE! It's the very same financial scheme (monetizing the debt and spreading its toxicity to the far corners of the markets) that brought down the housing bubble and required massive taxpayer bailouts of the banksters and brokers who orchestrated the thievery.



SB 792 allowed these traffic and revenue studies (toll viability studies that give the traffic estimates) to stay secret until AFTER the contract is signed. We tried to get lawmakers to remove this provision from the bill, and the amendment only got 19 votes (so much for OPEN GOVERNMENT, especially the kind that saves taxpayers money). This must be changed. We've long held that it violates federal law, the National Environmental Policy Act (NEPA), that requires the public and decision makers to be fully informed of the financial impacts of ALL the alternatives of a roadway project so it can properly weigh them and determine the preferred alternative.



Revealing these flawed traffic projections BEFORE going to contract will help taxpayers ferret out the truly viable (and sensible) toll projects from those that aren't, which are being propped up by HEAPS of taxpayer subsidies (gas taxes, Texas Mobility Funds, Prop 14, Prop 12, stimulus money, TIFIA loans, PABs, etc., up front) that end up going bankrupt anyway.

The failure of the San Diego South Bay Expressway PPP toll road in less than three years exposes the mythical "free market" concept of public private partnerships (called CDAs in Texas). It's a fad whose time has ended.

Proposed toll road through prime farmland in Oregon draws ire


Link to article here.

Sounds eerily familiar...the Trans Texas Corridor would also eat-up prime Texas farmland, the Blackland Prairie, and just one corridor would displace $1 million people. Wait till the Oregonians find out about non-compete agreements and guaranteed profits for these private toll road operators...

Proposed toll road south of Portland runs into opposition
By Dana Tims, The Oregonian
April 05, 2010

PARKWAY.jpgView full sizeSteve Cowden/The Oregonian A proposal to build Oregon's only privately financed and operated toll road, almost all of it crossing prime farmland south of Portland, is running into stiff opposition from local residents, farmers and elected officials.

Backers of the Coastal Parkway -- a proposed 11.77-mile four-lane highway linking Interstate 5 near Woodburn with Dayton in Yamhill County -- have been meeting quietly since last fall with landowners and officials in potentially affected towns. But their apparent goal of building grass-roots support, one willing seller at a time, doesn't seem to be working.

"I'm a little fascinated by their assertion that there is any support for this at all," Marion County Commissioner Patti Milne said. "We don't need a bypass here that does nothing but solve Yamhill County's traffic problems."

Milne and fellow commissioners Sam Brentano and Janet Carlson are scheduled to meet with parkway promoters April 15, "just to hear first-hand where things stand," she said.

When the idea of establishing toll roads came up in 2006 as a way to relieve traffic congestion in the Dundee area, the reaction from residents in the area was swift and clear. A new toll-road proposal also faces an uphill battle.Newberg businessman Robert Youngman, president of Royal Chinook Development Co., has, to date, been the parkway's most visible public spokesman. He met with Donald-area farmers at a local cafe March 13 and has made recent presentations to city councils and planners in Dundee and Newberg. Similar talks are set for later in April with councilors in St. Paul and Donald.

Reached at his Newberg office this week, Youngman declined to comment on a project that, if completed, would be only the third or fourth privately operated toll road west of the Mississippi River.

"We appreciate your call," he said. "We'll be in touch."

Phil Martinson, a West Linn civil engineer who has attended many of the same meetings with Youngman, said it's too early to say much about the project. "Hopefully, within a few weeks, I can give you something more," he said.

Youngman, according to meeting minutes, told Dundee City Council members in October that the Coastal Parkway's financial backers want to proceed because they don't believe the long-planned and publicly financed Newberg-Dundee Bypass will ever be built.

He tagged the Coastal Parkway's estimated cost at $260 million and said the limited-access roadway's preferred option would have only three interchanges -- at Interstate 5, at Oregon 219 north of St. Paul and at Oregon 18 near Dayton. The route crosses prime farmland in the French Prairie area of northern Marion County.

Without one or the other projects, he said, commercial and commuter traffic on Oregon 99W through Dundee will continue to remain hopelessly gridlocked.

Asked to identify the Coastal Parkway's financial supporters, Youngman listed Hampton Lumber, Evergreen Aviation, Cascade Steel Rolling Mills, the Oregon Trucking Associations and the Business Transportation Group.

Steve Zika, Hampton Lumber's CEO, said he wasn't familiar with details of the Coastal Parkway proposal, but said any alternative to the current congestion jamming Yamhill County's main highways would be welcome.

Bob Russell, executive director of the Oregon Trucking Assocations, said his organization "has not indicated its support for any alternative to the Newberg-Dundee Bypass, "nor have we provided any financial backing."

None of the other groups cited by Youngman as backers immediately returned calls.

Sterling Anderson, Marion County's planning manager, said that even if sufficient funding is found, the Coastal Parkway will run into significant legal and regulatory obstacles.

State requirements mandating that exclusive farmland remain in parcels of at least 80 acres, for instance, would have to be addressed, since a new road running through the middle of that land would create two parcels of 40 acres each, he said.

In addition, the need to build a new bridge crossing the Willamette River, and perhaps the Yamhill River, would present huge hurdles for developers.

"This would be the biggest, most significant land-use case the county has dealt with in my 26 years here," Anderson said. "And the biggest road project since I-5 was built."

State Transportation Department officials have sat in on several of Youngman's presentations, but said it's too early to assess the project's chances of success.

"We're treating it as if it were a private development," said Tim Potter, ODOT's Area 3 Region 2 manager. "When it's to the point they want to talk seriously about traffic impacts and the exact locations of tying into our road system, we'll roll up our sleeves and get serious."

Local residents, meanwhile, say that French Prairie farmland is not for sale, certainly not for a new highway.

"Farmers here are united," said Marcie Garritt, a St. Paul resident and member of the town's planning commission. "Whether the route would cross their land or not, they all agree -- you don't do this to farmland."

-- Dana Tims

Study of non-toll plan for 281 nixed

The fact the MPO could not get a single contractor to do an independent study for a non-toll option on 281 (and 1604 was added by an amendment by Rep. David Leibowitz) shows the whole process is severely tainted and that non-toll options will not be given any serious consideration as federal law requires. It's obvious that road builders know if they dare give an honest analysis or put forward an independent non-toll option for 281 (for which there already is one, see the plans here: www.281overpassesnow.com), they'll never get another job in this town again.

The obvious answer is to update the TxDOT plan from 2001 that was already adopted by the MPO for 5 years and promised and promoted in public hearings. There is also another more recent plan done in 2005 that can also be used as a non-toll plan. As a last resort, the MPO can always find a contractor outside Texas politics to do an independent non-toll plan. The cancellation of a non-toll plan OUTSIDE the control of the tolling authority, the RMA, displays the pathetic state of transportation in Texas today. I don't know which is worse, the power TxDOT and the toll authority wields or the gutless crowd of contractors we have...

Toll road study axed but alternatives still on the table
By Vianna Davila - Express-News
03/29/2010

The long-awaited resolution to the battle over tolls roads still hasn't come — yet.

In December, members of the Metropolitan Planning Organization board authorized a study to determine the cost differences between toll and nontoll alternatives on U.S. 281, after a heated public meeting last fall over the board's transportation options.

But by a February deadline, no consulting firms had stepped up to do the study, leaving the board back where it started.

At MPO's transportation policy board meeting on Monday, officials decided to rely on the Alamo Regional Mobility Authority's environmental impact statement — a three-year study that will ultimately recommend an option on U.S. 281 and how to fund it.

The environmental study will examine three main construction options: an expressway, which could include a combination of high-occupancy toll lanes and nontoll lanes similar to those in Houston; an elevated expressway, which also would include a similar combination of high-occupancy toll and nontoll lanes; or an overpass expansion, a plan that currently does not include tolls and would have the smallest physical impact, said RMA Executive Director Terry Brechtel.

For the rest of the story, go here.

San Diego privatized toll road goes belly-up

The South Bay Expressway foreign-owned toll road is the new poster child for the failed policy of road privatization. Up until now, most "conservative" and libertarian think tanks have promoted PPPs (public private partnership) as the "free market" solution to transportation finance. I've said all along it's no such thing. They're government sanctioned monopolies and this editorial states it.

