February 23 Transcript


Texas Department of Transportation Commission Meeting

Commission Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483

Thursday, February 23, 2006

COMMISSION MEMBERS:

Ric Williamson, Chairman
Hope Andrade
Ted Houghton, Jr.
John W. Johnson


STAFF:

Michael W. Behrens, P.E., Executive Director
Steve Simmons, Deputy Executive Director
Bob Jackson, General Counsel
Roger Polson, Executive Assistant to the
Deputy Executive Director
Dee Hernandez, Chief Minute Clerk

PROCEEDINGS

MR. WILLIAMSON: Good morning to everyone. It is 9:01 a.m. And I would like to call the February 2006 meeting of the Texas Transportation Commission to order.

It is a pleasure to have each and every one of you here this morning. And please note for the record, public notice of this meeting, containing all items on the agenda was filed with the Office of Secretary of State at 4:03 p.m. on February 15, 2006.

As we always do, before we begin our meeting, would each of you join with me in pulling out your Blackberry, if Blackberries still work, your telephones, your pagers and all other recording devices that might make a noise, and let's all put them on the silent or vibrate mode, so that we can respect our guests' testimony, and not have them interrupted by irritating sounds. Thank you very much.

As is our custom, we will open with comments from the commission. And we always begin with the commissioner who lives in far West Texas, Mr. Houghton and then work back to Ms. Andrade and Mr. Johnson and myself. So Ted, take it away.

MR. HOUGHTON: I thought the sun rose in the east instead of the west.

MR. WILLIAMSON: Well, this is the transportation commission.

MR. HOUGHTON: I don't know if this thing is working or not. Good morning everyone. Glad to have you here. I see, I hope we have got San Antonio back again. They seem to be a regular here. Congratulations.

And I look forward to all the fun today. I see we have a party on the agenda, Mr. Chairman. That is going to -- I am one never to miss a good party. So welcome, everyone.

MS. ANDRADE: Good morning. Welcome everyone. It is great to have my hometown send their delegation. Welcome to all of you. And also our friends from the Port-to-Plains corridor, and friends from Port Aransas.

It is a great morning in Texas when we have got a room full of people that are interested in improving our transportation system in Texas. So welcome, and have safe travels on your way back home. Thank you.

MR. JOHNSON: Good morning, all. I will echo the remarks of my colleagues. It is a delight to see so many people here. It means that transportation issues are important.

In the seven years that I have served on this commission, I have come to realize -- I was very naive when I started. But I have come to realize that transportation in so many ways is fundamental and critical to our quality of life. And you see so many interested people who want to participate and be heard. It is very enlightening.

Welcome to those of you who have come from San Antonio and of course, the Plains, and other parts of the state, like Padre Island. We are delighted that you are here.

MR. WILLIAMSON: And I associate myself with the remarks of my colleagues. We are delighted to have citizens from across the state who are interested in discussing in a civilized manner the problems and solutions that confront the transportation world in our state.

I note that our good friend, Senator Wentworth is with us this morning. My glasses work only close. So is there another member in the audience that I don't see? Senator Wentworth, it is always good to have you here with us, sir.

Let me remind everyone, that if you wish to address the commission today, we ask that you complete a speaker's card. You can find a card at the registration table, in the lobby, to your right. If you wish to comment on a filed agenda item, we would ask that you fill out the yellow card.

If it is not an agenda item, and you want to comment in the open comment section, we would ask that you fill out the blue card. Irrespective, except for formal delegation and opposition presentation, we would ask that you limit your remarks to three minutes, so that we can hear everyone during a reasonable time period.

The first item on the agenda is approval of the minutes for the January commission meeting. Do I have a motion?

MR. JOHNSON: So moved.

MS. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: The motion carries. Thank you. Mike, we are going to go ahead and start today's agenda.

I think we are still waiting on a few people from San Antonio, and there is some informative matters that I wish to get on the record before we begin our San Antonio discussion. So if you would please, take it over, and let's go to agenda item 2, please.

MR. BEHRENS: Okay, Mr. Chairman. Thank you. We will do that. This is a continuation on discussions that we have started in a previous commission meetings to talk about our legislative agenda, and give the commission a chance to interact with our legislative people on issues that we want to bring before the next session of the Legislature.

And to do that, I will ask Coby Chase, our Director of our Government and Business Enterprises Division to come forward, please. He was here earlier.

MR. WILLIAMSON: Coby is running for cover.

MR. BEHRENS: We are going to start.

MR. WILLIAMSON: He will be here in a second. Coby, it is all yours.

MR. CHASE: Good morning. For the record, my name is Coby Chase. I am the Director of the Government and Business Enterprises Division here at TxDOT. And this is part of my monthly update on our state's legislative recommendation.

As you know, the Legislature asked in law for the commission to make recommendations before each legislative session. And as our Chairman has us do, as we discuss it every single month, out in the open, and in public. And this part of that continuation.

I will be brief today for two reasons. And one, if Mark, I am going to need that overhead. If you could fire that up. Since we last met, and since I last appeared before you in Conroe in January very little has changed. There is not really anything new to add.

I will go through the issues very quickly. Stop me if you have a question. But I don't believe that I have a need to take up much time on this today. However, I do have a new -- there is something else that seems to be driving our state legislative program right now, that I would like to address.

Since we last met, the Lieutenant Governor did issue his interim charges in the Senate. And they looked, to a large degree, a lot like what is going on in the House, with some exceptions. He added Senator Armbrister from Victoria, and Senator Williams to the Senate Transportation Committee.

And what they'll be looking at this interim are making recommendations for updating the state's overweight truck fees; study and make recommendations relating to TxDOT's ability to build, maintain and relocate rail facilities; evaluate and make recommendations relating to the naming of state highways -- which is interesting; study and make recommendations relating to TxDOT's programs designed to increase safety in all safe transportation facilities; monitor ongoing efforts on the Texas-Mexico border; study and make recommendations relating to relocation of utilities; review the process by which the transportation commission allocates funds to the districts through the allocation program.

They will be doing that with the finance committee, and review the process by which the transportation commission determines which federal funding sources should be implemented to comply with funding reductions mandated by Congress, and that will also be done with the Finance Committee. The Lieutenant Governor also made his appointments to the joint study Commission on Transportation and Finance, adding Senator Carona, Lucio, and Michael Stevens of the Houston area.

And so, I would anticipate that that -- and Commissioner Houghton is one of the Governor's appointees. I imagine they will start meeting soon, and we'll be actively engaged in that. Like I said, there was very little -- nothing has changed, since I last appeared before you on the state's legislative agenda.

MR. WILLIAMSON: So you laid out the initial topics that we should either consider, or you are prepared to recommend we should take a position on.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: And we communicated that to whom and to how either formally, or informally?

MR. CHASE: Outside of just the simple fact that I appear at a commission meeting, and it goes to a broad audience. Or say legislative affairs section conveyed it across the street to the people we deal with the most. House, Transportation and Senate --

MR. WILLIAMSON: House and Senate members.

MR. CHASE: Yes. And they are always -- it is always an open invitation to sit and talk to them. But we will actively go and meet with each of them as well, too. To see what their interests are, and to see how it all meshes with the interim hearing process and things of that nature, along with what the Governor's Offices desires are.

MR. WILLIAMSON: Members, I don't know how you reacted to the list that Coby presented us. I thought about it over the last month. And the question that kept popping up in my mind is, the Legislature and the Governor have advanced an aggressive transportation agenda over the last six years, and provided the taxpayers and the commission with a series of tools to address congestion, mobility, safety and economic opportunity.

And almost all of this agenda, we are considering recommending to Senator Wentworth from this point forward seems to be driven by the lack of cash or cash flow available at the state level, and at the regional and local level. And I am a little bit -- I don't want us to go across the street in January with our hat in hand, after having spent six years with the assistance of Commissioner Nichols, I guess, with us, indicating to the Legislature that the tools alternative to the gas tax that we request should be sufficient over the next 25 years to address the problem, unless we have a real good explanation for that.

So I am a little bit concerned. I am not chiding staff. But I am a little bit concerned that so much of what we may be taking across the street is driven by an absence of cash flow. Can you enlighten me as to why that might be the case?

MR. CHASE: Well, it is. And we have had a series of questions recently. The federal -- and it is often times the state, what happens on the state level is very much driven by what happens to us on the federal level.

And we have had some questions recently about the federal government. And they have a history of this. Promise you X amount of money. We plan against that amount of money, and then they rescind that amount of money. It gets snuck into different appropriation bills and things of that nature.

And it kind of paints us as the bad guy, because we have to turn around and tell our local partners, like the metropolitan planning organizations what the case is. That there isn't as much money available in certain categories as we had originally anticipated.

MR. WILLIAMSON: Yes. But is that because they reduce money, or because the federal government redefined how we could spend that money, or was it both?

MR. CHASE: Both. It is both. What we in SAFETEA-LU, the newest of the highway bills, so to speak, the successor to TEA-21, it had more money go through it.

However, there were more strings attached to it, and they moved around the funding categories. So we anticipated the right amount of money. We did not accurately predict how they would tell us to spend the money.

MR. WILLIAMSON: So for example, in the area that is of concern, for example, to the San Antonio delegation and the opposition delegation, the matter of construction. Would it be safe to say that the amount of federal funds available to us now, for what we define as construction capacity is less because restrictions have been placed on that, or the money has been moved into other areas of the federal reimbursement budget?

MR. CHASE: Yes. Absolutely. It would have been moved into other areas.

MR. WILLIAMSON: And has the federal government actually rescinded or reduced the amount of money they initially indicated we would have?

MR. CHASE: And then after that, and over the last four years, they have rescinded about $300 million. And recently, it was about $159 million. They told states -- it was proportional.

It wasn't that Texas took a bigger hit than another state per se, proportionally, but $2 billion in funding was taken off the table. Because as you know, the federal government operates with very little cushion for emergencies. And in my opinion, and it is just my opinion, but we are going to be looking at more money for the war on terrorism.

We will be looking for more money -- or the federal government will be looking for more money for hurricane relief. And we are probably going to get hit again. But recently, it was $2 billion nationwide, and our share of that was $159 million, which the agency had to figure out the least painful way to remove that amount of money from planned activities.

MR. WILLIAMSON: Well, that being the case, remind or update the commission, how much of our federal gas tax dollar do we actually have, anyway.

MR. CHASE: I will be happy to do that. You had asked a while back for us to prepare some data, and a paper, just to put it into perspective. I mean what are we starting from, before we even make any of these decisions.

And Benard, if you could turn on the overhead. And I hope, I printed this out this morning. And I hope it is visible. But SAFETEA-LU is how our federal money is sent to us, and how we are allowed to spend it.

And I am going to introduce something a little new in a sense, here, but work with me. For every dollar, a Texan goes to the gas pump and pays a dollar. So does a Californian, a New Yorker, Floridian, whatever the case may be. And the very first thing that happens when it lands in Washington, D.C. is a half cent is taken off for LUST, the Leaking Underground Storage Tank fund.

MR. WILLIAMSON: When you mean every dollar, do you mean every dollar of federal tax?

MR. CHASE: Federal gas tax. Exactly. You pay 18.4 cents at the pump, and when it adds up to a dollar, it is in D.C., a half a cent gets subtracted for that. And then 15 2 cents goes to the mass transit account. Which means they take an additional 15 2 cents off and put it into buses. Which is not bad, but I just don't think most people understand that.

It is a lot like on the state gas tax, the first 25 percent is taken off and goes to education. This is similar. What is interesting, our calculations show that 15.5 cents, we only get back about 62 percent of it. So every dollar of that money, we would get back 62 cents.

MR. WILLIAMSON: Does TxDOT get that money, or is that --

MR. CHASE: We get just a little bit of it, for the small and urban-rural. It tends to be the money that goes to DART, VIA, Cap Metro, Houston Metro. The big bus companies.

MR. WILLIAMSON: But if you take all of our metro public transit organizations' distribution from the federal, from that 15 2 cents --

MR. CHASE: Yes, sir.

MR. WILLIAMSON: You are saying the state in total, as best as we can tell, gets back 62 percent of that 15.5 cents?

MR. CHASE: What they do is -- yes. What they do is, the 15.5 cents goes into the transit account. And then they add in some of the general funds, some more of the gas tax dollars. And so, we see 62 percent back.

MR. WILLIAMSON: Okay. Go ahead.

MR. CHASE: And then the remaining 84 cents is credited to the Highway Trust Fund. If I could push that up a little bit. This is where I always ask you all to endure me on the math a little bit.

Out of the 84 cents that Texas contributed to the Highway Account, Texas gets back a guaranteed 70 cents. And a lot of times we hear that it is 90 cents, it is 90.5, it is 92 cents. But over the life of SAFETEA-LU, all we are ever guaranteed, if they don't make any rescissions, is 70 cents back on the dollar, or on the 84 cents. Pardon me.

So that dollar you sent from the gas pump to Washington, D.C., which you think will come back and actually can be used in Texas, is 70 cents. And then I am going to go through a little bit more what happens.

MR. WILLIAMSON: 70 out of the 84.

MR. CHASE: 70 out of the 84. Because it is a 90 to 92 percent rate of return over about 80 some odd percent of the money. They don't guarantee you all of the money out of that 84 cents.

MR. HOUGHTON: Minus emergencies.

MR. CHASE: Yes. Minus rescissions.

MR. HOUGHTON: Minus war on terror, minus the hurricanes, minus all this other stuff.

MR. CHASE: Exactly. I am sorry, Commissioner Houghton. That is before that.

MR. HOUGHTON: Before that.

MR. CHASE: That is before that. No. This is what, if you look at the bill in its pure form, it says you will get back no more 70 cents for every 84 cents in the system, or 70 cents for every dollar you put in the system.

MR. JOHNSON: Coby, one thought. I think I heard you say, that of the 15 2 cents that goes to transit, Texas only gets in the 60 percent range of that bag. So we are getting 60 percent of the 15 2 cents, and we are getting --

MR. CHASE: 70 percent of the 84 cents. And for a little bit of history, and I won't dwell on this very long. Senator Gramm, when he was chair of Banking, when he was in the Senate, proposed a formula that would boost the amount of money that went to -- a guaranteed amount of money. And it was very interesting.

It was even a hard sell back in Texas. Our transit providers didn't quite understand that. They all work on earmarks. Now, if you take that 70 cents, and you wonder how much of it goes into what people generally ask for from the commission, and that is construction money, this is what happens.

You take -- the first thing you do is, of the 70 cents, you subtract 1.6 cents for enhancements. And that leaves 68.4 cents. And over the life of SAFETEA-LU, that is at least $333 million has been taken away from congestion relief and put into tourism projects. The next thing is, you should subtract 11 2 cents for maintenance, which is obviously a very important function of what we do. Federally funded maintenance.

That leaves 56.9 cents, or over the life of the bill, $2.4 billion is taken away for maintenance. Which is important, and no one says it isn't. But no one shows up and asks for maintenance money.

The next is, you subtract 2.6 cents, and that leaves 54.3 cents of that 70 cents, that is $532 million. Safety is important. These tend to be behavioral programs. Don't drink and drive. Those kinds of things. Click it or ticket. Things of that nature.

CMAQ Congestion Mitigation Air Quality. Really, all the money is ever spent on is AQ, air quality projects. Signal timing. Things of that nature. You subtract 2.9 cents, and you get 51.4 cents. And over the life of the bill, that is $603 million.

Demonstration projects. Remember that Congress picked the projects. 2.7 cents or at least 48 cents or $556 million.

MR. HOUGHTON: Give me an example of a demonstration project.

MR. CHASE: An example of a real demonstration project?

MR. WILLIAMSON: No, an unreal one. Give me an example of an unreal demonstration project. Don't be afraid.

MR. CHASE: There is one in Alaska. Why don't we do that.

MR. WILLIAMSON: Pick one in Texas.

MR. CHASE: They have got a number. Someone's state is bigger than us, so that is fair. You know, some ungodly amount of money that really wasn't planned for. The bridge to nowhere. Multi-hundred million dollar bridge to service 60 people and a polar bear.

And that is the kind of thing that we are talking about. Things that generally go outside of the traditional planning process.

VOICE: [inaudible].

MR. CHASE: There you go. I am going to try my best. The next amount of money is for border infrastructure. And a little bit of that actually can go towards construction, or it could go to construction. But it is also used for things like inspection facilities, I believe, and things of that nature. But it is not just pure construction dollars.

The next amount of money, recreational trails. And over the life of the bill, that is worth $13 million. Next is bridge replacement or rehab, very important, of course. 4.43 cents, leaving you 43 cents. $917 million over the life of the bill. Metropolitan planning, the amount of money that goes to our MPOs for planning purposes. Very important money, .4 cents or $89 million. Environmental and planning, now these last two, I am going to say, environmental and planning and right of way are both necessary to build projects. No two ways about it. And over time, right of ways become increasingly an insanely expensive part of our business, so we do have to spend money to do that.

But people don't come and ask us for right-of-way money. They come and ask for hard construction dollars. They don't come and ask for environmental planning money.

They come and ask for hard construction dollars to build roads. So that further reduces the amount of money by 5.6 cents and 7 cents. So at the end of the day, remaining for construction of that 70 cents, is 30.37 cents. And over the life of the bill, that is $6.25 billion for the next five years, for construction, in federal money.

MR. HOUGHTON: To the State of Texas.

MR. CHASE: To the State of Texas. Before any rescissions and before, if we were able to receive any discretionary money, which is very rare for us.

MR. WILLIAMSON: But we can only get that money if we spend state receipts first, correct?

MR. CHASE: Yes, sir. It is a reimbursement program. And in general, we pay a dollar, we get back 80 cents.

MR. WILLIAMSON: So it is not a grant. It is not an allocation, like Social Security. It is there are two levels of tax, gasoline tax.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: That our citizens pay.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: They pay this federal tax, it goes to D.C., it gets back to the state only if the state collects a state gas tax and spends that first, in order to get reimbursed.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: So if we are getting 30.37 on the gallon of our federal gas tax, how much of the state gas tax are we getting to work with for that same construction project? Because, the elephant in the closet is 281, 1604 and the Bexar County discussion we will have today.

MR. CHASE: Okay.

MR. WILLIAMSON: Let's use 1604 and 281 as an example. How much of the federal gas tax and the state gas tax we collect from the citizens of our state are we actually able to use to build 281, or expand 281 and 1604?

MR. CHASE: When the state collects the dollar in state gas tax, a penny is taken off for collections enforcement. How you collect the gas tax.

MR. WILLIAMSON: Who gets that?

MR. CHASE: The Comptroller.

MR. WILLIAMSON: The Comptroller?

MR. CHASE: The Comptroller. And then three cents go back in refund, it is people who apply for a fuel tax refund. I guess, like boating and I believe ag, and things of that nature. So there is a way to get people who are tax-exempt their money back. So three cents goes back.

MR. WILLIAMSON: That's 96 cents

MR. CHASE: So we are at 96 cents. After that, 24 cents is taken off for education. We have done that forever, and that is where it goes.

MR. WILLIAMSON: So, we are down to 72 cents.

MR. CHASE: And 17 cents for the Department of Public Safety.

MR. WILLIAMSON: So we are down to 62, 56 cents. Did you say 17 or 16?

MR. CHASE: 17.

MR. WILLIAMSON: We are down to 55 cents.

MR. CHASE: Right. And if we are talking in terms of things that affect the roadway system, we need to subtract out other expenditures, other transfers, like to the Gulf Intracoastal Waterway, public transportation and aviation, all very important programs, but they are not asphalt, so to speak. And that is ten cents.

MR. WILLIAMSON: 45 cents.

MR. CHASE: 45 cents. Now that is what is left over from the state gas tax for the state's use in the roadway system. There is also registration fees.

MR. WILLIAMSON: Add that back in.

MR. CHASE: If you add that back in, for every dollar in registration fees, about 65 cents accrues to the department for its use. And if you were using the same amount that got us to 45 cents, that would be, I believe, an additional 29 cents. That would be available to the department.

So the state gas tax actually goes into -- a lot of department programs are not just hard construction, Chairman. I am not implying that. But it is 45 cents, plus 29 cents in registration fees.

MR. WILLIAMSON: I know we are going to take a break in a moment and let our San Antonio discussion begin. And I don't want to belabor this. But I am curious.

And maybe Amadeo is more appropriate to answer this question. How are we progressing on our research project, to try to nail down in a way that the entire state can accept and agree the apportionment of state and federal taxes of all kinds to the actual use of a road.

MR. SAENZ: We have been able to -- and we have had several -- for the record, Amadeo Saenz, Assistant Executive Director for Engineering Operations. And part of the request that the commission -- the direction that the commission gave was to come up with some indexes.

And one of the indexes is that the asset value of the system. And what we were coming up with is basically, being able to determine on any particular road, how much revenue the users of that road would be generating. And of course, the revenue is being generated through the gasoline tax.

MR. WILLIAMSON: Tax revenue.

MR. SAENZ: Tax revenue. Yes, sir.

MR. WILLIAMSON: We are not talking about toll roads here.

MR. SAENZ: No. This is just on any road that anyone drives on, depending on the number of vehicles that use that road, and the length of the road, you can come up with vehicle miles traveled.

And then you can apply some formulas and come up with how much revenue and gasoline tax, what percentage of the vehicle registration can be attributed to that road. And you come up with the total revenue that this particular road generates, based on its use.

MR. WILLIAMSON: The reason we have asked for this, is because across the state, there are those who believe that the current tax scenario the state uses to pay for transportation is sufficient to pay for their roads. I hear, whether it is San Antonio or Dallas or Houston, I hear in those communities, we are already paying for our roads.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And so, what are your initial findings? Or are you at a point in time where you can share anything with us?

MR. SAENZ: We have had some examples. There may be some roads out there that generate enough revenue through the use that would pay for the construction and maintenance over the life of that facility.

And of course, what you have on a project is, you have a capital cost and initial construction, which includes design, right-of-way acquisition and the actual construction of that first part of the asset. And then from then on, you start maintaining it through routine maintenance. You have scheduled preventative maintenance programs that go there.

And as the traffic increases, you have to have capacity improvements. So over the 40 year life of the project, you can calculate what the projected cost would be to construct and maintain that asset to keep a level of service that is adequate. So we can come up with those costs.

We can also take that same traffic projection that we used, and generate the amount of revenues that it would have -- that road would have generated. And we are finding that a majority of our roads generate much less than the cost to construct and maintain.

MR. WILLIAMSON: Is it 20 percent less? 13 percent less? 40 percent less?

MR. SAENZ: Every road would vary. You know, if you all recall, I had done the example of 151 in San Antonio. And 151 in San Antonio that looked at the expansion that had just been completed, just looking at from that day forward, not taking into account and before, from that construction for 40 years into the future, that road would only generate about 45 to 47 percent of the revenue needed to construct and maintain that asset.

MR. WILLIAMSON: Tax receipts.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So on a gasoline tax, on a federal gasoline tax, state gasoline tax, and motor vehicle registration fee apportionment --

MR. SAENZ: Right. Yes, sir.

MR. WILLIAMSON: The users of that road would only contribute between 45 and 50 percent of the actual cost of that road?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So how would we make up the difference in the current scheme, if that weren't a toll road. How would we make that up?

MR. SAENZ: Well, the way we make up the difference is, you have a common pool. So we would still need to maintain, and still need to operate. So what you do is, you take money that is in the common pool to address your costs that are associated with additional capacity in the future, and the maintenance of that facility.

MR. WILLIAMSON: Well, who contributes to the common pool?

MR. SAENZ: All the taxpayers that drive on our highways.

MR. WILLIAMSON: Every taxpayer in the state, or every taxpayer in Bexar County?

MR. SAENZ: Every taxpayer in the state.

MR. WILLIAMSON: So taxpayers in Dallas contribute to the common pool. And in the case of 151, part of their tax money is used to make up that difference.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And is that the case on, for example, 121 in Dallas?

MR. SAENZ: We haven't run the numbers on it. We are running them now. We now are able to almost take every segment of road in the state, and calculate the revenue and cost ratio, or the revenue. You take the cost and subtract the revenue, and you find out whether you have a gap or not. So we have not run 121, but I would imagine that would be the case also.

MR. WILLIAMSON: But okay, let's assume for a moment, 121 is probably not going to be any more or any less used than 151.

MR. SAENZ: That is probably --

MR. WILLIAMSON: If we can assume for a moment that it would be the same 45 percent tax recovery, so citizens in San Antonio would be paying gas tax, that would go into the common pool. And the common pool would be used to make up the difference.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And what happens when the common pool is $86 billion short over a 50 year period. Who makes up that difference?

MR. SAENZ: We don't. The needs are $86 billion over a ten-year period of time. And if the pool, the money is not there, then in essence, we don't get to maintain our roads to that high level, or we don't get to construct additional assets.

MR. WILLIAMSON: So if we are $86 billion short, the way the shortage is made up through increased congestion.

MR. SAENZ: Increased congestion.

MR. WILLIAMSON: Degrading air quality.

MR. SAENZ: Degrading air quality.

MR. WILLIAMSON: Increased accident rates, deaths and damage on the highways.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Less economic opportunity and deterioration of our road beds.

MR. SAENZ: That is correct.

MR. WILLIAMSON: So in essence, leave it for our children to figure out how to solve the problem.

MR. SAENZ: That is correct.

MR. WILLIAMSON: Members, do you have -- I want to go to the San Antonio delegation at this point. But do you have any questions or any dialogue you wish to have with Mr. Chase or Mr. Saenz?

MR. HOUGHTON: I have got one. It is just a simple matter. Out of the full gas tax receipts in the State of Texas, what goes to new construction?

MR. SAENZ: I guess, in looking at the big picture, when we look at how much we are spending for maintenance and rehabilitation, which is not new construction, our numbers are somewhere between $2.1 and $2.3 billion a year. If you look at how much revenue the 20 cent state gasoline tax brings in, it brings in about 2.1, 2.2. So really, all our money, the equivalent amount of our state gasoline tax is being used just to maintain the 79,000 miles that we have.

MR. WILLIAMSON: Is that amount going up or going down?

MR. SAENZ: It is going up. Our system is getting older. I think last I checked, our average life of our system was about 45 years. So the older the system, the higher the maintenance cost.

MR. HOUGHTON: Where does the difference come from?

MR. SAENZ: What is the difference? Some of the federal money can be used for maintenance. You saw that Coby talked about interstate maintenance. So we used, and we commingled monies where we can use federal money to cover some of the maintenance. We do that now.

It all is basically a balance of cash management. And as we said earlier, the federal money is a reimbursed amount. So we have to spend state dollars, and then we get federal dollars to come back. And then we use those federal dollars on other projects. So it is just managing cash flow and managing accounts.

MR. WILLIAMSON: Do we contract in -- we contract in multi-year cycles, right?

MR. SAENZ: Yes. We put together a ten-year unified transportation program, that is basically a financially-constrained program. These are the projects that we foresee that, based on the revenue that will come into the state, both in federal and state gasoline tax, federal reimbursements, the projects that can be let, of course, then the project development process is a long process.

You have got the preliminary engineering. You have got to do design. So we have consultant contracts on board to do some of that work. We do some work in-house. And of course, we then let the construction projects. And of course --

MR. WILLIAMSON: So we let the estimated dollar cost of our projects, according to the estimated cash flow from all sources of cash.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So there are some in the state that believe we have billions of dollars in the bank. Is that the case?

MR. SAENZ: We don't. I think James could probably tell you what our balance in our account is at any time. But if I remember correctly, the last thing to report that I saw, we had about $160 million in the cash balance, but we had an outstanding loan of $300 million, because we had to cover some federal reimbursements that were delayed.

So we try to, now that we have the tools, we try to utilize all the revenues or all the sources of money that we had, and keep as close to as possible to zero, so that we can put those on the ground faster. It is balancing the money is, versus what our best projections of how the money is going to roll out.

MS. ANDRADE: Amadeo, we may have a cash balance, but it is all committed.

MR. SAENZ: It is all committed. Yes, ma'am.

MR. WILLIAMSON: Contractually committed.

MR. SAENZ: It is contractually committed. We have contracts for design. We have contracts for construction. Construction projects average for the state about three years to complete.

So contracts that we let three years ago are being finished this year. Contracts we let two years ago will probably go into -- some will go into this year. Some that we are letting this year, over the next three years.

But we know that we have a revenue source coming in, in the gasoline tax. We know that we are able to go back and ask the Federal Highway Administration for the reimbursement of the federal dollars. And that is how we manage the cash flow. But everything is committed.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Anything else? Anything of Coby?

MR. HOUGHTON: I just have one question, Coby. When you look at the gross numbers on the gasoline receipts at the federal level under SAFETEA-LU, and then you read reports like the U.S. Chamber of Commerce report that the Highway Trust Fund will be insolvent by 2008, can you describe that to --

MR. CHASE: Very briefly, yes. The Congressional Budget Office in particular is projecting that by 2010 or so, there won't be enough money to pay for -- the Highway Trust Fund will go negative. That is just a simple point of fact.

MR. HOUGHTON: And then it is based on appropriations from Congress to make up the difference.

MR. CHASE: Well, you would have to scale back the next generation of highway bills to something smaller than it is now.

MR. HOUGHTON: And then we would be a loser in that effect.

MR. CHASE: Historically, yes. That is an accurate bet.

MR. WILLIAMSON: Okay. Well, Coby and Amadeo, thank you for sort of establishing for the rest of the day some statistics that we want to deal from. Mike, at this point, I want to leave the discussion items, and move to the San Antonio delegation and the opposition presentation.

For those in the audience who are accustomed to our regular behavior, it will be irregular today. We will not take a break at this point, or following the San Antonio delegation, we will go straight through, and then we will take about a ten minute break and let everybody kind of catch their breath.

Joe? A friend of transportation. How in the world are you?

MR. KRIER: Yes, sir. I am fine, Mr. Chairman. Thank you. Chairman Williamson, Chairman Johnson, Commissioner Houghton. Before I go further, I want to say how proud we in San Antonio are of Hope Andrade, our Commissioner. I want you all to know that we not only seek her advice and counsel, we follow her advice and counsel on all matters affecting transportation in San Antonio and on a lot of other matters. But certainly on those in transportation.

I am Joe Krier. And I am here in two capacities; as president and CEO of the Greater San Antonio Chamber of Commerce, and I am pleased to serve this year as the Chairman of our San Antonio Mobility Coalition, our public-private partnership, dedicated to addressing transportation funding challenges in our region.

We have a number of SAMCO members in the audience this morning. And I would like all of them to stand at this time to be recognized. Would all you SAMCO folks stand and take a wave at the commissioners?

(Applause.)

MR. KRIER: Now I know you are going to hear later from opponents of some the strategies that we will be discussing with you. And I wanted to stress that SAMCO is a broad-based coalition that enjoys the support, not only of Bexar County and the City of San Antonio, and our VIA metropolitan transit, the Greater Chamber, the San Antonio Hispanic Chamber, the North San Antonio Chamber, the South San Antonio Chamber, the San Antonio Real Estate Council, and numerous private sector firms.

On behalf of all of those public and private and non-profit organizations, we are presenting to you our annual update on what is going on in our neck of the woods, and thanking you for your help in the past, and we will be talking about some future opportunities. I want to start with a thank you.

You will see from the chart we have shown, thrown up for you that TxDOT has made impressively higher investment levels in our district, in recent years. Since 2003, annual construction volume in San Antonio has almost tripled, rising from $178 million in 2003, $280 million in '04, $400 million in '05, and projected to reach $470 million in 2006. Several key sections of I-10, IH-410, U.S. 281 and other high priority quarters are currently under construction. Thank you for your support for that.