It also notes the flaw in raising toll rates when traffic drops, which is the exact opposite of a free market response to fewer customers. To increase demand they need to lower not increase toll rates. Yet what did the North Texas Toll Authority, a publicly run toll entity (so this problem isn't just with privatized toll roads), do when its toll road system experienced a decline in traffic? Raised its rates by 32%! The new generation of toll roads that have relied on "innovative financing" (ie - taxpayer subsidized toll roads, often co-mingled with private money) find themselves consistently upside down on their debt despite the taxpayer bailouts that help front the construction costs. We're creating an infrastructure bubble that will be deemed too big to fail that will require even greater taxpayer bailouts if we allow this tax raid to continue. I have yet to see any data that shows increasing the cost of transportation (toll taxes on top of high gas prices) helps the economy either.

Also, this article mentions a study TxDOT did that admits toll roads are based on FLAWED traffic projections (that are kept secret until after the contracts are signed). This is precisely what we tried to stop in SB 792 from 2007 (the counterfeit CDA moratorium) that allowed these traffic and revenue studies (toll viability studies that give the traffic estimates) to stay secret until AFTER the contract is signed. We tried to remove this provision from the bill, and only got 19 votes (so much for a conservative majority that should be for OPEN GOVERNMENT, especially the kind that saves taxpayers money). This must be changed. We've long held that it violates federal law, NEPA, anyway. Revealing these flawed traffic projections BEFORE going to contract will help us ferret out the truly viable (and sensible) toll projects from those that aren't which are being propped up by HEAPS of taxpayer subsidies (gas taxes, Texas Mobility Funds, Prop 14, Prop 12, stimulus money, TIFIA loans, PABs, etc., up front) that end up going bankrupt anyway.

We're going to continue to work against this mythical "free market" concept of public private partnerships (called CDAs in Texas). It's a fad whose time has ended!

Link to article here.

Tuesday, March 30, 2010

EDITORIAL: The trouble with tolls

THE WASHINGTON TIMES

A toll-road project in San Diego, once held up as a model of the "innovative" public-private partnerships, collapsed last week.

The South Bay Expressway filed for Chapter 11 bankruptcy protection after being open for business less than three years. Proponents of the tolling fad insist that allowing private companies to charge motorists to drive on roads represents the free-market solution to all of our transportation funding woes. The South Bay Expressway failure shows that plan is a road to nowhere.

Thanks to gasoline prices around $3 a gallon and the ongoing recession, hard-pressed consumers weren't interested in shelling out an additional $4.50 to drive 10 miles. Macquarie Infrastructure Group, the Australian firm that owns the expressway, assured federal highway officials that 60,000 paying customers would use the road daily. In fact, only 22,600 did so, leaving the project without enough revenue to sustain its debt obligations.


It turns out that estimates based on rosy scenarios are the norm in the world of tolling schemes. A Texas Department of Transportation study completed last year found that a majority of toll-road projects overestimated traffic levels in the first five years by at least 20 percent to 30 percent. Because public transportation agencies generally cut deals with private tolling companies behind closed doors, such detailed forecasts are not available for public review until long after the contract is signed.

Plunging traffic is also the norm nationwide. The Pocahontas Parkway in Richmond reported a 12 percent drop in traffic last year. Transurban, the Australian company that owns the road, responded by raising prices every year since 2008 and is scheduled to continue doing so until 2016. Dulles Greenway traffic is similarly down 7.2 percent, and Macquarie has put in motion a series of regular price hikes.

In a true free-market environment, the projects would follow the law of supply and demand, dropping rates to attract new customers. Instead, the foreign companies operating these roads are hiking tolls as fast as they possibly can - the opposite of what one would expect in a truly competitive marketplace.

Toll roads get away with this conduct because they are state-sanctioned monopolies, not free-market operations. Bureaucrats and politicians turn to public-private partnerships because they, in effect, outsource unpleasant revenue-raising duties to private companies. As we see from the South Bay Expressway, the deals governments strike with companies to perform this task frequently are based on faulty, unsustainable assumptions.

We hope Virginia Gov. Robert F. McDonnell heeds this lesson and drops his support for the foolhardy plan to impose tolls on the Interstate 95/395 high-occupancy vehicle lanes.

________________________________________________________________

Link to article here.

PFI - First US TIFIA road files for protection
Reuters - Thursday, March 25

NEW YORK, March 24 - South Bay Expressway, the first US toll road to tap the federally subsidized TIFIA loan program, has filed for bankruptcy protection. The 9.3-mile electronic tollroad is located in southern California.

Toll collections have been dramatically under projections since the road opened in late 2007. The road is owned by Macquarie funds - 50% by Macquarie Infrastructure Partners, the US fund owned by large institutional investors and 50% by the Australian listed Macquarie Atlas Roads.

South Bay Expressway currently has US$340m outstanding of a US$400m construction loan converted into a term loan facility according to bankruptcy filings. The term loan was arranged in 2003 with BBVA as admin agent and Depfa as co-lead, and matures in 2021. Other lenders to the project include Allied Irish, Bank of Ireland, BNP Paribas , Commonwealth Bank, DVB Bank, DZ Bank and HSH Nordbank.

In addition, South Bay took out a US$140m, 35-year TIFIA loan, under which the first mandatory interest payment was due in 2011. That facility now totals US$170m after the capitalization of US$30m in interest.

South Bay sought bankruptcy protection after attempts to negotiate a settlement with ORC, a contractor to the tollroad, failed to result in a settlement. ORC has made claims totaling US$600m, which is disputed by South Bay Expressway.

__________________________________________________________________

Link to article here.

Toll road builder files for Chapter 11
The Newspaper.com
March 24, 2010

Toll increases were not enough to save the company that built the South Bay Expressway from bankruptcy.

The 10-mile toll road in San Diego was built in 2007 by California Transportation Ventures, a group that eventually became South Bay Expressway Ltd. The group is a subsidiary of toll operator Macquarie Infrastructure Group of Australia, the same Macquarie that holds stakes in the Indiana Toll Road, Chicago Skyway and Dulles Greenway.

South Bay Expressway Ltd. filed for Chapter 11 bankruptcy reorganization in recent days according to the San Diego Union Tribune.

Company officials had projected 60,000 vehicles per day using the roadway, but daily traffic in 2009 averaged just 22,600.

The roadway will remain open as the company restructures $510 million in debts.

Land Line Magazine reported throughout 2009 that the South Bay Expressway was falling behind in traffic counts and that the company would have lost money if it had not raised tolls.

“Apart from the toll increases, traffic volumes on South Bay Expressway continue to be impacted by the weak regional housing market and a slowdown in economic activity which has also led to a decline in Mexican border crossings,” company officials stated in a 2009 financial report.

Macquarie-operated roadways have relied on toll increases – most of which have been guaranteed in contracts with state entities – to stave off financial losses.

South Bay Expressway Ltd. is less than three years into its 35-year agreement to operate the tollway. Caltrans is scheduled to take over operations in 2042.

The $635 million expressway was one of the first toll roads in the U.S. to use federal tax dollars under the Transportation Infrastructure Finance and Innovation Act – or TIFIA – program developed by the Federal Highway Administration.

– By David Tanner, associate editor
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Investors seek farm land grabs, water rights

Link to article here.

The footprint for the Trans Texas Corridor (TTC) land grab of over 580,000 acres of private Texas farm and ranch land may be taking shape through various means. This article explains how the TTC is very much alive and well, not only in Texas, but also in Canada and Mexico and everywhere in between. The article below speaks of investors seeking to buy-up U.S. farm land and seek farmers' water rights. Beware!

Hancock ag investors eyeing more farm deals

Reuters | 17 March 2010

by Carey Gillam

Investors are growing more bullish on U.S. farmland as softness in some sectors spurs increased competition for buying quality acres, a top U.S. agricultural investing group said on Wednesday.

New hedge fund players were among a range of large and small investment groups participating in farmland dealings, Jeff Conrad, president of Hancock Agricultural Investment Group, told the Reuters Food and Agriculture Summit in Chicago.