Other projects are being accelerated and expedited with aggressive use of a number of the new funding tools that you encouraged us to look at and that we have taken advantage of. Those tools were provided us not only with your help, but that of the Legislature.

I would like to also say a big thank you to David Casteel to our district engineer who is with us. You have an outstanding nationally recognized staff, but we are very proud of our San Antonio district staff. And David, would you stand up, and could we give David a round of applause. Where are you, David. I know you are here somewhere. There he is.

(Applause.)

MR. WILLIAMSON: Joe, did he go to UT?

MR. KRIER: I think the appropriate response to that, Chairman, is whoop. Is that all right, David? We have a number of San Antonio leaders that will be sharing some comments with you this morning. And then we have a closing video we want to share with you.

But I would like to start with a man who has received national recognition for his efforts with regard to hurricane relief, a truly outstanding -- and I think a guy who will be remembered as one of the great mayors of San Antonio, our Mayor, Phil Hardberger. Mayor?

MR. HARDBERGER: Thank you very much. It is great to see you. It is great to be before you, Commissioners.

MR. WILLIAMSON: Welcome, Mayor.

MR. HARDBERGER: We really appreciate all of the help that you have been giving us. And on behalf of the City of San Antonio and our public and private sector transportation partners, I want to thank you for the efforts that you have all made to accelerate the priority highway and improvement projects for San Antonio. And I am going to tell you a little bit about our needs, which are great. In fact, and I want to get two points across. Thank you for what you are doing, and two, we need more. We have several of our City Council members here, and I am going to ask them to just quickly stand.

I will get them all in here, as well as our City Manager here today. And if you all would just stand and remain standing. Richard Perez, Sheila McNeil, Patty Radle, Roger Flores, Art Hall, is Chip Haas still here? Chip Haas was here last night. And our City Manager, Cheryl Skelly. Thank you very much.

(Applause.)

MR. HARDBERGER: Despite the increased levels of investment, and the application of new tools, our region continues to face significant transportation funding challenges. Primarily, that is due to rapid population and economic growth. That is a good problem to have.

And we are fortunate to have that strong economic growth. But it does present transportation problems for sure. And we know that the demand for transportation services is going to continue to grow, dramatically grow in the years and the decades ahead for San Antonio.

Population, let's talk about population. And there will be some slides that we go along here, should you wish to look at them. But I am going to give you the information anyway. I am of the old school. I can just listen. I don't have to listen and look. So whatever you want to do.

But recent projections indicate that our regional population, which was 1.42 million in the year 2000, is going to increase to 2.39 million in the year 2030. That is a 68 percent increase, or to put it in common figures, 1 million new people.

If we turn now to our economic growth, during the same time period that we are talking about, the employment in the San Antonio region is going to grow by more than 75 percent. The addition of Toyota's North American assembly plant accompanied with 21 onsite suppliers, as well as a lot of rapid expansion in the biotechnology, health services, financial, higher education sectors, indicate with great certainty that the local economic growth is going to be a significant factor in generating transportation demand.

In the area of international trade, with more than 50 percent of our export-import traffic with Mexico passing through the San Antonio region, international trade expansion is going to place additional pressures on the local and regional transportation network. NAFTA truck traffic through the IH-35 corridor -- and all you have to do is be out there by the way, and you will know what I am talking about -- but that is going to continue to grow at an exponential rate, adding thousands of trucks to the region's already congested highway system.

And the truck traffic is growing by 15 percent every year along IH-35. That is compared with a 2 percent growth nationally. NAFTA related rail traffic is also growing 6 percent a year. And the overall growth in the movement of freight by rail is forecast to almost double by 2025.

The military. Recent base alignment and closure decisions have resulted in our case, not in a loss of people, but in a gain of people. A net increase of more than 4,000 military employees in San Antonio, and the addition of new and expanded missions at Fort Sam Houston, Randolph Air Force Base and Lackland Air Force Base.

The most dramatic of these changes will be at Fort Sam Houston, which is transitioning to become America's hub for joint enlisted medical training. That is everything down from doctors. It does not include the doctors, but all other kinds of medical training.

It will be the largest in the United States, resulting in 13,000 or 14,000 new workers and students, 5,000 families and $2 billion in new construction. Clearly, these military missions are going to benefit the Texas economy. But they will also require us to make additional investments in our transportation infrastructure that is going to serve those facilities.

The regional trade corridors hurricane evacuation routes which we had a recent example of. During that last hurricane season that we just got through, San Antonio served as a center for mass evacuations of citizens from Houston, New Orleans, Corpus Christi and other points along the Texas Gulf Coast. At least 30,000 people came through there around San Antonio; very likely more.

During such emergencies, the regional corridors between these Gulf Coast communities and San Antonio which would be IH-10, IH-37, and U.S. 281 were really inadequate for the purposes. These routes also served as regional trade and statewide connectivity corridors, which is of course then ongoing. We do applaud, and we thank the ongoing efforts of TxDOT to take a fresh look at these regional connectivity corridors in light of the lessons that we have learned from the hurricane experience this past year.

It is also important that our transportation planning move forward in a manner which allows the region to remain in compliance with federal air quality standards. We enjoy the growth, but we don't want the growth to degrade the quality of our air, which has occurred in many other cities in the United States. The San Antonio region has been proactive in air quality work through implementation of an early action compact that emphasizes proactive voluntary approaches and outreach to business and industry to meet a 2007 goal of full attainment.

So I hit five areas here, five trends that are going on which summarize and emphasize our transportation challenges that San Antonio and Bexar County is going to be facing over the next 25 years. And I believe that is all I really have to say, except thank you for how much you are doing for us.

We really do appreciate it. We really do need it. And we are going to need it more and more in the days, weeks and years ahead, almost certainly.

MR. WILLIAMSON: Members, dialogue with the Mayor?

MR. JOHNSON: Mr. Mayor, and I see Judge Wolff there, my observation is clearly you are doing things right.

MR. HARDBERGER: Thank you.

MR. JOHNSON: I salute you and I mentioned last night at the SAMCO reception what your area is accomplishing is, you are trying to stay on the curve, or ahead of the curve and anticipate a lot of the challenges before they actually get there in a direct and painful way. And I salute that. And I salute you for it.

MR. HARDBERGER: Thank you, Commissioner Johnson. I really appreciate your saying it. And we do have a very close relationship between the city and the county in San Antonio and Bexar County. Judge Wolff and I consult virtually every day about one thing or another. And so that is a good harmonious working relationship.

And we are really blessed to have a great city council that also I think has a team approach, rather than an approach of trying to fight each other. And we have got a great city manager. So we have got a lot going for us. But we still have a lot to do, too.

MR. HOUGHTON: I think this is a model that the cities around the state should emulate, and I congratulate you on it.

MR. HARDBERGER: Thank you.

MR. HOUGHTON: There are great opportunities in San Antonio and it is obvious by what the economic development opportunities are being brought forth. I have one question. Is this your leadership of the city, sitting right here with you?

MR. HARDBERGER: It is a lot of it. We have a lot of leadership, but it is certainly that you have got a lot of it, right here in the room.

MR. HOUGHTON: I was going to say, who is in charge back home?

MR. HARDBERGER: The truth is, this is our city council day, and so we are all going to go running home after lunch to start our city council meeting, which usually begins at 9:00.

MR. HOUGHTON: Well, congratulations.

MR. HARDBERGER: Thank you so much, Commissioner.

MS. ANDRADE: Mayor, I want to thank you for your leadership. It is great when I have meetings with you and the Judge, because we are a great community that works together.

But I would like to offer a special thank you, because I know that this is your city council meeting day, and you moved the meeting around so that you could be here. And to all the city council members that are here, thank you so much for driving to Austin.

I know that some of you got stuck on I-35. And it just proves that we do have a congestion problem. I try telling you that. I am on that road often.

But it is just great to live in a city that understands that we do have to put transportation as a priority in our community. And so I thank you for your leadership.

MR. HARDBERGER: You are welcome. And we are proud of you, Hope. It is great to work with you.

MR. WILLIAMSON: Thank you, Mayor.

MR. HARDBERGER: Thank you so much, Mr. Chairman.

MR. KRIER: Mr. Chairman, it was my high school English teacher who first taught me that if you goof up big time, confession and abject apology are the first steps on the road to forgiveness. We had intended for Senator Wentworth and Representative Ruth Jones McClendon to speak before any of us spoke.

And I goofed up and got the Mayor up here first. So we would love to have Senator Wentworth and Representative Ruth Jones McClendon visit with you, and then Judge Wolff will follow them, if that is all right with you, Mr. Chairman.

MR. WILLIAMSON: Absolutely.

MR. KRIER: Thank you.

MR. WILLIAMSON: A sitting member of the Legislature takes priority around here any day.

MR. WENTWORTH: We just did it on the basis of seniority, even though I am not that much younger than the Mayor. Chairman Williams, Mr. Houghton, Andrade, Johnson and Director Behrens, I notice you have had your colleague leave, because he still doesn't have a name plate, so I can't address him by name even. You need to get him a name plate.

Let me tell you, I am grateful for what the Texas Department of Transportation has done for San Antonio for a number of years. We are in the process now of completing the interchange at I-10 and 410, which is fabulous. We are making good progress on the interchange at 281 and Loop 410 near my house, that is going to be fabulous.

San Antonio and the State of Texas, because of our business climate is attracting more and more businesses. We have got Toyota coming. We have got Washington Mutual coming. We have got a lot of folks coming.

And I want to add my accolades to those that Joe Krier has already made of David Casteel. I have worked in my 18 years in the Legislature with a number of district engineers in San Antonio and they have all been good.

But none of them have been any better than David Casteel. He is responsive. He is professional. He is timely. And he is a real credit to the Texas Department of Transportation. And I want to add my congratulations to him.

MR. WILLIAMSON: Thank you for that, Senator.

MR. WENTWORTH: Let me bring a little practical political reality to our discussion. I send out every year a report.

And every other year, before we go into a regular session, I add a questionnaire to it. And I ask the 700,000 people in my six counties different topical questions. And I just did one last month.

I have gotten approximately 16,000 voter responses to the questions. I had 20 questions, and two of them had to do with transportation, because transportation has become a very hot topic in Bexar County.

And these are the two questions. In order to reduce congestion on our public highways, do you favor an increase in gasoline taxes of up to 50 cents per gallon, to fund new highway construction, yes or no. 77.4 percent of my constituents say no. They do not want an up to 50 cents per gallon gasoline tax increase.

Now I heard Chairman Williamson say it would take up to a dollar a gallon. I think that was an exaggeration. So I just put up to 50 cents a gallon.

MR. WILLIAMSON: I do want to -- thank you for giving me the opportunity to clarify that. There are three answers to the question how much does it take?

If we want to make up what has been removed from the state's transportation budget since 1986, to this moment, and then maintain that to 2030, the answer is it takes 75 cents a gallon right now, declining to 35 cents a gallon in 2030. And no provision is made for the population increase that we all know is coming.

If we want to make up for what has been removed in the last 20 years, and provide for the population increase that is coming by 2030, then we start a buck and a quarter a gallon, slide to 75 cents, and then to 35 cents by 2030. And you gave me the opportunity to clarify that. Because a lot of people say, you say a dollar, a dollar and a quarter, 75.

Well, it depends on what your goal is. If your goal is to make up what has been taken away, it is 75 cents today. If your goal is to make up what was taken away and build out for the future congestion, then it is a buck and a quarter, then you can slide it back down.

But you can never get it below 55 cents a gallon if you want to maintain that system. Anyway, that is where I get that.

MR. WENTWORTH: Okay. Well, my constituents at 77.4 percent do not want a gasoline tax increase. So the second question was -- because everybody in my district does want to reduce congestion -- the second question was, if you want to reduce congestion on our public highways do you favor the construction of new highways to be paid for by tolls.

And 54.2 percent of my constituents don't want to pay for them with tolls either. Essentially, they want the highway fairy to pay for new construction.

MR. WILLIAMSON: But he killed the highway fairy.

MR. WENTWORTH: Now let me say as a practical matter, and Chairman Williamson and anybody else in the room, including currently serving elected officials I think will identify with this. I have been in office for a long time.

I was first elected in 1976. I haven't served continuously since then. There was a little six year hiatus. But I have actually served in office for 25 years. As a county commissioner, as a State Representative and now as a State Senator.

The message that my Texas constituents have given me over that period of three decades now really hasn't changed that much. And I hope the Mayor and the councilmen and others will see whether or not this resonates with them, because -- and I understand it, because it is the same message I give my congressman and my county commissioner and my school board members and the rest. And it is this.

I am a Texan, I live in Texas. I am damn proud of it. I wouldn't live in any other state. And by god, we are entitled to the best roads and the best health care and the best schools and the best parks, and the safest streets, which means the finest prison system known to man. And oh by the way, while I have got you on the phone, don't raise my taxes.

That is the tightrope that all elected officials in this state try to walk. Between either the requests, or in some instances, the demands of our constituents for certain services, but the lack of enthusiasm about giving us the money to pay for it.

So I appreciate what you all are attempting to do. As you may recall, six or eight years ago, when Kip Averitt was still in the House, and Clyde Alexander from Athens was Chairman of the House Transportation Committee, they came up with the idea.

As you all know the Constitution does not allow the Senate to initiate tax bills. They have to initiate in the House of Representatives. They came up with the idea of increasing the gasoline tax by a dime a gallon. I couldn't introduce that bill in the Senate.

But when I heard about it, I said, it is a good idea. We need to do something to address congestion. It takes money to build these highways. So I told both Clyde and Kip that I would be the Senate sponsor of that bill, in the Senate, if they got it out of the House.

That news got made public, and Governor Perry announced that it doesn't make any difference what the Legislature did on raising that gasoline tax, he would veto the bill if we passed it. So that is taken off the table.

So it looks to me like the question at this point is, we do either nothing, which is what you all don't need to be reminded, which was the policy that the City of Austin adopted years ago. Don't build them, and they won't come doesn't work. They didn't build them. People came anyway. And Austin is trying to catch up.

So it is either, we do nothing, which is not an acceptable alternative in my view, or we do tolls. That is the point we are at. And I am grateful for the work that you all perform; the service you provide.

And I am grateful too for the multimodal approach you all are taking. I would encourage you to continue working on getting Union Pacific to move their lines.

And I appreciate the help you have been to the Austin-San Antonio commuter rail district. That is a bill that Senator Barrientos and I got passed nearly a decade ago. And it is more needed now than ever.

And with that, I thank you. And Chairman Williamson, we have got another House member who has sneaked in since you introduced me.

MR. WILLIAMSON: Members, any dialogue with the Senator?

MR. HOUGHTON: I just thank the Senator for his support on transportation issues. A champion, really appreciated. And moving those railroad lines, there is no railroad fairy, either.

MR. WENTWORTH: Oh, I understand.

MR. WILLIAMSON: Anything else?

MS. ANDRADE: Senator, it is always a pleasure to be with you. And thank you so much for coming here. You are right. Thank you for the history that you have given us.

But you are absolutely right. You know, what we are dealing with is extremely difficult because it is different from the way that we have done things before.

And so sometimes, we need to be reminded that we don't have any choices. And those are tough choices that we have to make, that we do have to prepare our community and our state for the growth that we are experiencing. So thank you.

MR. WENTWORTH: Thank you.

MR. JOHNSON: Senator, I just want to echo what my colleagues have said. It has been a pleasure noting the consistency that you deal with, all the issues that you deal with, and especially from the transportation side.

You have just been a true champion of finding solutions to the challenges that we face. And I have certainly enjoyed my association with you, and I thank you for what you do for this great state.

MR. WENTWORTH: Thank you, Commissioner. I am glad that I am still on the Senate Transportation Committee to, and will continue to be actively engaged.

MR. WILLIAMSON: You have always spoken directly, since your days when you and I were colleagues in the House, and I appreciate the direct communication.

MR. WENTWORTH: You bet. Thank you, sir.

MR. WILLIAMSON: Thank you, sir.

MS. MCCLENDON: Good morning.

MR. WILLIAMSON: Good morning.

MS. MCCLENDON: Mr. Chairman, Commissioners, Director. On behalf of the San Antonio area, and particularly my House District 120, I want to express my appreciation to each of you, for your magnificent staff, and especially our San Antonio area staff for the increasing level of investment you are making in San Antonio, and for the assistance in developing transportation solutions for our region.

Since early 2000, we have really gotten our act together. And I really appreciate the fact that you have recognized our efforts. In particular, I want to sincerely thank you for your efforts in working with me, and the rest of Bexar County, the Union Pacific Railroad and other key stakeholders, to identify and implement a plan to relocate freight rail carrying dangerous toxic chemicals away from our densely populated neighborhoods.

And Mr. Chairman, I just want to thank you especially for your sage advice and counsel as I work to steer the relocation effort through the Legislature and get them to understand that rail relocation is a safety issue, and it is very important to the State. I measured this gigantic project in four steps.

The first step was to get it past the Legislature and to get the government decided. And that has happened. Then the next step was, of course, the amendment that we passed in November to get the voters' approval, and that has happened.

The third step is to secure the funding. And then the fourth step of course, and the final step is construction. With the passage of Proposition One in November, the Texas Rail Relocation Fund was approved by the voters of Texas.

We now begin step three. And I will be working with colleagues in the Legislature on the Appropriations Committee to find sources of funding for this huge project, and we'll start making plans to implement the actual moving of the rails.

I look forward to working with you and all of your staff, and all other interested parties of these next two phases of this monumental production. In closing I want to join the others in appreciation for your newest member, my friend, Hope Andrade, I will tell you, she truly gets it.

But don't go to California with her, because she will get you in trouble and will make you have to take shots and stuff. So don't do that. But again, I sincerely appreciate all that you have done for San Antonio. That is a long story.

MR. HOUGHTON: I think you may want to clarify that.

MS. MCCLENDON: I am going to let Hope handle that. Thank you for all you have done. And we really appreciate your efforts.

MR. WILLIAMSON: Well, you were a tremendous asset to the State. Not just San Antonio and Bexar County, but the State, in advancing the rail relocation bill. And we do believe it is as much a safety issue as it is an economic development issue.

We think ultimately, it is also a congestion relief issue. Because we believe that if we can figure out how to get, primarily the UP, the BNSF and the Kansas City Southern, on routes away from our urban areas, we will off load truck containers onto railcars, which will reduce the congestion on all of our highways. So we think it is a three-for, long term.

But it wouldn't have worked, if you hadn't been so articulate in advocating the safety side of it in the House. And we owe you a great deal of gratitude for that.

MS. MCCLENDON: Thank you.

MR. WILLIAMSON: Members?

MR. JOHNSON: I just wanted to say it is great to have you here. And thank you for championing so many very strategic issues, and especially the railroad relocation. I know it is vital, not only to your district, but you know, the community and the state, in ways that the Chairman has mentioned. And I certainly have enjoyed working with you on some of the enhancement projects.

MR. WILLIAMSON: What was the name of that bridge?

MS. MCCLENDON: It is the A Street Bridge.

MR. WILLIAMSON: The A Street Bridge.

MR. HOUGHTON: I look forward to working with you on the rail relocation. We had some meetings on that internally, on the funding sources, and some ideas and concepts.

And I am glad you got to go to California. That is a prime example of private sector and the public sector coming together, and making something happen.

MS. MCCLENDON: Absolutely.

MR. HOUGHTON: But thank you for your efforts.

MS. MCCLENDON: Thank you.

MS. ANDRADE: Representative McClendon, thank you so much for everything you have done for this State, and for our community. And I promise you that if you go on another trip where we are trying to find opportunities to fund our rail fund, that you will not get sick. And so it really was not my fault.

MR. WILLIAMSON: Everyone told us that you were the one that chose the restaurant.

MS. ANDRADE: The food was good, right?

MS. MCCLENDON: The food was delicious.

MS. ANDRADE: And the company was wonderful.

MS. MCCLENDON: Absolutely.

MS. ANDRADE: So thank you, and I am so proud of you and I am so proud to call you my friend.

MS. MCCLENDON: Thank you.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Thank you, ma'am.

MS. MCCLENDON: Thank you.

MR. WILLIAMSON: Oh man, my favorite County Judge.

MR. WOLFF: Wonderful, the quality of Ric Williamson, who is able to convey to anybody exactly how he feels. We have enjoyed that. I really want to thank Hope again for the tremendous work she has done -- we have come a long way, almost five years now, I guess, with pulling the community together. And trying to be a partner with the department.

We still have a long ways to go. The landmark in Texas metropolitan transportation plan released by TxDOT in October of 2004 identified $8.4 billion transportation funding gap for San Antonio, over the next 25 years. This number doubles to $16 billion when unfunded rehabilitation needs are considered. And still more will be needed to adequately address local street construction needs.

I suspect just about everyone in this room is familiar with that gap, and similar gaps in other Texas metropolitan areas. We all share a common challenge to reduce or eliminate these gaps. To this end, officials from various local and regional transportation entities, the Alamo RMA, Bexar County, the City of San Antonio, VIA, MPO, ACOG and SAMCO are partnering with TxDOT to apply the new funding tools made possible in recent years by actions of the Texas Legislature and Texas Transportation Commission.

By aggressively applying these new funding tools, and by undertaking related efforts to focus on multimodal and regional solutions, significant transportation projects are being accelerated in Bexar County, and in some cases, for decades ahead, earlier than what had been the case with traditional funding approaches. Taking together the application of new funding tools, we'll begin to take a significant bite out of the projected $8.4 billion funding gap.

Here are just a few examples of how we are applying the range of new funding tools in Bexar County and San Antonio. $34 million in new annual funding is being generated through our advanced transportation district, which was approved by the voters of San Antonio in November 2004, to leverage additional street, transit and highway improvements.

As a result, ADT leveraged six major highway projects along portions of IH-35, 410 and IH-10 have been authorized for construction this year, rather than waiting up to ten more years to bring these projects online. We thank the commission for working with us to expedite these projects, which were first presented to you in June 2005.

ADT money is being also used to upgrade city streets, and to make significant operational improvements in our mass transit system, as Tim Tuggey, VIA Chairman will shortly address. We are also accelerating delivery of projects through the Alamo RMA, and a proposed 70 mile system of new toll lanes along U.S. 281, 1604, and IH-35 and other high traffic corridors. The new lanes will provide additional needed capacity, faster congestion relief, and a choice for motorists in the existing non-toll lanes will remain available to motorists.

A third tool we are applying is pass-through financing. Specifically along portions of FM 3487, Culebra Road, and FM 2696, Blanco Road. Bexar County and TxDOT staffs continue to negotiate specific terms and we anticipate the first of these agreements would be brought before the commission for your approval in April of this year. Again, the primary goal is to accelerate project delivery by several years.

Other funding tools and approaches we are applying in the region include the Texas Mobility Fund, bonds for future toll lane projects. Project 14 bonding to accelerate non-toll capacity. Expansions along IH-35, and 410 and U.S. 281 interchange. Potential private sector dollars from the CDA proposals. And some $30 million in federal earmark for eight priority projects.

To illustrate how the new tools are being applied in Bexar County, the MPO has prepared the following two slides showing our 25 year transportation plan before and after the addition of the new funding tools. Through application of these new funding approaches, 264 additional lane miles have been added to the MPO plans, or a $964 million in new or accelerated investment and transportation infrastructure.

With regard to freight rail, a San Antonio rail master plan is being developed through three ongoing studies that will examine options for one, the relocation of rail through freight out of the Austin-San Antonio corridor to the east of IH-35. Relocation of rail freight to bypass the metropolitan area of San Antonio, swing it around southeast and missing, and taking that freight out of the middle of San Antonio.

And potential improvements to existing infrastructure, related to the first two goals, and most important as Senator Wentworth has stated, with the moving of freight out of the IH-35 corridor, then our commuter rail system will begin to function in that area. A specific list of projects and their costs and benefits will be prepared as phase two of the rail study, expected to be completed in the fall of 2006.

Improvements to the regional rail infrastructure is also a critical piece of a state's infrastructure in this region serves as a crossroads for both north, south, and east-west lines. Given the proximity of San Antonio to several border crossing and expected increases in freight coming from San Antonio. And improvements to rail infrastructure will alleviate some of the strain that the expected increase in freight will place on the roadway system.

We support the commission's continued efforts to address congestion and safety issues along key rail corridors in the state, and to incorporate specific rail elements in the design of the Trans-Texas Corridor project. We are also supportive of the Legislature to capitalize the Texas Rail Relocation Fund, and fund it, which was approved by the voters in November.

Clearly, significant funding will be needed to address rail relocation needs of all major areas in our state, and I am very thankful that the commission understands the significance of increasing our capacity in rail to be able to not have as many trucks on our highways, and it is a major safety issue. I would now like to introduce Bill Thornton, Chairman of the Alamo RMA who will provide a brief update of the development of our toll lane system.

MR. WILLIAMSON: Members, any dialogue with Judge Wolff?

MR. HOUGHTON: Just it is very refreshing, Judge, to see the city and the county going down the same path together. And that is something again, I would hope other communities around the state would emulate.

MR. WOLFF: Mayor Hardberger is providing great leadership on the City Council, and the City Council that is here today, I think is one of the best city councils that I have seen in the last ten or 20 years. And they are really providing good leadership and we are delighted to be working with them.

MR. HOUGHTON: Congratulations.

MR. JOHNSON: Judge, I wanted to repeat what I told the Mayor. Clearly, San Antonio and Bexar County are doing a lot of things right. And it is really great to see.

MR. WOLFF: Well, it took a major effort, I think, in the last five years, pulling together city, county, VIA and the private sector, which has played a key role in helping us develop these plans, and the voters of San Antonio, voting by some 58.15 percent to assess a sales tax to help.

MR. HOUGHTON: 58.15.

MR. WOLFF: I remember that number. We had a good campaign.

MS. ANDRADE: Judge, I want to add to thanking you for being visionary and so committed to our community. And you know, at times, I am saddened when you are criticized, because I know where your heart is. And I know that you would never do anything to harm our community.

You are just trying to help prepare it. But thank you. Thank you for being strong and hanging in there.

MR. WOLFF: Well, if we will continue to get over the facts as you have laid out today, and explain to the citizens of Bexar County what we are faced with, I think they will understand we need to take all these steps. There is a lot of distortion in the community today about what we are doing. And we have got to do a better job of communicating what the challenge is, and what we are planning to do.

MS. ANDRADE: And I will help you on that. Thank you.

MR. WILLIAMSON: You really are one of my favorites. I think you are a very good county judge. My daughter is well represented.

MR. WOLFF: Thank you very much. We like working with you, even though you can be tough sometimes.

MR. WILLIAMSON: That is about the kindest thing that has been said.

MS. ANDRADE: Judge, but we seem to work it out at the end. Right.

MR. THORNTON: Nelson has kind of set this nest of warmness for me to land in now. The problem we have got is there are too many straight shooters in this room. And that is not bad in Texas though.

Texans where I grew up in West Texas, they kind of like that. In fact, the only worse thing you could be called in West Texas was a liar. And that is one thing we're talking about here, is getting the facts out so people using the correct information as we face these issues.

And speaking of straight, you have always been a straight communicator. But you have been a steadfast commitment to what you said you were going to do. And I had banked on that. I have bet on that, and I will do it in the future.

The commission has followed through with every thing you have asked us to do. You have given us the resources. We came to Corpus. We said help us with a little financial assistance, and you came through in spades. You were wonderful.

We are using that money now to do those studies, to address these issues that you have identified. I think we are doing it in a proper way. We have Terry Brechtel that we have hired. I think that you all have met, is our new -- replacing Tom Griebel as our new president of our organization.

Jim Reed is here from our board, who is spending a great deal of time over here. And let me say in that partnership with 281 where we had our conversation, where do we fit in. The process has been spectacular in your kindness, in your inclusion of San Antonio's people coming over here, and that needs to be noted. Thank you very much.

We are using these additional funds to look at three other projects. Bandera Road, Highway 16, 281 and actually it is Wurzbach Parkway and 281, that area. And also I-35 -- the NAFTA highway, as it comes through San Antonio.

We are doing the work on those today. We may need more toll equity to make those feasible. And we will work with you to develop what that ought to be.

What you see today -- and Ruth is still here. Ruth leaned over and said, we have our act together. Bexar County, San Antonio, the RMA and partnership with the MPO Division, business organizations, we are coming here today as a united front. These elected officials on city council take decisive votes to support what we do. And we are saying thank you to them.

It is not easy to ask people to pay more. But they have done that or are supporting us, rather. And we say thank you to all of you that have done that.

Interestingly, the opposition we have, even what you will hear today is not from Bexar County. From Comal County, New Braunfels, not San Antonio. So I think that is an important note that we need to make on this.

I want to say the Governor's name. We are developing or living that vision that was developed several years ago, through you and the Legislature, the commission in adopting this. But it is the most creative way, I believe, the most fair way to address this shortfall that you have identified here today.

It is not a tax, which everyone pays. It is an option. If you don't want to ride in our toll lanes, don't do it. But don't be upset if I choose to do it, and I speed on past you to get to wherever I need to go.

I will be one less car in front of you at that next traffic light while you are still waiting. I think these toll lanes are going to be adopted by our citizens, and they will be appreciated as they are already, in Houston and Dallas.

One thing I would say, Ms. Hall, and what you have talked about today. Ms. Hall and I agree on this. On the gas tax, preserve what you have. The legislative session that is about to come up is going to be rough. They are going to be looking for money everywhere.

As best as you can, let me say, preserve the gas tax as best you can to our Representatives. Secondly, if there are opportunities to rescind some of those diversions, that would make this a much more straightforward conversation in what is collected as transportation dollars stays in transportation projects.

And I say that on the record, just for encouragement. Thank you all, and you all have been great partners. And we are working hard for you in San Antonio.

MR. WILLIAMSON: Members?

MR. HOUGHTON: I want to thank you again, Bill.

MR. THORNTON: Thank you.

MR. HOUGHTON: We got over all the bumps in the road, and now we are headed down that super toll road.

MR. THORNTON: Ted, may I mention this? We started without really a name, no money, no rules, no procedures, no history. We were appointed by the Governor and by a commissioners Court. We have matured. We have grown.

We are in the game playing with you as partners. It simply had to be a time of maturation, which I think we have come through very well. And the leader for TxDOT, the department and the commission has been Hope Andrade. And that is why you hear so many people saying, thank you to Hope. Her presence is very important in what we are doing. Thank you.

MR. WILLIAMSON: We could almost call her one tough grandma.

MS. ANDRADE: That title has been taken.

MR. WILLIAMSON: Sorry.

MS. ANDRADE: Chairman Thornton, before you leave, I also want to thank you. And for the record, I want it known that Bill Thornton is also a former mayor of San Antonio. So he has a great understanding for our city. Thank you for your leadership.

MR. THORNTON: If you will notice, you have got three former mayors here.

MS. ANDRADE: Yes. Isn't that great.

MR. THORNTON: Yes. We are all lined up, happy to do this.

MS. ANDRADE: Another thing we didn't mention was that we also have our Chairman from the MPO, which is Councilman Perez.

MR. THORNTON: Right. And he is strong leadership, when these open opportunities for people to give other opinions, he has been strong in looking forward to addressing problems with realistic solutions. And he has been great on that.

MS. ANDRADE: He has been a great supporter, and a great future leader. Thank you.