“There is more competition,” said Conrad, who oversees Hancock’s $1.2 billion of agricultural investments in the United States, Australia and Canada. “We are definitely seeing more deal flow.”

Notably, capital flow is increasing from overseas, in particular from Europe, Asia and the Middle East, Conrad said.

The market action is accelerating to the level where Conrad sees portfolio trading opportunities and potential development of a real estate investment trust.

The interest in buying farmland comes amid a decline in commodity prices tied in part to a global glut of key crops like corn and soybeans and diminished corn-based ethanol demand.

Conrad said the Hancock group’s return was down last year to 7.6 percent from 18 percent in 2008 as commodity prices fell and land values flattened. He is cautiously projecting continued single digit returns again for 2010.

Still, the group’s client base, which is made up of pension funds, large taxable investors and funds of funds, continues to grow, Conrad said.

“Our investors are very long-term oriented,” Conrad said. “Typical farmland provides very attractive current income that is what institutional investors are looking for.”

OPPORTUNITIES IN SOFT SECTORS

Conrad said his investment group was finding some opportunities where previous investors had bought land intending to convert it to commercial property but were stymied as credit dried up and the economy swooned.

The group is also finding good values in farmland in Idaho were the dairy industry is struggling, and remains very active in the U.S. Midwest, the heart of corn and soybean production.

As well, the group is looking to deepen its presence in the California vineyard sector, another area that has been struggling through the recession due to falling demand for wine.

“There has been a glut of wine for the last few years so that is a sector we like,” Conrad said.

The Hancock group is a unit of the Hancock Natural Resource Group, an indirect wholly-owned subsidiary of Manulife Financial Corporation (MFC.TO) (MFC.N). In addition to the row crops and wine, Hancock is heavily invested in specialty crops such as almonds, walnuts, cranberries, apples, pistachios and macadamia nuts.

Cranberries and pistachios provided double-digit returns in 2009 while apples and almonds did poorly, according to Conrad. Cranberries appear to be softening, however, with more supply building up inventories amid limited exports.

One key area for investing now is a rush to lease or buy water rights, Conrad said. Water is a key resource for agricultural production and scarcity concerns coupled with a growing world population makes water control critical.

“That pattern is just going to become more and more common,” he said.

The United States and its technologically advanced farming systems do not offer the same high rates of potential return as some investors are seeking in Brazil and other countries, Conrad said.

But the more mature market does offer solid long-term opportunities and Hancock has no plans to extend its investments outside the United States, Australia and Canada.

“Our plan is to build out the countries we’re in right now,” he said.

(Reporting by Carey Gillam; Editing by Tim Dobbyn)

Trans Texas Corridor still alive

Trans Texas Corridor routes moving at freight train speed
By Terri Hall
Mar 20, 2010
Houston Examiner

After Rick Perry's highway department announced the Trans Texas Corridor (TTC) route known as TTC-35 was "dead" in 2009, we find out post-election in 2010 that it, along with free trade, is very much alive and well. Canadian officials have shown renewed interest in a multi-modal trade corridor along I-35. Winnipeg recently announced its intention to build an inland port similar to those in San Antonio and Dallas. One such inland port in Kansas City has ceded sovereign United States territory to Canada and Mexico with the flags of all three countries flying over it. Officials in Winnipeg said it also intends to run a logistics and trade corridor to include rail and high speed highways all the way to Mexico as an Asia-Pacific gateway connecting to Toronto and Montreal.

It should surprise no one that former San Antonio Mayor Phil Hardberger and tolling authority (Alamo RMA) Chairman Bill Thornton took a trip to Toronto in 2006, partially at taxpayer expense, to promote Trans Texas Corridor-style trade connections and to be certain it includes the Port of San Antonio.

Norris Pettis, Canadian Consul General in Dallas, notes in the latest San Antonio Business Journal that "of all the urban centers I deal with, San Antonio is right up there in preaching free trade." The article also said Canadian officials observe an anti-trade sentiment in the U.S. as a whole, but see an open door in Texas, which they say doesn't share "protectionist policies."

Read the rest of the story here.

London tube line’s public private partnership in the hole

Link to article here.

This is another example of how a so-called "public private partnership" (PPP) actually means PUBLIC money for PRIVATE profits rather than the "partnership" taxpayers were promised, one where the private entities put up the money and take all the risk. A legal ruling deemed that the private contractor, Ferrovial (parent company to Cintra, the Spain-based company involved in several PPPs in Texas), does not have to upgrade the system, taxpayers do. Even worse, this also demonstrates that once the government gives away control of our infrastructure to private corporations, it has little recourse to protect the public interest. The private entities write these iron clad contracts to protect their interests, leaving taxpayers holding the bag. We have yet to see one PPP deal that worked out well for the taxpayers in any country. PPPs are just one more scam to give private corporations free access to taxpayers' wallets using government-sanctioned monopolies in the name of "free market."

Boris Johnson told he must plug £460m tube funding gap
Arbiter of public-private partnership rules that London Underground contractor Tube Lines should not have to make up shortfall in budget
By Dan Milmo
guardian.co.uk
Wednesday 10, March 2010

Boris Johnson must make cuts to London's public transport network or postpone improvements to one of the capital's busiest underground lines after he was told to plug a £460m funding gap in a controversial public-private partnership.

The London mayor said taxpayers were being asked to "write a blank cheque" to fund Tube Lines, the last surviving PPP contractor responsible for maintenance and upgrades on three tube routes: the Jubilee, Northern and Piccadilly lines.

In a final ruling today, the arbiter of the PPP contracts, Chris Bolt, said Tube Lines's work programme over the next seven and a half years should cost £4.46bn. The publicly owned London Underground, which still runs the tube network on a day-to-day basis, must fund the work and has budgeted only £4bn for it – leaving a shortfall of £460m on its already stretched balance sheet.

Johnson, who ultimately controls LU and its parent Transport for London, said he would consider taking legal action against Bolt, who rejected demands that Tube Lines fund the difference by raising debt privately. Instead, Bolt said TfL should either cut back on an upgrade to the Piccadilly line – the only tube link to Heathrow airport – or find cost cuts elsewhere in its £9bn annual budget.

"Londoners will also be outraged that the tube upgrades promised to them are now threatened," said Johnson. The mayor claimed that Tube Lines's co-owners, Ferrovial, the Spanish owner of Heathrow airport, and Bechtel, the US project management specialist, would be paid £400m in management secondment fees by 2017.

"In other countries this would be called looting, here it is called the PPP," he said.

But Bolt rejected the management fees argument, saying that Ferrovial and Bechtel managers were helping to keep down overall costs and, without them, the maintenance and upgrade work could cost more than £4.46bn.

Andrew Cleaves, Tube Lines's acting chief executive, said delaying an upgrade to the Piccadilly line was one option for closing the funding gap. Bolt has already asked the Department for Transport whether funding set aside for purchasing new Piccadilly line trains, believed to be about £500m, could be used to plug the gap.

"There are many different variations around timing that we can work through with London Underground, including the timing of the fleet and the upgrade. That's the sort of thing I want to sit down with London Underground about and discuss," said Cleaves.

The Piccadilly upgrade is due to deliver faster and more frequent trains on the route by 2014 and failure to deliver it on time raises the threat of overcrowding on an already busy line.

The Tube Lines boss also denied that the ruling would threaten the company's viability. Tube Lines had originally argued that the work should cost £5.75bn and faced an even greater funding shortfall than LU, which prompted Tube Lines directors to discuss whether the company is a going concern at a recent board meeting.

Johnson's funding options are becoming increasingly limited after the DfT said it would not reopen a 2007 funding settlement that awarded TfL £40bn until 2017. Lord Adonis, the transport secretary, is adamant that TfL cannot increase its borrowing to fund the £460m gap.

Trans Texas Corridor TTC-35 resurrected post-election

Link to article here.

The good news is, the section of I-35 where there is a 391 local government commission (TURF co-sponsored events to help spread this method to fight the Trans Texas Corridor for TTC-69), I-35 will be expanded and kept toll-free.