MR. JOHNSON: Bill, I want to make an observation. I believe when the RMA legislation was passed, there were a lot of skeptics. And there still are a lot of skeptics. But nobody foresaw how well they could work.

And I am certain that when your group first gathered, there was no unanimity on probably any issue before you, including the great challenges that communities such as San Antonio and Bexar County face. But what you have done, is you have shown that by working together and coming together and recognizing challenges, that you can succeed.

And it is a great picture for others around the state to look at where you started, and where you are today. And then years from now, what you have accomplished.

MR. THORNTON: Commissioner, we have been an RMA for about a year and a half. Do you know how many votes we have had that were less than unanimous?

MR. JOHNSON: I do not.

MR. THORNTON: Not one. And the reason for it is, we have worked through committees. The issues are discussed. All options are considered. TxDOT provides us with the information, and the work is done.

Such in the committee, Jim Reed who is here. Where is Jim? That gentleman right there is why the work is done. And by the time it gets to our board level, all options have been considered. Everybody's voice has been heard. We have not had one vote that was less than unanimous.

MR. JOHNSON: But my sense is that when you began consideration that probably everybody was not in agreement or in harmony on things.

MR. THORNTON: We really were. We had good leadership. Tom Griebel is a TxDOT product. I mean, he grew up here as a young man at age 15, and started working at TxDOT, and now look at him today. He has grown into a full size human. We had a good guy to help us there. Stole him from SAMCO, which is here today.

But we have been fortunate. I pledge, and I know that Commissioner Houghton gets nervous, it seems, when I say this. Our goal is to be the best RMA in the state. I know they are all here, and they are all equal. We want to be the one that you can look to as doing it correctly, and I think we can.

By the way, we have still not gotten that tough grandma. She still hasn't given us our report, after spending two months with four people sitting in our offices and going through our files. We have still not gotten our report, like Austin got.

MR. WILLIAMSON: I am going to bet that after your testimony, you will get it pretty quick. Just a guess.

MR. THORNTON: I can't wait.

MR. WILLIAMSON: I want to add to the remarks of my colleagues about how much I appreciate the way you have conducted yourself and led your RMA. As you and I have discussed many times face-to-face, Governor Perry does believe strongly in the notion of local and regional planning and execution.

And he believes that, at least in the world of transportation, our role is to transfer the authority to act with the tools to take action to empower local and regional leaders to be responsible for their own destiny. And we practice that here at TxDOT in our rules and our regulations, and what we say to our legislative partners across the street.

We are not afraid of the Governor's vision of handing control of transportation to the regions, because we believe that in the end, you are capable of making quick good decisions for your local and regional constituency. And we believe in local control, at least in our part of the political world. And you have been a model of that.

And you are right. We may argue. But we are like the -- what was that Air Force, Top Gun? The guy said, the wing pilot cannot break. We will not break. We will be your partner through the worst of it, so that you can enjoy the best of it. We give our word, we keep it.

MR. THORNTON: I know that. I do know that. The Governor has kept his word on local control, because during that interesting time, the thing that I say to our citizens, if they are for us or against us.

You don't have to drive to Austin to complain. You know who I am. You know where we are meeting. Come on over. And that is as local as it can get for the good, and for the bad, we are there to hear people. Thank you all very much.

MR. WILLIAMSON: Glad you are here.

MR. THORNTON: Tim Tuggey is the gentleman who led the effort to get a tax increase for our Advanced Transportation District. He is Chairman of VIA. He is very involved in transportation issues in our community. And he will be the next presenter.

MS. ANDRADE: Mr. Chairman, you just had a new board member walk in. We recognize her.

MR. THORNTON: Who is your Vice-Chairman?

MR. WILLIAMSON: We don't have one.

MR. THORNTON: We do. Christina Rodriguez. And she is very active in our board, and I am glad that she is here. And I am sorry that --

MR. WILLIAMSON: I guess my proper answer was that I have three Vice-Chair.

MR. THORNTON: Well, we have got a great one in Christina, and I am glad that she is here today.

MR. TUGGEY: Mr. Chairman, Commissioners, Director Behrens. My name is Tim Tuggey. I am Chairman of VIA. Like Joe, I am wearing two hats today, Joe Krier. I am Chairman of VIA and also serve as Chair of Advanced Transportation District that was recently formed by the voters.

As Nelson Wolff pointed out, 58.15 percent -- we will get it down to the thousandths here before it is all over. I want to recognize first of all, John Milam, the president and CEO of VIA who is with me here today. John, please stand up.

The most important thing I have to say is thank you. Particularly with respect to the ATD. And I need to say thank you. And our community needs to say thank you to Hope Andrade and David Casteel, who were crucial resources to our community, as the voters were educated on the importance of this ATD legislation.

And I don't know that many recognize the fact that the ATD, in addition to providing additional highway and local street funding, saved VIA, which was in financial crisis. And but for the ATD legislation which Hope and David helped educate the voters on, I would be looking at an entirely different financial situation for VIA, as we move forward.

One half of the ATD money is reserved for public transportation improvements. And VIA is using that money for extended service on our busiest routes, to expand service to new areas. For instance, down south to Toyota, up to the new location where Washington Mutual is going.

There is some discussion perhaps, right next door, World Savings coming in, with a similar 5,000 job footprint, looking at that corridor as well. We are improving passenger facilities, and of course, new technologies to improve bus travel times. We are also, as a result of the ATD and the new SAFETEA-LU legislation, now in a position to pursue bus route and transit, a form of public transportation that combines the flexibility of bus service on rubber tires at about 1/3 of the cost of light rail.

Very significant savings that is at the top of the priority list for the Federal Transit Administration. Two separate analyses now have identified Fredericksburg Road, which is graphically demonstrated here as being especially suitable, or it was. Fredericksburg Road is especially suitable for this motor transportation, as it connects our two major employment centers; downtown San Antonio and the UT Health Science Center and the related medical facilities.

This year in particular, now we have received preliminary approval from Federal Transit Administration to begin preliminary engineering. And we look to implement the BRT by the year 2010 if not sooner.

VIA, and the other SAMCO partners have also been highly supportive of efforts led by Commissioner Andrade to prepare a public transportation strategic plan for Texas. A plan that envisions coordination among the rural and urban public transportation systems with special attention to the underprivileged, and those that need assistance with Health and Human Services.

We especially want to salute Hope and your leadership there, Hope. Not only in our community, but statewide in this effort. In addition to expanding our public transportation network, and providing express bus service for instance, we just initiated that on 281 corridor, a very important corridor to you.

And going forward with bus rapid transit, we are emphasizing a multimodal approach with our support, all of our support across SAMCO, to the Austin-San Antonio Intermunicipal Rail District; our support of enhanced freight rail service and relocation of rail away from the urban areas; our support of pedestrian amenities and bicycle networks throughout the community.

And of course, finally, our support of toll express lanes to provide additional options for VIA as well as individual motorists. We thank you for the opportunity to be part of this partnership and really appreciate your support. I am going to turn it back over now to Joe Krier. Joe?

MR. KRIER: Did you all have any questions?

MR. WILLIAMSON: Anybody?

MS. ANDRADE: Go ahead.

MR. JOHNSON: Have any questions or comments to Mr. Tuggey?

MS. ANDRADE: I just want to thank Tim for all his hard work. Thank you for what you do for public transportation in San Antonio, it is so important, as you know. It is very special to my heart. So thank you. Thank you so much.

MR. HOUGHTON: Thank you, Tim. Thanks again, very much. Thank you.

MR. KRIER: Commissioners, Director Behrens. I know, I appreciate your indulgence. We are running a little longer. We are going to start wrapping up now. And we will end in a second with a closing video I hope you will find both informative and entertaining.

We have talked a lot about the past, and the present. I want to close my remarks by urging you to work with us on some items that affect our shared future first. Our state highway 130, well known as the I-35 alternate as a part of the Trans-Texas Corridor I-35 project.

We have shared with you our views about alignment preferences, rail integration, and connectivity. And we urge you to move forward aggressively with regard to segments five and six, which we think are critically important, not only to NAFTA traffic, both rail and highway, but to the growth of Toyota and its presence in the southern sector of our community.

Second with regard to concession revenue associated with that project, we urge you to apply that revenue to both toll and non-toll highway, rail and transit projects. Third, with phases two and three of the San Antonio regional rail study being completed later this year. We encourage your efforts to address congestion and safety issues along the key rail corridors in this state. Particularly that between us and Austin.

With regard to future toll system projects, we commend you and the RMA for your cooperative efforts to finalize and implement plans for a toll system along portions of Loop 1604, and 281. And with planning efforts now shifting toward implementation of toll lanes within SH 16, I-35 and Wurzbach Parkway corridors, the RMA has begun its feasibility, preliminary engineering and financial planning studies along those corridors. And we appreciate your partnership in that regard.

As early as April of this year, two separate pass-through financing agreements will be placed on your agenda for portions of FM 3487, Culebra Road, and FM 2696 Blanco Road. Again, subject to negotiations. And we urge the commission's favorable consideration of those agreements.

The Mayor mentioned our military projects. We have got 13,000 military moving out of Fort Sam Houston in the next two to five years. I point out that that is roughly six times the employment impact of Toyota. And we will need your help in making sure those folks can get into and out of that base as easily as possible.

We support your efforts to review potential capacity improvements along our key regional corridors. And we know you and we are exploring the potential for accelerating a proposed grade separation project at Loop 345, Fredericksburg Road and Medical Drive, with pass-through financing to make it easier to get access to our medical center, our number one biomedical industry.

Let me close by saying this. I said to Chairman Williamson last night at the reception that I am a big fan of Darrell Royal. And Darrell Royal used to pride himself on dancing with those who brung him.

The TxDOT has brung us a long way over the last 50 years. It has been our pleasure, not just to be your dance partner, but to be your partner. And we look forward to being your partner for many years to come.

Thank you for hearing all of us today. And we are going to close with a little video that summarizes our thanks to you. We appreciate being with you, and look forward to being with you again.

MR. JOHNSON: Joe, before you sit down, I have one observation to make. I have certainly enjoyed working with you on the commission that we had to study the meaningful and measurable goals for this department and that has served as a template for a lot of what we do.

But my impression today is -- and we have heard from the county, the city, VIA and the RMA -- and I think it is illustrative of the fact that to meet the challenges that we face in transportation, we have to coordinate our efforts. There is not going to be one sole entity enterprise or agency that is going to be able to solve all the issues before us.

And I think your area's ability to coordinate four entities in this case, and any more that I am sure you deal with on a daily, monthly, basis. It is phenomenal and I am going back to where I started with Mayor Hardberger, that clearly the greater San Antonio area, Bexar and its surrounding counties are doing a lot of things right, and it is gratifying to see.

MR. KRIER: Thank you, Chairman Johnson. And as you know, one of the things we did in that strategic planning effort was, for the first time, put economic development into the department's strategic plan. And at the end of the day, Chairman Williamson, it is really just about jobs.

It is having a system that lets people get to and from good jobs and keep the good jobs we have. And get more good jobs. Because those good jobs provide all these revenues, all these gas tax revenues, all these toll revenues we are talking about.

And if we don't have good jobs, and we don't get more good jobs, this state is not going to be funding any of its needs in the future. So thank you for your vision on that.

MR. HOUGHTON: Are you going to play the video? Yes.

(A video tape is played.)

MR. WILLIAMSON: That was fabulous.

MS. ANDRADE: Mr. Chairman, can I? Joe, thank you so much. For those that don't know, Joe Krier wears many hats. But you are always bringing us all together. Thank you for that. Thank you so much.

MR. KRIER: Thank you, Hope. Thank you very much. I appreciate that. We are nominating Councilman Parrish for the Academy Awards this year. We will see if we can get him in the lineup.

MR. HOUGHTON: What you have done in San Antonio, Joe, and Mayor and County Judge, Representative, Senators, left. Is what we are trying to do to this state. If we hang together as a state, this state will be truly beyond any expectations that we have today. And you are doing that in San Antonio.

So as I say to people, the pieces are not bigger than the whole. The State of Texas has got to work together to make transportation which is economic development. You just said it. And that is where we are headed. And thank you very much.

MR. KRIER: Thank you. We appreciate that.

MR. WILLIAMSON: Anything else, John? That was a neat tape. Thanks very much. We are products of Rick Perry's vision, and we are steadfast and loyal to his vision.

And everything that you said today kind about us is directed towards a Governor who understands that the proper transportation infrastructure drives the average income up for every Texan. And it is, in the end, the average income level that generates the necessary revenue to educate our children, and clean up our air, provide for our elderly, in addition to the transportation system itself.

And we do appreciate the kind words. And we do appreciate the partnership we have with San Antonio. And we appreciate those who disagree with us. You know, I have said it many times from this position, Texans have the inherent right to disagree, to complain, to suggest alternatives, and to present their viewpoint. And we have one.

And I guess I get to finally meet Terri Hall. Terri? Well isn't life weird? I was just sure that you were the lady right there in that pink jacket.

MS. HALL: No. She is press. All right. Good morning. Well, thank you for allowing me to address you. It is a pleasure to finally meet many of you and see your faces.

Although I did find it puzzling that we are called the opposition. Because we believe that -- well, we know that over 70 percent of the public is behind us.

Today, I am speaking on behalf of the citizens of the taxpayer. The ones that Senator Wentworth referred to that you have to walk the tightrope with. And also to speak for the citizens in the San Antonio Toll Party, that have come together under that umbrella along with the Texas Toll Party and others all around the state.

There is not too many citizens that are willing to be comfortable with public speaking, much less going up against the Goliath of the transportation commission and lots of our members of government and the highway lobby. So even though I live in Comal County, I can assure you that the majority of our membership is in Bexar County. Many of them are here today.

This effort is statewide. When you are putting tolls on state highways, it affects all of us. I have a statement from the Aquifer Guardians in Urban Areas, AGUA, for you that was just handed out to you. And I would like to share with you some of our concerns with the tolling of Texas, and make some proposals as to how to restore the public's confidence in this process.

And I might just say, since I think it was a shot across the bow earlier today, about this being a distortion. This isn't a distortion. These are your numbers that I am using.

The public understands what you are doing. It is not that you have to re-wrap the message in new packaging. We have gotten the message. We don't like the message, is the difference.

I will tell you what the public doesn't really trust about the toll plans. There is four things. We feel like we have no voice. There is no justification, no transparency and no controls. The taxpayers don't get to vote on these projects.

Prop 15 doesn't mention the Trans-Texas Corridor, toll on existing highways, nor does it mention the toll first minute order by the transportation commission passed back in December 18, 2003. There is no justification for making us pay tolls on freeways that we have already built and paid for.

The CDAs are being negotiated and signed in secret. Unelected tolling authorities are problematic. It is taxation without representation. And with the push to use CDAs, there is not really true local control. It is only an illusion of it.

A host of our elected representatives share this with me both publicly and privately, but mostly privately. There is no cap on how high the toll rates will go. Just a formula setting a guaranteed percentage of profit. There is really no check and balance on the private sector toll operator with any frequency that brings true accountability having the minimum agreement be 50 years or more.

The Senate's executive summary for Fund Six had this to say about TxDOT's financial management. The sheer size of the budget, and of TxDOT coupled with the significant new financial authority granted to the agency during the 78th Legislative session calls for improvements in the agency's financial reporting methods. And those are words from the Senate.

TxDOT claims to have a funding crisis. I know that you led up to that quite well in your first agenda item today, along with the Bexar County and city delegation. But the gas tax has been steadily increasing for the last 20 years. And it has jumped, actually $1 billion since 2004, into the 2005 budget.

A GAO report on the comparison, or comprehensive study of 25 states reveal that the median cost per lane is 1.6 million a mile. On Highway 130, just east of Austin, the cost comes out to be about 7.6 million per mile. On 281, it works out to be close to 10 million per lane mile, for a three mile stretch.