However, right after the election, Perry's TxDOT announced its intention to extend the SH 130 toll road north of the 391 commission's jurisdiction. SH 130 from Georgetown around Austin extending south to San Antonio has been referred to as the first leg of the Trans Texas Corridor TTC-35. So as we predicted, if Rick Perry were re-elected, he would continue his plans to push the TTC piece by piece all the way up to Red River. This new TTC segment from Waco to Hillsboro, filling the gaps of "free" lane I-35 expansion, is also likely to become some form of foreign-owned toll road.

Relieving traffic on Interstate 35 through Waco remains priority for state officials
By Michael W. Shapiro, Waco Tribune-Herald staff writer
Wednesday March 10, 2010

Plans to relieve traffic on Interstate 35 with the Trans-Texas Corridor were put to bed last year in the face of a chorus of public criticism that centered around the use of eminent domain to make way for the ill-fated project.

But if the population in Texas continues to grow, state officials think congestion will only get worse on I-35 if nothing is done.

The Texas Department of Transportation is studying a series of potential traffic solutions.
Drivers navigate through traffic on Interstate 35.
Drivers navigate through traffic on Interstate 35.
Jerry Larson/Waco Tribune-Herald
TxDOT held a meeting Tuesday in Waco to discuss the situation with local officials representing the Central Texas stretch of the highway.

The department will present ideas next month to four advisory committees trying to come up with plans to ease I-35 traffic.

Finding solutions

State transportation staffers said they will present traffic data on several proposed solutions in April.

Ideas under consideration include:

*  Extending State Highway 130, a toll road that runs parallel to I-35 in the Greater Austin area.

Transportation officials said they would look at the traffic relief that would result from extending the road to Temple, and possibly through the Waco area to Hillsboro.

The committee recommended that the extension run on the east side of I-35 within five miles of the highway.

* Building the so-called Texas T-Bone — a high-speed passenger rail system that would connect Dallas-Fort Worth, San Antonio and Houston.

The proposal envisions using the Killeen-Temple area as a central hub.

The plan has been promoted heavily by Temple Mayor Bill Jones, who sits on the local I-35 committee and delivered a presentation at the meeting.

TxDOT is trying to implement a bottom-up approach — taking recommendations at the local level, then consolidating those ideas into a plan.

It was clear at the session that officials still were working out the kinks.

A few area residents showed up at the three-hour meeting but left early without a chance to address committee members or state officials.

Officials continue to search for ways to relieve current and future traffic congestion on I-35. Ideas proposed during a Tuesday meeting called by the Texas Department of Transportation include expanding toll roads and a high-speed rail system.

Members agreed later to change the rules to ensure that the public will be able to comment at future meetings.

There’s a “need to give everybody an opportunity to speak, to the point where we have to bend over backwards to display that there’s trust and transparency,” said Russell Devorsky, who represents the Waco Metropolitan Planning Organization on the committee.

A lack of transparency led to suspicions about the Trans-Texas Corridor, he said.

Other members complained they hadn’t received detailed traffic statistics for I-35 or guidelines showing the financial limitations for traffic-relief projects.

State officials said they wanted to start with how to tackle congestion, and detailed traffic modeling of several local projects were in the works.

The local committee consists of three members representing Bell County (all attended the Tuesday meeting in Waco); two members representing McLennan County (one of whom attended); members from Hill County and the Hillsboro Chamber of Commerce (both in attendance); as well as two members each from Dallas, Ellis and Tarrant counties; and one each from Falls, Hood, Johnson, Kaufman, Limestone, Navarro and Parker counties.

The Texas Farm Bureau also has a member on the local committee.

Big Bend, target for trade corridor, may become “international” park

Link to article here.

Big Bend is the target for one of Rick Perry's planned Trans Texas Corridor routes, called La Entrada de Pacifico. So it shouldn't surprise us that the idea of turning one of Texas' natural treasures over to international control is being floated anew. Connect the dots...

Should Big Bend Become an 'International Park?'
US Interior Secretary proposed the idea today, proposal dates back to the 1930s
By Jim Forsyth
Friday, March 12, 2010
WOAI Newsradio, San Antonio

US Interior Secretary Ken Salazar today suggested combining the Big Bend National Park in west Texas with  the Monumento Natural del Rio Bravo across the river in Mexico, to form the Big Bend/Rio Bravo International Park, 1200 WOAI news reports.

"The United States and Mexico are neighbors sharing a beautiful treasure," Salazar said today during a tour of the Big Bend.  "Our two nations could and should engage in an even higher level of cooperation to conserve this remarkable area and its wildlife, while providing more opportunity for visitors to enjoy it."

Actually, the idea of combining the two parks is not new...it was discussed by Presidents Franklin Roosevelt and Manuel Avila Camacho back in the 1930s.

Salazar said he has had talks with Mexican Interior Secretary Juan Rafael Elvira Quesada about the idea.

Salazar was the guest of Congressman Ciro Rodriguez, who's district includes the Big Bend.

"I'm proud to represent this area and look forward to having a dialogue with the Secretary about how best to preserve and enhance the park using stimulus funding and other resources," Rodriguez said.

Salazar said combined, the Big Bend and Rio Bravo constitute one of the largest and most important conservation areas in North America, and a combined park would help officials on both sides of the Rio Grande better address issues from water and air quality to management of wildfires.

Rio Bravo del Norte is the name for the Rio Grande used in Mexico.

Perry’s slush fund: public money for private profits

Link to article here.

This article exposes one of Rick Perry's worst policies aside from his toll road and Trans Texas Corridor boondoggles: the Texas Enterprise Fund, dubbed a "slush fund." Perry is bought and paid for by special interests. Private industries should NOT be receiving "economic incentives" paid for by Texas taxpayers, just like Perry's buddies at Cintra (Spain-based company that's the primary beneficiary of Perry's penchant for selling-off Texas roads to the highest bidder, that in turn charges us 75 cents PER MILE to drive) shouldn't be granted a government-sanctioned monopolies over our public infrastructure.

Slush Fun
At least one Texan has benefited from Rick Perry's Enterprise Fund.
by Dave Mann
Published on: Thursday, March 11, 2010
Texas Observer

 
For the past six years, Texas Gov. Rick Perry has lorded over a controversial stash of taxpayer money known as the Texas Enterprise Fund, dispensing huge sums—$345 million and counting—to large corporations, ostensibly to spur job growth. Critics call it the governor’s slush fund. “He takes from us so that he can play with his corporate slush fund and award his friends’ businesses,” said Debra Medina, one of Perry’s two challengers for the GOP gubernatorial nomination, at a recent candidate’s debate.

Perry defends the fund as a much-needed economic-incentive program. He credits the disbursements with creating 55,000 jobs in Texas and helping keep the state’s economy out of recession. Whether the program has boosted the state’s economy depends on your point of view. But at least one Texan has greatly benefited from Enterprise Fund outlays—Rick Perry.
Many companies that have received money from the fund have, in turn, aided the governor. An Observer investigation has found that 20 of the 55 Enterprise Fund companies have either given money directly to Perry’s campaign (through their political action committees or executives) or donated to the Republican Governors Association, a Washington, D.C.-based group that Perry presided over in 2008.

The 20 companies have received a combined $174.2 million from the Enterprise Fund. During the same time period, those 20 corporations have donated $2.2 million to Perry and the governors association. Several companies made donations around the time they received grants from the Enterprise Fund. It’s even possible that taxpayer money from the fund came full circle into Perry’s own campaign.

Perhaps no company better illustrates the flow of money than Hewlett-Packard Co. In October 2006, the California-based technology giant received $3 million from the Enterprise Fund to open four data centers in Texas that were supposed to create 420 jobs. The project didn’t exactly go well—the centers never opened, and Hewlett-Packard later had to repay its grant. Nary a Texan got a new job. But before the deal fell apart, Perry and his political allies took in their share of money.

Hewlett-Packard’s political action committee contributed $20,000 to the governor’s campaign. It was one of 18 Enterprise Fund companies whose PACs or chief executives donated to Perry’s campaign, according to an analysis by the watchdog group Texans for Public Justice. The PACs and chief executives forked over a combined $355,000 to Perry’s campaign. (One of the largest donors was Joe Sanderson, the head of Sanderson Farms Inc., a Mississippi-based chicken producer that received $500,000 from the Enterprise Fund in April 2006. Three months later, Joe Sanderson gave $25,000 to Perry’s campaign. He has since given $75,000 more.)

The serious money went to the Republican Governors Association. Organized in 2002, the association raises tens of millions every election cycle to support GOP candidates for governor all across the country. In 2008, Perry served as its chairman, and as its finance chair for the last two years.

Hewlett-Packard has given the governors association $518,767 in corporate money since 2003. Eleven other Enterprise Fund recipients have sent corporate checks to the association during the past seven years, according to an Observer analysis of the group’s campaign filings with the Internal Revenue Service. Many of them gave money repeatedly. The 12 companies contributed nearly $1.8 million in corporate money to the association. Eleven of the 13 are large, national corporations that could have donated to the association for reasons unrelated to Perry or the Enterprise Fund.

Hewlett-Packard was the most generous, but wasn’t alone. FMR LLC, owner of Boston-based Fidelity Investments gave big money ($343,450), as did Lockheed Martin Corp.($211,595), Home Depot Inc. ($189,081), defense contractor Raytheon Co. ($167,175), and the chicken producers at Sanderson Farms ($102,145).

It’s difficult to know what the Republican Governors Association did with the millions it received from Texas Enterprise Fund companies. Some of that cash may have circled back to Rick Perry.

In the fall of 2006—10 days before he would be re-elected—Perry received two checks totaling $1 million from the governors association.

The contributions raise some legal questions. That’s because much of the association’s financing comes from corporate sources, according to an Observer analysis of the group’s IRS filings. Craig Holman, a campaign finance expert with Public Citizen in Washington, says it’s well known that the Republican Governors Association accepts and spends corporate money. In some states, that’s legal. But Texas law forbids candidates from receiving or spending corporate money on political campaigns.

Texas’ century-old corporate prohibition was the central issue in the campaign finance scandal that led to the indictment of then-House Majority Leader Tom DeLay in 2005. The DeLay affair involved GOP organizations funneling illegal corporate money to Texas candidates. Similarly, if the governors association gave corporate money to Perry’s campaign in 2006, that would violate Texas law.

However, the association also received several million dollars from non-corporate donors, people like Bob Perry (no relation to the governor). The Houston home builder and prolific GOP donor gave more than $2 million in 2006 alone—enough to account for the contributions to Gov. Perry. In fact, Bob Perry donated $500,000 the day before the governors association sent a $500,000 check to Gov. Perry. It’s perfectly legal for the association to send this non-corporate money to Rick Perry’s campaign.

The flow of money also raises the possibility that some taxpayer dollars traveled the following circuit: from the Texas Enterprise Fund, to various large companies, to the Republican Governors Association, which then donated to Perry’s campaign.

By Oct. 26, 2006, the day the governors association sent Perry’s campaign the first of two $500,000 checks, the group had received nearly $216,000 in corporate contributions from five Enterprise Fund companies during the 2005-06 election cycle. The companies were Tyson Foods Inc. ($20,000), Home Depot ($25,000), Raytheon ($65,000), the U.S. unit of German telecommunications company T-Mobile International AG ($20,000), and Hewlett-Packard ($86,000). IRS records show these corporate donations being paid to the same governors association accounts that later dispensed money to Gov. Perry.

By Oct. 26, 2006, those five companies had been paid $17.5 million by the Texas Enterprise Fund.

Perry may have benefited in other ways. Raising money for someone else can sometimes be more beneficial in politics than receiving it. In that sense, Perry’s fundraising for the governors association may have raised the governor’s political profile.

IRS filings show that some of the top contributors to Perry’s campaigns over the years also donated to the association. Bob Perry, the governor’s top money man, heads the list. He’s given the association nearly $6 million since 2006. San Antonio’s James Leininger and Dallas businessman Harold Simmons have donated $100,000 each in recent years. Several Perry-friendly Austin lobbyists have contributed. So did the Association of Electric Companies of Texas, an Austin-based trade group that sent $25,000 to the governors association.

Then there’s Michele Mosbacher of Houston, who contributed $25,000 to the association on April 18, 2008, according to IRS records. That was three months after Gov. Perry appointed her to a position on the University of Houston Board of Regents.

These contributions may partly explain how Perry ascended to the chairmanship of the association in 2008—a high-profile position among national Republicans—bypassing the group’s then-vice chairman. After serving one year as chairman, Perry is now, as he runs for re-election, the association’s finance chair.

Donations from Texas Enterprise Fund companies also may have aided the governor’s rise in the association. Some companies donated to the association not long after, or not long before, they received money from the Enterprise Fund. The most blatant example is the bank Comerica Inc. In September 2007, Comerica received $3.5 million from the Enterprise Fund to create 200 jobs in the Dallas area. On Feb. 8, 2008, Comerica gave $25,000 to the Republican Governors Association—to date the only contribution the company has ever made to the group that several months earlier had named Perry as its chairman.

Gurwitz: Conservatives want more than Perry's photo-ops

Web Posted: 03/06/2010
Conservative Texans want more than photo-ops
By Jonathan Gurwitz
San Antonio Express-News

When the 2009 regular session of the Texas Legislature concluded, Gov. Rick Perry came to San Antonio to affix his signature to a major property rights measure. In front of the Alamo, Perry appeared to sign legislation putting a constitutional amendment on the November 2009 ballot that sharply restricted the circumstances under which state and local government could exercise eminent domain.
The ceremony presented a great photo-op: a conservative governor affirming an essential right, drawing a line in the sand on eminent domain in the shadow of the Cradle of Texas Liberty. The ceremony was also deceptive.

What Perry purported to sign was a joint resolution passed by a two-thirds majority in both houses of the Texas Legislature. Such measures circumvent the governor's office and automatically appear on the ballot in the next general election. Voters approved it in November with 81 percent support.

The decision of conservative Texas lawmakers to bypass the governor on eminent domain reform in 2009 was deliberate. Two years earlier, Perry had vetoed an even stronger affirmation of property rights drawn up in response to the U.S. Supreme Court's Kelo decision.

The ostensible explanation for Perry's 2007 veto was that a key provision would have vastly inflated costs for new road construction. Beneath this explanation lay additional bothersome issues that put him at odds with conservative Texans.

The 2007 eminent domain reform effort conflicted with Perry's plans — since abandoned — for the Trans Texas Corridor, a 4,000-mile multi-modal transportation network that would have necessitated the state's seizure of as much as 600,000 acres of private property. The project generated even greater controversy because of its heavy reliance on toll roads; because a former Perry staffer worked as a consultant for the Spanish company, Cintra, that won the rights to develop the corridor; and because Perry fought a ruling by Texas Attorney General Greg Abbott that compelled the Texas Department of Transportation to lift a veil of secrecy on the contract's details.


Read the rest of the story here.

Goldman Sachs fueled financial crisis in Greece, Europe

Link to article here.

Goldman Sachs has been playing both sides (consulting and giving financial advice to both the government and the private entities with whom the government is making deals) for quite some time now, especially with regards to public private partnership infrastructure deals. They've been operating with impunity despite the colossal conflicts of interest. Now it's toxic wheeling and dealing has led to the financial collapse of Europe. The U.S. government beware - time to boot Goldman from the halls of Washington and Austin!

February 14, 2010
Wall St. Helped to Mask Debt Fueling Europe’s Crisis
By LOUISE STORY, LANDON THOMAS Jr. and NELSON D. SCHWARTZ
New York Times

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.


Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Athens did not pursue the latest Goldman proposal, but with Greece groaning under the weight of its debts and with its richer neighbors vowing to come to its aid, the deals over the last decade are raising questions about Wall Street’s role in the world’s latest financial drama.

As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.

Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Some of the Greek deals were named after figures in Greek mythology. One of them, for instance, was called Aeolos, after the god of the winds.

The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

A spokeswoman for the Greek finance ministry said the government had met with many banks in recent months and had not committed to any bank’s offers. All debt financings “are conducted in an effort of transparency,” she said. Goldman and JPMorgan declined to comment.