The average cost per mile for a turnpike, according to the Comptroller's special report on the RMAs, now known as one tough grandma, the average cost for the turnpike is 9 cents a mile. Well, in San Antonio, the start rates, from just the initial feasibility studies are 14 cents a mile up to a dollar a mile on some of the toll plans that we have seen.

The gas tax system on average is anywhere from 1 to 3 cents a mile based on San Antonians buying approximately let's say, 1,500 gallons of gas a year. That would be calculated from, let's say, on a generous side, 30,000 miles traveled per year at 20 miles to the gallon. The cost savings to the consumer is abundantly obvious, with the gas tax system versus tolls.

And you don't need a toll road fairy to come to that conclusion. Central Texas MPO did the comparison. They found that it would only be a 1 to 2 cent gas tax hike, compared to tolls. And that is with them wanting to toll every major highway in Austin, with the exception of one.

And with all due respect to Senator Wentworth, how you word a question, really does make a big difference in how you compare these two. If you said would you prefer a 1 to 2 cent gas tax hike or a lifetime of tolls given to a foreign company, I think you would have a big difference in the outcome. And that number would go from 54 percent to close to 90 some odd compared with $3,000 a year on the average family for tolls.

You see it as funding. We see it as taxes. There has been some poor fiscal stewardship that we have seen, in just some of the early studies, in the toll starter system, and Wurzbach and I-35 and others. We found that the cost of toll gantry equipment came to a million dollars a mile, in one project. Projects where the cost of the toll equipment equaled the cost to actually build the road.

We also found that 1604 improvements could be paid for 100 percent with bonds, and yet you are choosing to toll it. We are questioning the rationale behind these projects, and why these costs for these gigantic tollways aren't being challenged.

Another aspect to the funding crisis is that TxDOT says we need another funding source. We just can't keep up with the growth. The fact is, 34 percent of your 2005 budget is spent on road maintenance. There is funding dedicated, both to all three, construction, purchase of right of way, and maintenance in your current budget. Less than half your budget is going to road maintenance. Yet, I have heard David Casteel and others repeatedly say that the gas tax is all used up with road maintenance.

When population increases, consequently, so does tax revenue. In fact, the Comptroller's figures from -- that I showed earlier, from 1984 to 2004 shows that the gas tax revenues went up at a rate of 178 percent, while population only grew 50 percent. And that is adjusted for inflation. Bexar County saw a 64 percent growth rate, but that gas tax revenues still increased at a far greater rate than growth.

The reality is, 2005 figures show that TxDOT gets $330 a year from every man, woman and child in Texas. The annual TxDOT bill for a family of four is $1,320. Tolls on average will cost the Texas family anywhere from $2,000 to $4,000 a year more. That is more than double your current take.

Some of SAMCO's alternatives that they have floated around before promoting tolls here today, were things like all tax increases of vehicle registration, gas tax, sales tax, property tax. When you do the figures, every one of these options is less than tolls. And Vic Boyer did say that my figures were accurate on that at an MPO meeting.

Commissioner Larson said that tolls equals the largest tax increase in Texas history. Let's see. If you simply get rid of the toll equipment, not to mention the toll lanes that only half of all motorists can use, probably less, with the high gas prices. Just build what is needed, you are already 30 to 50 percent less money to build, and everyone will be able to drive on it.

The simple solution sure seems to be to can the toll lanes, the toll equipment and all that goes into the administration of that. San Antonio gets 100 million a year in discretionary funds currently. And they are actually trying to say through this $8.4 billion funding gap that we need four times that. That equals about 420 million a year more than what we take in, or excuse me, 420 total. That would be three times.

To build what exactly? All we need is some added capacity. We don't need to rip up our current highways, re-pave them, build toll lanes. We just need added capacity.

The GAO report on highways and transit for March of 2004 studied several tollways that have a public private partnerships. Four out of the five examined included non-compete clauses in their contracts, under which the public sector agrees to varying degrees not to build any new roads or to improve any of the existing roads. There also where there weren't specific non-competes signed, there were quote, understandings that the state would not build competing roads.

That means 100 percent of them have some sort of non-compete agreement or understanding not to build or improve existing roads or the free lanes around toll lanes. This is an enormous sticking point for the public, and lead to Cal-Trans buying out the private contract on SR 91 in California. Toll roads are unequal taxation.

Here is a letter to the editor from the Dallas Morning News, just weeks ago, where Sharon Overall of Plano, Texas says, I would prefer to have the North Texas Tollway Authority have control of our roads besides a foreign company. 47 percent of the tolls wouldn't be used for construction and maintenance.

There should never be a profit from a road. If two people pay the same gas tax and one has to pay an additional toll tax to use the road, then there are unequal transportation opportunities. I am waiting for the first lawsuit based on economic justice in toll roads. The Victoria Transit Institute states that the average administration costs for toll roads is 25 to 35 percent. Add in the 12 to 19 percent profit, which is standard in public private partnerships, and you get pretty close to half the toll money evaporating.

Representative Krusee is fond of calling this a free market system applied to roads. But really the private bids are problematic. It grants a monopoly over publicly owned infrastructure.

From the National Motorist Association article on their website, a real market based system has willing sellers, willing buyers and competition among those sellers and buyers. Highway corridors are not assembled by willing sellers and willing buyers in competition with one another. What they are doing is essentially market principals figuratively at the end of the barrel of a gun.

In the case of so-called private toll roads, the state exclusively grants its eminent domain power to condemn authority to the toll road operator. See what Senator Hutchison has to say on tolls. Tolls, she does not support widespread tolling, because it is contrary to Texas tradition of free, clear and well-maintained roads. And because it imposes another tax on those whose taxes have already generated the revenue for highway construction.

The decision to construct new toll roads should be made at the local level after approval from voters. Texas should not impose tolls on existing highways. Our support is growing, and we are building a coalition of like-minded citizen groups to do just that.

Here is something from the father of toll roads. Actually he is a pro-toll advocate. His name is Peter Samuel. He had this to say, in an article in his -- he is the publisher of Toll Road News; in Texas, the tollers are behaving arrogantly, and with extraordinary political ineptitude.

Political support in Texas has also been sapped by bewilderingly unprincipled and unexplained intermixing of funding of projects. TxDOT's promiscuous approach to raising funds and their promotion of projects without even a semblance of a study has been the anti-toll groups major recruiter. That is from the father of toll roads. He is pro-toll.

There are reforms that are needed. We believe there needs to be a top to bottom review of the transportation planning in San Antonio, and to position the city to prosper even with sustained increases in gasoline costs.

Secondly, reform the composition of the MPO board. More on that in a moment. Delaying all projects until economic impact is truly determined for San Antonio. Things like the impact of such a steep new driver's tax on the family budget. On toll viability with such an unstable energy market.

Your investment grade studies and your bond buyers are probably going to get pretty wobbly-kneed here soon. Employees' ability to get to work. The ability of businesses to retain their employees. In fact, I talked with businesses up and down 281 and other corridors where you are planning toll roads. I have heard from these business owners, and they tell me, they are very concerned about these issues.

Their employees have already told them that the gas prices are affecting their ability to go from, for instance, the south side up to the north side, where they feel there is better jobs. Their employees have already told them they will no longer head north to go to work if they have to pay a toll to travel efficiently. We need to restore transparency.

And one of the ways you can do that, is to abandon the CDAs. There is some quotes from the Collin County and Dallas officials. Quote, they are so sold on this CDA process, I don't think they are going to let anybody do a toll road on their own, says Collin County Commissioner Jack Hatchell.

County Judge Ron Harris, it is a money grab. There is no control. Plus, they are making a sizeable profit. It is all done in secret. Jerry Hoagland, another County Commissioner; when the State sells out to the highest bidder that automatically translate into the highest tolls for our citizens, I think the Legislature needs to change the focus of TxDOT.

You need to return the projects to TxDOT and keep private interests from profiting off our already funded public infrastructure. When you look at the MPO policy body in San Antonio compared with the others around the state, you will see that not even half of our MPO board members are elected officials.

They are making multi-billion dollar decisions, life-altering decisions for the citizens of San Antonio. And they will not be accountable to the taxpayers who are footing the bill. We don't need more roads. What we need is better planning.

These are from the words of Dave Paisley, former San Antonio City Planner. He had this to say about tolls in his December 21 article. Ten years ago, there was excess capacity on 281 and 1604. Today, there is gridlock. How is it possible to screw up these two highway corridors so badly in just ten years?

How can a city without enough traffic to warrant an HOV lane suddenly have so much congestion that it needs a toll road. He says there are deep flaws in the city's political and development practices. He says the city has not provided for any connectivity during the development process.

You can't get anywhere without getting on 281 or 1604. His proposed solutions, well. Let me tell you one more quote. Short of securing these important east- west routes through the development process, the only alternatives are for the taxpayers of the community to bear the cost and inconvenience of retrofitting arterials after development has already occurred, or to ensure the hardships of an inadequate major thoroughfare system.

His solution he suggests, complete Wurzbach Parkway as soon as possible. That road has been planned for 20 years, it has been funded for 15. It is inexcusable. Make San Antonio developers provide a network of arterial streets, as they do in Phoenix.

Better planning equals less driving. This is the relative impact of urban vehicle miles traveled. The best way to reduce vehicle miles traveled, which by the way, the U.S. Department of Transportation has that as a stated goal; to reduce vehicle miles traveled per year. And these are the factors involved in doing that.

City center orientation is the number one way to reduce vehicle miles traveled. Not continuing to spread outer loop upon outer loop. Jobs and housing balance, making it so, and Toyota plant will help greatly in bringing more high paying jobs to the south side of town, so that people don't have to travel north to get those jobs. And then what is the number one thing that increases vehicle miles traveled. More roads, and road density.

Here is some economic and quality of life indicators for San Antonio. San Antonio unfortunately ranks at the bottom of the list on all of the economic and quality of life issues important to our families. 50 being the best, one being the worst. Near the top, we are near the top on hazardous waste, toxins and poor air quality, and we are ranked among the lowest on education, per capita income, and human health.

Really these tolls equal trickle-down disaster. It transfers congestion to our surface streets, instead of providing freeways for efficient travel. Senator Kay Bailey Hutchison said on the Senate floor, May 10 of last year, that accidents on surface streets increased 17 times when they put tolls on a nearby highway in Ohio. And congestion of our neighborhood streets tripled.

These toll plans aren't about increased productivity or less commute time. It is about revenue building and runaway taxation actually making our roadways less safe, and more expensive.

I am a Ronald Reagan conservative. I will admit it. Any time you increase the size of government, increase taxes and increase the cost of doing business, it equals economic disaster. These tolls are based on implausible assumptions and inflated traffic projections that assume growth and number of users actually stays the same both with and without tolls on freeways.

Tolls change a person's behavior. You slap a toll on a road, it is going to change your growth numbers. That is why a lot of these toll roads, like in Laredo and in Florida, when they had false implausible assumptions for their inflated traffic projections, they went belly up.

Here is a look at our traffic fatalities in San Antonio.

Let's talk about safety a minute. People in San Antonio are actually 28 times more likely to die in a motor vehicle accident than those in the average U.S. city. There is a compelling body of evidence that toll roads contribute to making our roadways less safe. This needs to be examined, and studied properly; not just given lip service. The public needs to be able to trust these multi-billion dollar projects are safe.

Judging by the expose of TxDOT's crumbling materials used in Highway 130, that have repeatedly failed dry density tests, which leads to rapid decay, you have some serious liabilities on your hands, by promoting shoddy toll roads all over Texas. With factors known to increase accidents on free lanes and surface streets. This is TxDOT's vision of congestion relief.

You all are familiar with this highway. It is SR 91 in California. It is the poster child for toll proponents. But this isn't congestion relief. It is congestion manipulated for a profit. This may be your vision for our highways, but it is not what San Antonio wants. It is not what Texas wants. A picture paints a thousand words.

So let me just recap what is going on in just the last month, down in San Antonio. TxDOT, who Mr. Thornton likes to call his natural partner, so much for local control, has broken the law on the 281 project. Has demonstrated total ineptitude on the first toll road, as well as fiscal mismanagement that some would say is tantamount to fraud.

You are negotiating toll formulas with two foreign companies in secret for freeways we have already paid for. You have held a CDA workshop, putting over a thousand people in the highway lobby on notice that private Texas land taken through eminent domain is up for sale for private gain. Shortly thereafter, TxDOT wrapped up its bond buyers party here in Austin, promoting CDAs for which there are only sketchy guidelines as to their use.

Frank Holzman at TxDOT tells a group of citizens at Encino Park on camera that whatever we drive on today will be tolled. While Joe Krier, SAMCO, gets on KTSA radio and states the complete opposite, proclaiming that what I drive on today will not be tolled. The City of San Antonio admitted, they tweaked the timing of the stop lights on 281 to steal motorists' valuable time, and perhaps make them cry uncle, in hopes of getting us to beg for a toll road.

Christina De La Cruz in public works said TxDOT gave the city new traffic counts. While Tom Wendorf stated in a letter to Commissioner Larson, the traffic has essentially stayed the same. Then the City goes out of its way to deny it touched the lights at all. And we are supposed to believe that you are acting in the public's best interests.

It is a joke, if it weren't so absolutely serious, and life-altering. What has happened is deception, lies, half-truths and highway robbery. The public isn't buying it, and it is a disgrace. This commission has a lot of repair work to do to restore the public's trust.

Since bureaucracies don't usually like to fix themselves, our grassroots citizens are building a coalition to see that it does get fixed. Would those who traveled here today stand with me, please stand and be recognized, or step forward if you are standing in the back.

MR. WILLIAMSON: Welcome.

MS. HALL: Do you have any questions or interactions?

MR. WILLIAMSON: Well, let me say that you started out by saying that you didn't know why you were characterized as the opposition. I meant no offense. On the yellow card, you say you are against. And so I presumed.

MS. HALL: Well, that is what they asked me to write down as far as are you here with the delegation or you know -- anyway.

MR. WILLIAMSON: Okay. Well, that was why that happened. I meant no offense, and I apologize by extending any --

MS. HALL: Okay.

MR. WILLIAMSON: Let me also say, and I will just speak for myself. That there are many things you have read into the record today to which I would like to respond.

MS. HALL: Okay.

MR. WILLIAMSON: Unfortunately, your organization and organizations you are speaking for have us in court. And as all business persons and government employees are warned consistently by their lawyers, when you are in litigation with someone, you really can't talk to them much until the litigation is out of the way. I wouldn't want to say as a blanket statement, and Bob Jackson, are you here -- my lawyer?

If I wander, just jump up and throw something at me, please. I wouldn't want to say that I processed your testimony as a well-thought out weaving of your philosophical concerns with your interpretation of information and some facts, and some unsubstantiated allegations. Now you could well say the same thing about my remarks earlier in the day. So I don't say that as a pejorative thing.

MS. HALL: Okay.

MR. WILLIAMSON: I say it as -- if I take the totality of your remarks, if I extract the philosophical differences, then it is easy for me to say, you know. Hey you are a Texas citizen. You think this. I think this. We disagree.

Perhaps your philosophy will prevail. Perhaps mine will prevail. But we both understand where each other is coming from, and we just disagree. If I take the information you laid out, I have absolutely no doubt that Commissioner Larson, who is on record as being in opposition to tolls wrote the statement you quoted.

I don't know what that brings to my logic tree about deciding what to do or not to do. You introduce information, and it is information. You are a bright person, and you know that information is information. It is neither negative or positive. It neither argues for your logic or against your logic. It just is.

Similarly, your quotes of County Judge Harris, I thought was in the back someplace, is information. It is neither negative or positive. I just observe that you weave it into your testimony. The facts you used are the facts. I am a firm believer that facts are important, and you used facts to establish your philosophical position, and to attack the opponent's philosophical position.

And the facts that are woven into your testimony are acceptable. The things that I believe appear in your testimony that are unsubstantiated, I just want to say to you, that we heard you. It is on the record.