While Wall Street’s handiwork in Europe has received little attention on this side of the Atlantic, it has been sharply criticized in Greece and in magazines like Der Spiegel in Germany.

“Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” said Gikas A. Hardouvelis, an economist and former government official who helped write a recent report on Greece’s accounting policies.

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

Banks eagerly exploited what was, for them, a highly lucrative symbiosis with free-spending governments. While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal.

Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting.

The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

Derivatives do not have to be sinister. The 2001 transaction involved a type of derivative known as a swap. One such instrument, called an interest-rate swap, can help companies and countries cope with swings in their borrowing costs by exchanging fixed-rate payments for floating-rate ones, or vice versa. Another kind, a currency swap, can minimize the impact of volatile foreign exchange rates.

But with the help of JPMorgan, Italy was able to do more than that. Despite persistently high deficits, a 1996 derivative helped bring Italy’s budget into line by swapping currency with JPMorgan at a favorable exchange rate, effectively putting more money in the government’s hands. In return, Italy committed to future payments that were not booked as liabilities.

“Derivatives are a very useful instrument,” said Gustavo Piga, an economics professor who wrote a report for the Council on Foreign Relations on the Italian transaction. “They just become bad if they’re used to window-dress accounts.”

In Greece, the financial wizardry went even further. In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.

Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet that year. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.

These kinds of deals have been controversial within government circles for years. As far back as 2000, European finance ministers fiercely debated whether derivative deals used for creative accounting should be disclosed.

The answer was no. But in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.

Still, as recently as 2008, Eurostat, the European Union’s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.”

While such accounting gimmicks may be beneficial in the short run, over time they can prove disastrous.

George Alogoskoufis, who became Greece’s finance minister in a political party shift after the Goldman deal, criticized the transaction in the Parliament in 2005. The deal, Mr. Alogoskoufis argued, would saddle the government with big payments to Goldman until 2019.

Mr. Alogoskoufis, who stepped down a year ago, said in an e-mail message last week that Goldman later agreed to reconfigure the deal “to restore its good will with the republic.” He said the new design was better for Greece than the old one.

In 2005, Goldman sold the interest rate swap to the National Bank of Greece, the country’s largest bank, according to two people briefed on the transaction.

In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.

Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.

Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”

Lawmakers push for repeal of NAFTA

Link to article here.

Remember that NAFTA is the reason for all the trade corridors planned to pave over Texas called: NAFTA superhighways, the Trans Texas Corridor (TTC), Corridors of the Future, High Priority Corridors, or the renamed TTC called "Innovative Connectivity Plan."

U.S. lawmakers launch push to repeal NAFTA

By Doug Palmer, Reuters
Thu Mar 4, 4:35 PM EST

A small group of U.S. lawmakers unveiled legislation on Thursday to withdraw from the North American Free Trade Agreement in the latest sign of congressional disillusionment with free-trade deals.

The bill spearheaded by Rep. Gene Taylor, a Mississippi Democrat, would require President Barack Obama to give Mexico and Canada six months notice that the United States will no longer be part of the 16-year-old trade pact.

"At a time when 10 to 12 percent of the American people are unemployed, I think Congress has an obligation to put people back to work," Taylor said.

He argued NAFTA has cost the United States millions of manufacturing jobs and hurt national security by encouraging companies to move production to Mexico.

The high unemployment rate makes it the "perfect" time to push for repeal even though past efforts have failed, he said.

"You'll see the American people rally behind this, in my humble opinion," said Rep. Walter Jones, a North Carolina Republican who is one of about 28 co-sponsors of the bill.

Business groups like the National Association of Manufacturers and the U.S. Chamber of Commerce strongly support NAFTA, which they say has spurred U.S. economic growth by tearing down trade barriers between the three countries.

The repeal proposal comes as Obama says he wants to resolve problems blocking congressional approval of long-delayed trade deals with South Korea, Panama and Colombia.

The strongest opposition to those agreements comes from Obama's fellow Democrats.

The United States also will begin talks later this month with Australia, New Zealand, Singapore, Chile, Peru, Vietnam and Brunei on an Asia-Pacific regional free-trade agreement.

Obama criticized NAFTA during the 2008 presidential election campaign but has not followed through on threats to withdraw from the agreement if Canada and Mexico did not agree to revamp the pact's labor and environmental provisions.

But many Democrats are pushing for that and other changes to existing trade deals before considering any new deals such as the deals with South Korea, Colombia and Panama.

The House of Representatives is expected to vote later this year on whether the United States should remain a member of the World Trade Organization.

U.S. law allows House and Senate members to request a vote on that issue every five years. In 2005, 86 of the House's 435 members voted to withdraw from the world trade body.

(Reporting by Doug Palmer; Editing by Stacey Joyce)

Elections come & go, but resistance to toll taxes continues


If there's one thing we've learned in the 5 years we've been fighting to keep our freeways toll-free, it's that elections don't matter near as much as the people themselves staying engaged in the ongoing battles against our own government. We've passed the era where citizens could get by with complacency, we're in a new ballgame now. After years of neglect and trusting our elected representatives to do the right thing when no one's looking, it's obvious to even the casual observer that those days are long gone, and we now face the Goliath of entrenched special interests and lobbyists who really run the show. As one of our supporters likes to put it, we need a permanent, grassroots lobbying class for "we the people."

One thing about elections remains the same...the same recycled candidates show-up in office year after year. Though on rare occasions the good guys and bad guys trade places, by and large, for a litany of reasons I won't go into here, it's those who have been corrupted and who have no qualms about ignoring and exploiting the taxpayers that remain the powerbrokers. The kingmakers simply won't tolerate the incorruptible being in charge. So we've learned to work hard for the good guys, but to expect the bad guys to still be there when the dust settles.

Issue-based activism works

The grassroots have shown that we can mount an offensive and successfully defeat toll-related issues one at a time, year after year, by constant vigilance. The bad guys only have to win once to get their pay-dirt, but the taxpayers have to win time after time, year after year to defeat the litany of bad legislation and policies that hit the pipeline at breathtaking speed.

The aversion to paying 75 cents a mile to a foreign company to simply drive on a public road hasn't faded, nor will it. The waste, fraud, and abuse of taxpayer money by an out-of-control transportation department can and must be fixed. With the taxpayers on high alert, we can return to a sensible, sustainable, and affordable transportation policy in Texas, one without the highest tax on the table...tolls.
One of the biggest challenges in unseating incumbents isn't so much the name recognition and hefty campaign coffers (though these things can be enormous obstacles) as it is the growing number of political favors and payback the politician doles out the longer he's in office. It makes for highly motivated voters beholden to incumbents who eagerly head to the polls to re-elect the guy who is the gift that keeps on giving to one's industry or pet program.

Corporate welfare

I sat down and read an issue of the Business Journal this week. A sizable chunk of the stories involved businesses who owe their success to taxpayer handouts. One business that experienced explosive growth (5,900 percent) exclusively provides services for the federal government. One article brazenly offered tips on how to secure contracts from local bond elections (and avoid pesky obstacles like competition) by positioning oneself early for favorable treatment by being a team player and helping the bond election pass.

For all the mudslinging about social welfare programs, corporate welfare costs the taxpayers dearly. The self dealings that often involve the revolving door between private sector and public sector positions, jumping between the two in order to secure government funding or land a government contract by being well-connected, often exploits taxpayers with backroom deals made in secret with lobbyists. Instead of standing in line at a welfare office, they have slick web sites that tell them of all the upcoming bond elections, how much taxpayer money is on the table, and what contracts are up for grabs. This ain't capitalism, rather, it nicely explains the origin of the phrase: "hogs at the trough."

The sooner we, the taxpayers, identify the enemy, the sooner we defeat the cronyism that grips the "system." With our freedom to travel at risk and the threat of a complete financial meltdown of the infrastructure bubble (that will be too big to let fail) our politicians are creating with massive, multi-leveraged toll road debt, we cannot and will NOT relent until freedom is secured.

NTTA bailout saddles taxpayers with toxic debt

Last week, both the Texas Transportation Commission (TTC) and the North Texas Tollway Authority (NTTA) approved a deal to use ALL Texas taxpayers (our state gas taxes) as collateral for toll roads in North Texas. Highway 161, a road to primarily benefit the Dallas Cowboys (Hwy 161 is the main pathway to its new stadium), got the green light first, and we're on the hook for virtually unlimited interest on the debt for 36 years if the toll road traffic doesn't show up.

The NTTA wouldn't need the State to guarantee its debt if it didn't already know that the projected traffic to pay for it is on shaky ground. Investors won't bite unless a return on their investment is a sure thing. They made it a sure thing by using the State's highway fund as a backstop for the NTTA's toxic debt (read more history here).

For years Rick Perry's excuse for levying toll taxes on urban Texans has been, "Why should West Texas pay for the congestion in Houston or Dallas?" Yet here we are, ALL paying for congestion in North Texas! The move is also unconstitutional (exploiting what TxDOT thinks can be construed as a "loophole"). The highway fund cannot be used to guarantee loans. To skirt the law, TxDOT added a provision it thinks it can use to make the unconstitutional deal legal by charging the NTTA interest on any money lent to it from the highway fund.

Exploitation or illegal?

Sound familiar? TxDOT exploited a "loophole" that was supposed to prohibit tolling existing roads for US 281, US 290, among others (watch it here). TxDOT also exploited the prohibition against selling our highways to foreign corporations through private toll contracts called CDAs by using another financing mechanism meant for local governments (called pass through financing) to accomplish the same thing.

In another example, TxDOT exploited a law that allows it to advertise toll roads in order to wage a PR campaign to persuade/lobby the public to accept more toll roads versus following the legislative intent of the law, which was to advertise the use of toll roads already open to traffic (like "get your Toll Tag here"). Perry vetoed a law passed by the legislature last year that would have prevented such chicanery from continuing.

Lastly, TxDOT attempted "creative accounting" tricks with Proposition 12 bonds in order to multi-leverage debt (use borrowed money as a down payment to get more borrowed money and so on) after the Texas legislature soundly defeated such legislation in the special session in July of 2009. Lawmakers clearly did NOT want TxDOT to become a bank or engage in the same risky financial schemes that caused the mortgage meltdown and global financial crisis that required a massive taxpayer bailout.

So how many times will this rogue agency get away with flouting the law? Would you and I get a free pass for such violations (especially considering TxDOT is doing it with other people's money forcibly confiscated through taxation)? Of course not! Add to that its rigged, fraudulent environmental studies to gain clearance for controversial toll projects and its $1 billion dollar "accounting error," and it adds up to intolerable acts that cry out for accountability.

Scheme to buyback FREEway to toll it

Hwy 161 is already three-quarters built with taxpayer money and could open as a free road, yet in this NTTA bailout, the agency will borrow over $1 billion in part to buy back the free portion of the road so it can turn around and toll it. This scam shoots a hole through another Perry talking point that claims we're out of money to build these roads with traditional funds, "so we MUST toll it." In fact in 2007, a TxDOT report to Congress lobbied to buy back existing interstates so it can slap tolls on freeways already built and paid for, and it caused a statewide backlash, a federal amendment by Kay Bailey Hutchison to ban the practice, and a TURF lawsuit to stop such lobbying against the taxpayer.

See the pattern here? TxDOT continues its deplorable behavior unchecked while taxpayer money is exploited, wasted, and recycled (how many times do we have to pay for the same road?). At the end of the day, lawmakers huff and puff, but they never blow the house down (and clean house)!

It's abundantly clear no one is looking out for us, so we must do it ourselves. We cannot give up the fight for accountability nor can we afford for this Governor and legislature to look the other way and continue to condone such disastrous fiscal policy certain to bring economic ruin for generations.

Call your state lawmakers at (512) 463-4630 or to contact his/her district office go here.

Perry’s Commission approves NTTA BAILOUT

Link to article here.

Tollway authority approves State Highway 161 project

Friday, February 26, 2010

By MICHAEL A. LINDENBERGER / The Dallas Morning News
This email address is being protected from spambots. You need JavaScript enabled to view it.

The North Texas Tollway Authority voted today to borrow nearly $1.2 billion and formally accept State Highway 161 into its growing network of toll roads.

The decision means construction on the final leg of the 11.5 mile road between Irving and Grand Prairie can begin as soon as next month, and be open to full traffic by late 2012.

Also Online
Transportation blog: Pros and cons of NTTA's construction of SH 161

The decision adds to NTTA's already staggering $7 billion debt, and puts future drivers in the role of guarantors for the new loans, since toll rates will go up if traffic on highway is significantly below expectations.

Texas taxpayers could be on the hook, too. That's because the Texas Department of Transportation guaranteed the debt for SH 161, promising to make annual debt payments for decades, in the unlikely event that traffic is so low the road can't support itself even after rates are increased.

The NTTA board's vote to proceed with the project was 8 to 1, with Bill Moore, an appointee from Collin County, opposed.

Under NTTA's rules, it would have taken only two "no" votes to scuttle the project.

Even some of those voting for the deal expressed concerns.

Board Chairman Paul Wageman of Plano said the North Texas region has too many toll roads as it is. Vice Chairman Victor Vandergriff of Arlington said taking on the project means the agency could be "sidelined for a number of years," unable to proceed with other major new ventures.

The decision was closely watched across the region and in Austin, as well as by scores of local and state officials packed into NTTA's Plano headquarters.
The road is expected to generate big profits for NTTA after 2040. But Wageman -- who peppered advisers and staff alike with questions as if he were a lawyer cross-examining witnesses -- asked how reliable the revenue estimates could possibly be that many decades out.

"Are they not just estimates? Guesses?" he asked. "We don't know what the world will look like in 30, 40 years."

Dan Heimowitz of RBC Capital Markets, NTTA's chief financial adviser, agreed. He noted, however, that NTTA's current roads have, over time, exceeded projections, not fallen short.

___________________________________________________________________

Background on NTTA deal here. More background on the NTTA bailout in the article below. Link to article here. Also see Terri Hall's article entitled "Toll roads run amok."

Road Conditions


by Abby Rapoport
February 25, 2010
Texas Tribune


Sensible people in the Metroplex may have given up long ago on Southwest Parkway and State Highway 161, two huge road projects that were first proposed back in the 1960s. Now they're toll roads — one incomplete, one not yet started — and the money to build them may finally be available.

There is, of course, a catch.

On Wednesday, Texas Department of Transportation commissioners approved a "credit wrap" that will help the North Texas Tollway Authority afford the loans it needs to complete SH 161 and to build Southwest Parkway. That was expected, but they also added a provision that forces NTTA to pay interest if it can't meet their revenue commitments. As part of the deal, NTTA gets to use TxDOT's credit rating to lower its own borrowing costs. Since the state isn't allowed to guarantee loans from its highway fund — known as Fund 6 — and isn't allowed to lend money that will be used directly to pay off someone else's loans, the agency is exploiting a loophole.

The local authority will vote on whether to accept TxDOT’s conditions on Friday, and that late addition could prove contentious. NTTA building toll roads while drawing on TxDOT’s credit rating to incur enormous debts is a far cry from Texas’ traditional pay-as-you-go approach to highway construction. With traditional sources of funding falling short, the story of Southwest Parkway and SH 161 illustrates the lengths the state must go to meet its transportation needs.

The ramp-up period

Almost everyone in North Texas seems to agree on the necessity of the two projects. SH 161, first initiated in 1969, runs north-south from SH 183 to I-20 on the Dallas-Tarrant county line, forming a link in Dallas’ growing “loop.” Southwest Parkway (also known as Chisholm Trail Parkway), which first appeared on the drawing board in 1962, connects southwest Fort Worth to downtown. Three of SH 161's four phases are complete; construction has yet to begin on Southwest Parkway.

The funding imbalances for the projects were projected to be in the billions, and given the state’s lack of available funds for transportation, both would clearly require using tolls to offset debt. As SH 161 began to garner support and funding, those concerned about the parkway proposed a new idea: Combine the projects so that excess revenues from one could support the other.