Our silence does not indicate that we agree with what you said. Nor do we accept any of your characterizations of our actions or anyone else's actions. We acknowledge that you placed in the record. Because of the litigation, you and I can't joust perhaps as much as we both probably would like to.

MS. HALL: Well definitely, I mean, I understand that you see a lot of this as a perception thing. But to the public, this is how the public sees it. And we got the message loud and clear. And again, to restate, we don't like the message. And we want non-toll alternatives for our highways.

MR. WILLIAMSON: I spoke for myself, members. If you have anything to say, please. We have had the pleasure of a few -- the testimony of a few people who don't agree at all with what we are doing. Sal Costello was in with us a couple of times. In Conroe, there was a lady whose name escapes me on the corridor. There was a lady here from Bastrop a few months ago.

I sometimes read in the newspapers comments from persons such as yourself that seem to suggest that we don't welcome, or we don't listen. And nothing could be further from the truth. As a former member of the Legislature, I know well that the power of my beliefs are strengthened by the most vicious attack of those who don't share that belief.

And I also learned through the years, with Representative McClendon, and before, Representative Wentworth, that is always better to listen carefully to what the opposition says in order to understand you can make a mistake. So you are welcome here every month. And your words, and your testimony is valuable to us.

MS. HALL: Thank you. I appreciate you saying that. And I might just say that a lot of folks that were e-mailing me before coming today to give testimony, I really hope that you do listen, and not just take in testimony into the record, and then continue to barrel through with what you want to do.

That has been the impression we have all gotten from the public hearing process, where the public just overwhelmingly is opposed to the toll lanes, particularly on 281. Since that is where the public hearings have already taken place. And yet, they continue to toll those lanes.

So it is one thing to say that you are listening. But it is another to continue to go down the path that you have been going down. And that is what I was here to talk about today.

MR. WILLIAMSON: Yes. But I wouldn't want you to misconstrue what I have just said. You can listen to someone, and you can observe, or you can pay attention to their information. You can deal with their facts, and then you can observe their philosophical disagreement.

And that is the basis upon which you make a decision, is the philosophy. If we don't adopt or agree with your philosophy, or the philosophy of those --

MS. HALL: The majority of Texans.

MR. WILLIAMSON: I understand you said that. I heard what you said. But even if we don't, that doesn't mean that we didn't listen. I mean, we have changed a lot from this podium over the years, based on testimony of people who have appeared before us, and pointed out the weaknesses in our approach.

It wouldn't be unusual for us to change the direction of the department, or to change our minds about something, because we do listen. But we don't always agree with the opposition.

And I would hate to think that someone would automatically assume that because we don't agree, or because you couldn't convince me to change my mind, that I wasn't listening. Because I assure you, I am listening very carefully.

MS. HALL: I might just say in parting, that the difference between this, and let's just say, a board room meeting, you know, a business meeting or something in the private sector is that I have to pay for your decisions. And all of Texans have to pay for the decisions you make.

And even though you are appointed commissioners, you all know that ultimately, it is the taxpayers who are footing the bill for this. And that is who I am here to speak for today.

MR. WILLIAMSON: Yes. It is the same taxpayers who are footing the bill for congestion and poor air quality and insurance rates, because safety is not as good as it could be. And it is the same taxpayers who don't have the same economic opportunity that people in Tennessee have when their transportation systems aren't attractive to the Dell Corporation.

And it is the same taxpayers, or maybe it is their kids who will have to pay for repairing all these assets that weren't properly maintained for 50 years because no one could figure out a way to pay for them. They are the same taxpayers.

MS. HALL: Thank you for allowing me to address you.

MR. WILLIAMSON: You were very kind. Very professional.

MR. HOUGHTON: I would like to say one thing. You talk about listening. I get a little bit more amenable to listening when I am not called a liar. I shut down pretty quick. So when we can get the discourse on a calm even keel, I think I would listen a little bit better.

MR. WILLIAMSON: You mean a civilized discourse?

MS. HALL: I believe it was civilized. And what I was demonstrating in that paragraph of my statement isn't so much directed at you personally, but what the kind of lies and deception we have already seen happen with the promotion of the toll plans in San Antonio. And what one person will come out and say, and then a day later, someone comes out and says the complete opposite.

MR. WILLIAMSON: It was almost a philosophical observation.

MS. HALL: Okay.

MR. WILLIAMSON: Yes.

MS. HALL: All right. But they are not directed at you all personally. We are trying not to make this personal.

MR. WILLIAMSON: We do appreciate you being here.

MS. HALL: All right, thank you.

MR. WILLIAMSON: Was there anybody else? Let me thank everyone. Those from San Antonio who were advocates earlier in the day. Ms. Hall, I am pleased to finally meet you. Those who came with Ms. Hall.

All of my employees who prepare for the day. This has been a very good exchange of information and ideas. And the State of Texas is stronger for it. We are going to take a ten minute recess to permit those who have to leave, the opportunity to leave unimpeded. And then we are going to resume with our regular agenda. I thank everyone here.

(Whereupon, a short recess was taken.)

MR. WILLIAMSON: We invite all of you here to participate with us for a few minutes, in something that is important to this organization, and to the people that we do business with everyday, that being the taxpayers of this State, and the private sector individuals and companies that work on the transportation world. Michael, how do you want to do this?

MR. BEHRENS: I think we need to get Mr. Reagan to come up to the --

MR. WILLIAMSON: We just need to say, Dan Reagan, are you still here? He went to the golf course? Tell the commission, Mr. Reagan, are you still employed by the federal government, or have you gone to the dark side?

MR. REAGAN: I have gone to the dark side.

MR. WILLIAMSON: You have gone to the dark side. Well, somebody needs to recognize you for all those years of government service. And since we have been the beneficiaries of your wisdom and your firm hand, we are the appropriate authority to recognize you. Mike, would you like to do the honors?

MR. BEHRENS: Yes, sir. Thank you. Dan, we have you back up here today, because something was passed on to us. And we were asked to pass it on to you. So let me read it for you. This is an excerpt that has been put into the Congressional Record, honoring Curtis Daniel "Dan" Reagan, by the Honorable John Culberson, Congressman from Houston.

And this was put into the Congressional Record on Thursday, February 16, 2006. And it says, Mr. Speaker, I rise today to honor Curtis Daniel Dan Reagan of Austin, Texas. Dan Reagan has been a champion for quality transportation and his leadership, knowledge and vision have helped improve the safety and reliability of the Texas transportation system.

Dan Reagan began his career with the Federal Highway Administration, then called the Bureau of Public Roads on June 12, 1967, following his graduation from the University of Texas at Austin. I got that out.

MR. WILLIAMSON: We were afraid you wouldn't quite be able to say it clearly.

MR. BEHRENS: He spent almost three years in the Bureau of Public Roads in the highway engineer training program, learning all phases of organizational responsibility and honing his engineering and management skills in Point Reyes, California, Washington, Payson, Arizona, Washington, D.C., Tallahassee, Florida, Fort Worth, Texas and Austin, Texas. Mr. Reagan then held numerous positions in Baton Rouge, Louisiana, Montgomery, Alabama, including the assistant area engineer, area engineer, assistant planning engineer, planning engineer, and research engineer.

While stationed in Baton Rouge, Mr. Reagan attended graduate school at Louisiana State University, taking classes in transportation engineering. In June 1981, Mr. Reagan was assigned to the former FHWA Region One office in Albany, New York, where he held several positions, including Director of Planning, Director of Planning and Program Development, and Deputy Regional Administrator.

As a deputy, he was responsible for all aspects of the federal aid program in the eight northeast states, the Commonwealth of Puerto Rico, and the Territory of the U.S. Virgin Islands. Then from October 1994 to July 1995, Dan became the acting regional administrator.

On February 4, 1996, Dan Reagan was appointed by the Federal Highway Administration as division administrator for Texas. With a staff of 50 employees, he was responsible for delivering the second largest federal aid program in the nation, and implementing FHWA's national strategic plan throughout Texas, in partnership with the Texas Department of Transportation.

While serving as a Texas division administrator, Dan Reagan established the FHWA's first international program engineer position for the entire Texas border, creating a forum known as the Texas Environmental Resource Stewards, that brings together the leaders of state and federal agencies impacting transportation to resolve issues in advance and pave the way for such landmark public private partnerships, such as TTC-35, TTC-69, and the Central Texas Turnpike Project.

Mr. Speaker, I am very proud to honor and thank Dan Reagan for his family on the occasion of his retirement for a lifelong professional commitment of service to the traveling public. I wish Dan Reagan much happiness and good health in the years to come. And again, this statement is made by the Honorable John Culberson, Congressman for Texas.

MR. WILLIAMSON: And we all associate ourselves with those remarks.

(Applause.)

MR. WILLIAMSON: Well, you go ahead and tell us what you want to tell us. Then we are going to come down and take pictures. If you want to chew on us now, this is the time to do it.

MR. REAGAN: As a private citizen, actually, I won't say I am embarrassed, but I am a little bit nonplused. There was a time in my youth where there was consideration that the only recognition that I might ever get was my picture in the post office.

But I just want to say, particularly to the commission, but to all of TxDOT and the people of Texas, I have had 38 2 years with the Federal Highway Administration. The last ten years have been the best ten years of my career. And that is the time I have spent with you all. It has been a labor of love.

It really hasn't been work. It has been joy. And I lay much of that to this commission and your predecessors. To Mike and his staff and their predecessors. And all the people of TxDOT who really made my job not work, but fun. And I want to thank you all for that.

MR. WILLIAMSON: Well, that is kind of you to say that. Ted?

MR. HOUGHTON: Well, I haven't known Dan a very long time, but during the period I have, he has been a true gentleman and listened. Can do, get the job done, let's find a way to get it done. And that is what I am missing at this point in time; let's get the job done.

MR. WILLIAMSON: Hope.

MS. ANDRADE: Dan, thank you so much. It truly has been a pleasure working with you, as I mentioned to you one day. I was on the elevator with you. And you are always smiling. So I know that you were enjoying what you were doing in your job. And thank you for your dedication and commitment to transportation. Good luck in your retirement.

MR. REAGAN: Retirement?

MR. JOHNSON: Dan, I want to focus on something that Ted mentioned. And you know, that is the partnership that it takes to get things done.

Clearly, as a representative of the federal government and this commission and agency is representative of state government, sometimes those lines are not parallel, and they don't intersect smoothly. But they sometimes intersect perpendicularly, in opinion and thought of the way to get things done.

But you have exhibited and led with a very positive focus on let's figure out how to do things. And it shows, by working together, we can accomplish a great deal. And if we work separately, we are not going to accomplish nearly as much.

And you know, I salute that attribute that you have been able to probably were born a lot with, but you have been able to develop. And it has also been a personal pleasure of mine to work with you.

MR. WILLIAMSON: Dan, you have been great to work for, and work with. One of the things, one of the several things that Governor Perry instructed me on when he sent me here was, be sure that we never are in a position where we think or say that the federal government is our enemy, because they are not our enemy. They are, in some instances, our regulator, and in some instances, our partner.

But Texas is one of 50 states, and the federal government is the 50 states. So let's don't ever go down the path of being at war with the federal government. And I think he exercises that philosophy throughout his administration, all the other state agencies, but it has been particularly true here. And it is easy to not be at war when you are dealing with someone who is strong and resolute and lets the chips fall where they will.

And I just want to tell you that like the rest of us, I wish you the best in your retirement, or your semi-retirement. We are going to miss you dearly. But as Mike Behrens once told me, I was trying to talk a TxDOT employee out of retiring. And he said Ric, that is the way of it. There is a time to move on, and go to the next level.

And it is your time. And we will miss you at one level, but we hope to be doing business with you at another.

MR. REAGAN: Thank you, sir.

MR. WILLIAMSON: So that's hats off for a job well done. And I need for you to stay there and help me do something, if you don't mind.

MR. REAGAN: Glad to.

MR. WILLIAMSON: Do you have your reading glasses on?

MR. REAGAN: Yes, sir.

MR. WILLIAMSON: This is really neat, the way this worked out. If you don't mind, I would appreciate it if you could read that.

MR. REAGAN: This will be a distinct pleasure. This is a certificate of service, in recognition and appreciation of 35 years of meritorious service for the Texas Department of Transportation.

The commission presents this certificate to Michael W. Behrens, professional engineer, and extends its congratulations and best wishes for a long and happy continuance of service. And it is well deserved, Mike.

(Applause.)

MR. WILLIAMSON: Michael, do you want to say anything?

MR. BEHRENS: No, we're not working.

MR. WILLIAMSON: Well, if everyone will indulge us, will you take some pictures. So a few minutes, if you don't mind.

(Photos are taken.)

MR. WILLIAMSON: And Michael, all of us could spend a lot of time talking about what a great [inaudible] you are, but you know how we feel about you. There is only one thing I have to add, in giving your pen is 35 years is not too long at the Texas Department of Transportation.

MR. BEHRENS: Thank you.

(Applause.)

MR. WILLIAMSON: Back to Coby.

(Discussion was held off the record.)

MR. BEHRENS: Okay. At this time, we will go to Agenda Item 4, which is, we are going to be hearing a report from the Ports to Plains Highway group. Are you going to start it off, Tom? All right. Tom Martin, welcome.

MR. MARTIN: Thank you very much. Mr. Chairman, members of the commission, Mr. Behrens. My name is Tom Martin, the Mayor Pro Tem in Lubbock. And I serve as a member of the board in the Ports-to-Plains Trade Corridor Coalition.

It has been exciting to be here, and we appreciate the members of the commission taking time to meet with us yesterday while we were having our quarterly board meeting. And I think this is the first time we have ever had the board meeting of the Ports-to-Plains coalition in Austin. And I think we'll have more of our meetings here as time goes on.

Also, I appreciate the opportunity this morning, while you were having some previous agenda items here this morning, it helped me prepare tomorrow when I go back to Lubbock, we take action and debate a new animal control ordinance, and decide how many dogs and cats you can have at your house. So I appreciate the opportunity this morning to get kind of mentally prepared for that discussion.

I would like to introduce the members of our coalition from four states; Texas, Oklahoma, Colorado and New Mexico, that are in attendance with us this morning. Several of our members have had to leave, particularly, the Colorado delegation, to be able to make the all day trip by air to get back to Colorado. But I would like to introduce the other members here, and ask them to stand.

Gaynelle Riffe from Stratford, Texas, who is the secretary of our board of directors. John Burch from Plainview, Texas, the Mayor Pro Tem. Don Bethel from Lamesa, Texas. Bill Crooker, County Commissioner from Howard County, Big Spring. Ron Lewis, the Director of Public Works in the City of San Angelo. Penny Periatell, who is with the Chamber of Commerce in Raton, New Mexico.

And is Harold McDaniel still here? Harold McDaniel from the City of Amarillo was here. And we also have one other kind of unofficial member of the board; Eddie McBride, president of the Lubbock Chamber of Commerce. They are all in attendance. Again, several other members had to leave early.

Thank you very much. We appreciate the opportunity, and in just a few moments, Michael Reeves, the president of our coalition is going to make a short update to the commission on the progress of the Ports-to-Plains Trade Corridor, and some of the successes that we have enjoyed together, not only in Texas, but in the other three states that are member of our coalition.

As a matter of fact, New Mexico may be actually the first state to complete their portion of the corridor, which is thanks to some recent initiatives in that state. So without further ado, Mr. Chairman, I would like to introduce Michael Reeves, the president of the Ports-to-Plains Coalition to make our report.

MR. WILLIAMSON: Welcome, Michael.

MR. REEVES: Thank you. We are pleased to be here. Also I forgot to mention Todd McKee who is the treasurer of our board of directors, and has been involved for some time.

MR. WILLIAMSON: Where is Todd from?