“[Southwest Parkway] was getting pushed aside in favor of what might be a more reliable revenue sources,” says state Sen. Wendy Davis, D-Fort Worth. That has changed: Southwest Parkway is now projected to be more profitable than its sister road, but the revenue-sharing mechanism is still in place and should lower risks for lenders and make construction loans easier to come by.

“We expect that both roads have potential to be very lucrative projects once they get through the ramp-up period,” says NTTA spokeswoman Sherita Coffelt. “We don’t anticipate either road underperforming, but in the case that one did, the other one would be able to support it.”

NTTA has taken out a variety of loans to complete its various projects, a burden that makes it less appealing to lenders and pushes up the costs associated with its debt. Thanks to the recent TxDOT vote, NTTA can now use TxDOT’s credit rating. While the state Constitution prevents Fund 6 from being used as collateral for this type of loan, the state can make construction and maintenance loans to NTTA that happen to mirror the amounts of the authority's bond payments.

“We cannot loan them money for debt service,” explains TxDOT deputy director James Bass. “We’re looking at what eligible expenses we are able to make a loan available to them for.”

He estimates the funding gap now, if the deal is approved by NTTA on Friday, at about $30 or $40 million. That's pennies in the world of road building. The maneuver could save the authority hundreds of millions in interest and essentially makes it possible to build two roads that might not otherwise get built. “So it’s real, it’s big,” says TxDOT Commissioner Bill Meadows, who represents the Fort Worth area on the board.

Will the safety net be needed?

It also creates a new way to pay for roads that may not be as fiscally conservative as people might like. “Given the amount of debt the [Transportation] Department has already incurred and the uncertainty of future revenue to replenish Fund 6, what protections, if any, are there for Fund 6?” wrote House Transportation Chair Joe Pickett, D-El Paso, in a letter to the agency. (Pickett did not return several requests for an interview.)

To answer his question, the agency included a number of protections. Before anyone could touch Fund 6, NTTA would have to raise tolls on both projects, and even if anyone dipped into the fund, it could not take out more than the difference between expected and actual toll earnings. “We’re not making a pledge that we’re going to make sure [that] in any and all circumstances bondholders get paid,“ Bass explains.

It also includes a stabilization fund with enough money to match the next year’s projected revenues. That way, should the highways underperform one year, the fiscal trouble is at least 12 months away. “The intent is that it will always provide one year’s cushion … before there’s a call placed upon Fund 6,” Bass told the board.

Staffers at both agencies assured the commissioners the safety net won't be needed. Coffelt says the revenue estimates are very conservative, and that the roads would have to be 20 percent below these low expectations in order to even consider going into Fund 6. “We think there’s a very slim to none chance of that happening,” she says. Bass echoed those sentiments to the TxDOT commissioners.

Such reassurances ease Davis' concerns, as her constituents would benefit from the roads. “If I felt like Fund 6 were ever going to be drawn upon by virtue of these projects it would concern me, but I think enough analysis has been done,” she says. “I don’t foresee any circumstance that Fund 6 will ever spend a dime towards these projects.”

Coffelt says the credit wrap isn’t just good — it offers innovative methods to overcome funding challenges. “That’s never been done before,” she says. “Taking advantage of TxDOT’s good credit rating and our cash flow abilities is what’s allowing us to get these projects across the goal line. “

The idea of using state credit to finance local projects isn’t entirely new, says Bill Allaway of the Texas Taxpayers and Research Association. When school districts use bonds, the state often backs the bonds with the Permanent School Fund to secure a lower rate. “The difference is the Permanent School Fund’s actually got a pile of cash in it. It’s an endowment,” he says. “Whereas the highway fund is not an endowment but an operating fund.”

The Highway Fund, a.k.a. Fund 6, generally struggles to meet its own obligations — particularly as the Legislature has dipped into it for health and human services programs, education programs and other spending that has little to do with highways. With the fund already struggling, Meadows sympathizes with concerns that the credit wrap maneuver will become a regular tool in transportation.

Not everyone is worried. “I think this will be a model for projects all over our great state,” state Rep. Rob Orr, R-Burleson, told the TxDOT board as he exhorted them to approve the agreement to build in his district. Yet TxDOT Commissioner Ned Holmes of Houston insisted that the board amend the agreement to charge interest should NTTA not meet its revenue-sharing agreements after year 10 of the project. “We’re in the business of setting precedents,” he said. “I think it’s a very dangerous precedent to set, not to have cost to a deferral.”

Meadows argued against the amendment, which ultimately passed, but he acknowledged the significance of the effort. “This whole thing about the precedent-establishing nature of this action — I think that’s a good public policy question,” he says. But nonetheless, he’s “ready to build the roads” and isn’t interested in waiting longer.

No one’s saying the situation is perfect, but impatience and desperation are setting in. “I’m supporting it because at this point, it’s the only solution that we have,” Davis says.

But while legislators hold out for better leadership on transportation, some see this effort as a sign of things to come. “Projects in the future are going to be more and more complicated to fund,” says Michael Moore, director of transportation for the North Central Texas Council of Governments. “Is this a systemic problem? … The answer is yes.”

NTTA’s board gets its say on Friday. Coffelt says the board may be hesitant, given Holmes’ amendment. The various partners who have negotiated the effort — the Regional Transportation Council, the counties, not the mention TxDOT — are holding their collective breath.

© 2010 The Texas Tribune

Tax indexed to fuel efficiency to replace gas tax?

Link to article here.

Is this a better gas tax idea?
Fri, Feb 19, 2010 | By Rodger Jones
Dallas Morning News

State lawmakers have been scrambling for ways to protect the buying power of the fuel tax even as cars get more efficient and require less gas. The concept under discussion in Austin has been to index the tax so it would automatically rise with inflation or the cost of construction.But that's looking to be old school even before Austin gets seriously close to acting.

In Virginia, lawmakers are already looking at a newer idea of indexing the gas to the average fuel efficiency of the cars on the road. That's yet another way to make sure that car owners produce a steady amount of revenue and keep up their per-mile tax support for roadways.

Two transportation guys around here have tossed out this idea too -- my colleague Michael Lindenberger wrote about it recently, and Michael Morris, transportation director for the North Central Texas Council of Governments, has made public presentations.

Both Michaels seem to be claiming authorship of the idea -- our Michael says he thought about it before he heard about it -- and it's hard to know which one to believe. I do know that both have the attention of transportation officials.

-- Our Michael says he was buttonholed the other day by Texas Transportation Commissioner Bill Meadows, who had read the blog item and said the idea is worth pursing.

-- Morris laid out details of the concept this month to a joint meeting of the Legislature's Senate and House transportation committees. Senate Transportation Chairman John Carona asked for details. You could hear the wheels turning.

I have to say Morris has a better pitch. Lindenberger has a treatise. Morris has charts, numbers, a powerpoint and everything. He's also got a great intro line for elected officials who are sensitive to the "tax friendly" label.

Morris told lawmakers: "If I said there is a strategy to raise taxes that does not cost the consumer any more money, you would say I'm crazy."


He had their attention. You can see his presentation by clicking up the Feb. hearing on the Legislature's archives. Dial into 3 hours, 29 minutes and listen. You can also follow his chart while listening (click to pg 10).

I'm not sure I follow how you can cut people's taxes and make more money, but lots is possible in Austin. One of the Michaels will have to convince me how a fuel efficiency index does magic that an inflation index can't.

Even so, this campaign year is a tricky time to talk about any kind of new tax. Kay Bailey Hutchison has jumped on Rick Perry because TxDOT is studying the concept of so-called VMT (vehicle miles traveled) tax. That method also could make sure you pay a steady per-mile cost of using roadways, regardless of fuel efficiency. It could be a lot more complicated, potentially with transponders that could have to produce information at car-registration time or perhaps at the gas pump.

But any of the new ways of raising more highway revenue is politically dangerous in an election year. Just look at the answers legislative candidates gave on this newspaper's voters guide when asked about highway funding.

Whoever goes down to Austin next year will need to confront a long-term funding shortfall estimated at more than $300 billion over 25 years. The status quo isn't cutting it.

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