MR. REEVES: From Lubbock, Texas. We are excited to be here today and to have this opportunity to update you. We have been working on this project for about ten years or so. And I think more so than ever, we are sensing from the commission, sharing our vision of the corridor, and the opportunity it has to bring economic development to our part of the state.

And I think we are really excited about the opportunities that are presented. And also, I would be remiss if I didn't thank the staff that we have worked with, not only Mike and Steve and the executive staff, but we have worked a lot with Coby Chase and Cindy Mueller up in Washington, especially during the SAFETEA-LU process.

Peggy Thurin has been a great help here in Austin as well, with the quarter management plan that was going on a couple of years ago, I worked with Peggy tremendously and has been a great asset. And of course, the district engineers that we have worked without throughout the corridor. I know many of them are here today.

And they have been a tremendous resource. And so we can always go to them, and if we have any questions, if they can't answer it, they are always able to direct you to the right place. So I certainly want to thank those guys, because they have been a tremendous asset to us and to the other folks in our organization.

Need the quick update, exactly what the coalition is who I work for. About 90 plus members, primarily cities and counties, but we also include economic development agencies, chambers of commerce, and private sector organizations. So we have a wide and diverse group of supporters with a common goal to proving our corridor infrastructure.

We have two full-time staff in Lubbock and we also have a part-time staff person working in Colorado to help us on the northern end. And we also have, as Tom mentioned and pointed out, a diverse volunteer from throughout the corridor. And it represents a lot of the leadership in the communities.

We have city council members, mayors, county commissioners, private business. Our Chairman, Sid Cawthorne is a banker in Del Rio. So we have a wide group, and it represents a wide -- it shows the wide interest that we have in our project.

The corridor itself is about 1,400 miles long. And today, a little over 500 miles are already four to six lane divided. 137 miles under design and construction. And I believe we can add about 100 miles, or 80 miles into Mexico, which is the construction process right now. So overall, we're almost halfway there, as far as the four lane. We have about 15 relief route plans. 12 of those are in Texas.

And we are making good progress, especially in Big Spring, and the one in Del Rio as well. Estimated cost overall, these numbers come from our quarterly management plans, so the figures are about a year old. But overall, I expected to complete the four lane dividing and the 15 relief routes looking at $2.8 billion overall. The lions share of that being obviously in construction and expansion.

But we also wanted you to not overlook the increase in maintenance and operations, which is another $125 million by adding that capacity. So that is something we are obviously aware of.

Ports-to-Plains is more than just a highway. I think highways is where we started and that is what gets a lot of the attention. But we are working to upgrade the overall transportation and utility infrastructure in the entire corridor, because that is what the business needs. That is what, for us to continue to grow economically, we need the overall infrastructure in place.

So we are working with the current West Texas freight and rail study, looking at that rate of rail service. I know in Colorado, we are working with the Front Range Railway Relocation Project, which ties in very nicely with our project through the Eastern Plains of Colorado. We are looking at opportunities where we can reach out and include utility transmission lines, pipelines, ITS.

And we realize that even though we are in very rural areas, where it maybe is not toll viable in some of these areas, we can look at some of these other opportunities for possible revenue sources to help offset the costs. We are making progress as well, I know Mark Tomlinson up in Amarillo, and their district is doing a lot of the work in the State of Texas with four laning U.S. 87 from Dumas, over the state line.

I mentioned the reliever routes in Del Rio and Big Spring. You are going to hear a lot more about that, I think. Del Rio will be coming to you with a pass-through finance agreement here within the next couple of months.

And they have been very proactive, and very aggressive at putting together a package of funds from the local level, with some different sources, and working on taking advantage of the tools that the commission has been given to try and expedite that project exponentially. They are hoping to be under construction next year, and if all goes well with the pass-through agreement in Del Rio, we could have the final projects let by 2009.

We are working with the folks in Big Spring, and the folks in Dumas on their relief routes, to try to examine the options to take advantage of the pass-through agreements as well. We are working to embrace these tools that we have been given in expediting it. We are also beginning work within this year hopefully on four laning U.S. 287 from Stratford to the Oklahoma state line. And so that will really kind of wrap up the four laning within the northern Panhandle of Texas.

And that is significant, because you can look at what is going on in the other states, where we connect. You go into New Mexico, they broke ground in December. And they are looking to be completed within four years. The section of Ports-to-Plains from Raton to Clayton was on Governor Richardson's bonding package up there. So that has been fast-tracked, and we will be moving.

And the exciting thing about that is, once it is in Raton, it connects with I-25, and will give us a complete four lane route when the Texas sections in the Panhandle are completed. Complete four lane route, all the way from Denver to San Angelo, which is a good opportunity for us.

Oklahoma, although we go about 40 miles in Oklahoma through one very rural county, we have had some good success. Boise City, I believe, received their finding of no significant impact on their environmental statement last year for their relief route. We got about a $36 million earmark in Oklahoma, so that is going to greatly expedite that project there.

Colorado has been focusing primarily, most of the corridor where it ties into I-70, south of I-70 in Lyman there, is primarily super-two. So a lot of CDOT has been focusing on completing out that super-two and then we will be working to move on to upgrading it to four lane divided in Colorado as well.

I think the strengths of our organization, and where we have seen the growth and opportunity comes from several areas. One is, first and foremost, we have tried to be as cost-effective as possible. I think we realize that you know, we all recognize that the limitations on funding and the shortfalls that we have for transportation funding. So we tried to utilize as much existing roadway as possible.

Try to utilize as much four lane divided, so we are not having to go out and add more capacity than necessary. And then in those areas where we do have to add capacity, I think you will find that the cost in the rural areas is much lower than it is in the metropolitan areas. I think Amadeo can probably tell you, the cost of right of way between Sonora and El Dorado is probably a lot lower than the cost of right of way between Dallas and Fort Worth, so we can stretch our dollar a little further there.

Another important opportunity for Ports-to-Plains is we have extremely strong unified support from throughout the corridor. When we were doing our quarter management plan, one of the consultants asked me, do you have anyone that is opposed to this?

Normally when we are doing this, there is somebody who comes out of the woodwork if nothing else, is not happy with you. But he said, I am surprised, because we haven't run into that with this project. And I think that is what we have been excited about, is everyone from the counties and the cities, and it is exemplified by the group we have here today.

And throughout the corridor, everywhere we go, even at our public hearings, public meetings for the relief routes in Del Rio and in Big Spring, you had a few folks that had some concerns, primarily about specific access issues on the proposed relief routes. But by and large, they all agree that this is a good project that is going to help their communities grow, and they are very supportive of the Ports-to-Plains concept.

I know another important aspect, we don't have the air quality concerns. We don't have any communities with non-attainment status, so we have the room to grow in West Texas, and the opportunity presents itself to take advantage and to move forward fully.

And why Ports-to-Plains is important, why we have such tremendous support, is we see, and our communities recognize that this is an economic development opportunity. In our corridor management plan, we recognize that if we complete this corridor, we are going to see 40,000 new jobs created in rural Texas and rural parts of America, with an economic impact of more than $4.5 billion.

And just as importantly, we are increasing the tax base in this part of the state, in this part of the country, where if you look at the conflict with the current litigation with the school finance plan, it was because you have these property poor school districts as opposed to the property rich tax base. And so what we are trying to do is to go into some of these rural areas and increase the tax base by creating opportunity there.

One of the ways when they see Ports-to-Plains, it is like the mission to lower costs in rural parts of the country, the quarter management plan found out they estimated that if you were to relocate a manufacturing company from a metropolitan area in the Midwest, move it to some towns along the Ports-to-Plains corridor, they would generate in per-truck savings, total one way, anywhere from between $350 to $3,500 per truck, just in the lower costs as well. Most of them would exceed $2,000.

So that is something that our economic development partners can take that information and use it as they try to recruit new business to their area. Overall, the economic benefit that will come out of producing the quarter, the benefit to cost ratio is better than three to one.

Jobs we are looking at, mainly distribution and manufacturing, but we don't want to overlook the construction, the actual, the construction of the highway itself. It will create jobs, roadside services, and tourism.

One of the big things they found, our greatest asset out there is the wide open land and space. And so companies, warehousing and distribution, and companies that require large parcels of land and large buildings, they can build out in our area for a lot more cost effectively. So those are the types of businesses that would be most attractive to our area.

We don't want to overlook our connections either. We connect with three Mexican border crossings in Del Rio, Eagle Pass, and of course, the big one in Laredo. And that provides us access, not only to the interior of Mexico, but a lot to the growing ports on the west coast of Mexico.

We are seeing a lot of the -- we are hearing about a lot of growth, as companies are looking to ship, finding alternatives to the congestion at Long Beach and Los Angeles, they are looking at the Mexican port. So we can tie in with, there are only three border crossing, La Entrada al Pacifico go round.

And we also tie in to some east-west connections with I-10 and I-20 and I-40 and I-70. It gives us access to east-west. And some existing connections from Denver that can take us to the Pacific Northwest and into Canada, with some of our partners in the Great Plains corridor. And we are also very interested in the port-to-port connection that will be going to Corpus Christi and give us access to the deep water ports off of the Gulf of Mexico as well.

I wanted to point out on a map here, and primarily the northern access that we can divide, going out of Denver, that we can -- existing infrastructure that can take us to serve the Northwest. It can serve the Vancouver, Seattle area, the Great Plains and Saskatchewan, and even up into Calgary and Edmonton.

And a kind of interesting thing we are seeing there, is the very great similarities between the economies we run into throughout this Great Plains region. There is oil and agriculture. So there is a great possibility of trade within the corridor itself, and not just looking at -- sometimes I think we can get -- look so much at the international trade opportunities, we can sometimes forget the intercorridor trade that is available as well.

And Joe Kiley on our staff in Colorado does a tremendous amount of research in looking at the opportunities that we have with those trades as well. And this map shows you some of the Ferromex connections, and the Ferromex system in Mexico. But you can look on the West Coast, you see the port at Topolobampo and the rail line that runs over there to Ojinaga where we can tie in with the La Entrada route.

And also the lines that exist from Eagle Pass as well as Laredo than can give us access, not only to the interior of Mexico, but over to the West Coast as well. So we have plenty of opportunities for those companies who are looking to trade into Mexico.

One thing we don't want to overlook is the opportunity for safety improvements. The corridor management plan estimated that in Texas alone, the segments that are two lane today, if we can improve those to four lane divided, will reduce accidents here in Texas on those segments of the highway by 47 percent. So that is a significant impact as well.

Some of the activities we have coming up, we are working, partnering with Texas Tech and the other universities along the corridor for a research consortium. And identifying some different research projects where we can identify economic impact that the corridor will have. And also maybe how we can serve those potential customers.

One of the big parts of our research this year is going to be a trucking industry survey, so we can find out trucking companies that are potentially using our corridor, and some of the amenities that they look for, some of the opportunities that can make it more attractive to those firms. We are working with Peggy in talking about putting signage along the corridor, as well as exploring some single number designation for our entire corridor, to make it easier for companies to identify their route as a singular route, as opposed to the current conglomeration of multiple highway numbers.

Right now, it is I-70, and it ties into 277 and 287. So we are looking to kind of streamline that a little bit, make it a little more marketable.

And I think the other thing we would encourage, we are seeking the creative financing options, and we understand the current funding situation, not only in Texas, but in the entire country. So we are working as best as we can to embrace those opportunities and move our project forward.

I think we understand the situation and we are working as our member communities are open to the opportunities that present themselves here for Ports-to-Plains. We do have our website, portstoplains.com, as well as the quarter management plan, which is available online. And I know the executive staff here is probably very familiar with that, but it has a great deal of information and statistics as well.

And with that, that wraps up everything. I would be glad to answer any questions you may have.

MR. JOHNSON: The slide that you showed, that had the costs, $2.87 billion.

MR. REEVES: $2.8 billion. Yes, sir.

MR. JOHNSON: Is that the cost to finish?

MR. REEVES: Yes, sir.

MR. JOHNSON: That doesn't include the costs of what has been done to date?

MR. REEVES: No, sir. That is finishing out the four lane as well as the relief routes, and increased E & O as well.

MR. JOHNSON: Do you have a breakdown or an idea of the difference between, let's call it the main corridor route costs, versus the reliever route?

MR. REEVES: Yes, sir. We have them broken down by specific projects as well. I don't have those numbers with me, but we can certainly get those. But they have broken them down. The way the quarter management plan was put together, they went through and tried to break it down into specific segments, county by county. And so they are smaller, manageable projects.

So it is not, we are not looking for a $2.8 billion check. We have been fortunate to find those opportunities where we can break it down into smaller projects.

MR. JOHNSON: Mr. Chairman, would now be the appropriate time for me to make an observation?

MR. WILLIAMSON: Please do.

MR. JOHNSON: One thing that I want to add, actually two. Yesterday and last night, it was wonderful to see your group. But to have representatives from the four states and to meet them, and for the effort that they made to get here to participate, I think shows a lot of significance in how important this corridor is, not only to Texas, but to the other three states. And that is great to see.

The other thing that comes to mind is, clearly the economics are that this corridor needs to be developed one project at a time. And I salute you for what you have accomplished thus far, and I think it is terrific. And you mentioned already, there are a couple of others that are getting ready to fill in a few more of the gaps. And that is the way to get it done. And we want to work with you to meet that end.

MR. REEVES: We are excited about the opportunity, and like I say, we have had such great reception with the commission willing to partner with us, and with the staff that we have worked with, the DEs. It is not a matter of us trying to convince people that we have a good idea. Everyone is saying hey. Let's find a good idea to get it built.

MR. JOHNSON: Well, it is indeed rare to come up with something that nobody disagrees with.

MR. WILLIAMSON: Man, isn't that the truth. Ted? Hope?

MR. HOUGHTON: Well, I have had the opportunity of working with these folks out in West Texas. I am in far West Texas. So the tirelessness of the crowd, the group, to get this done, and the dedication, Michael, and to the others in the organization. We got to meet with them yesterday afternoon. And I have been out in Lubbock and Amarillo, it has been a lot of fun. And see the dedication.

MS. ANDRADE: I certainly enjoyed my visit with you at the meeting yesterday, and you are always welcome in Austin.

MR. REEVES: Thank you.

MS. ANDRADE: So I look forward to seeing you again.

MR. REEVES: We are planning to be back in June with the conferences coming up.

MS. ANDRADE: Good. You have done a great job on this corridor.

MR. REEVES: Thank you.

MS. ANDRADE: And so I salute you for that.

MR. REEVES: Thank you.

MS. ANDRADE: It is great to bring four states together.

MR. REEVES: Four states. Exactly.

MS. ANDRADE: Wow. Congratulations.

MR. REEVES: And the support has been terrific from all of them.

MS. ANDRADE: And no opposition. Hold on to that.

MR. REEVES: None of it.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: I don't think they are even opposed to Spanish owned firms, are you?

MR. REEVES: If they are from the United Arab Emirates, I will take it. Just as long as we get our road fixed. We are glad to do it.

MR. WILLIAMSON: We do appreciate the presentation and the hard work. I think Coby or one of GBE's section carried a message not long ago, along with Commissioner Houghton that our view is that infrastructure is hard to finance on its own face, because of shrinking cash flows.

So we should all be looking for opportunities to specialize or look for niches that no one else has thought about. And that includes wind power, electricity, and water and whatever else we can find to capitalize on.

And we are committed to Ports-to-Plains as we are committed to La Entrada, because we believe, maybe not the 25 year future of the state, but maybe the 50 year future of the state lies in the western half of the state, and the wise person plans for that now, not 50 years from now. So any time we can be of assistance, we need to know. We are standing by.

MR. REEVES: Thank you.

MR. WILLIAMSON: Anything else, members?

(No response.)

MR. WILLIAMSON: We want to thank each of you also for being very patient. It was perhaps a longer morning than we thought it would be. But it was a necessary morning.

MR. REEVES: Okay.

MR. WILLIAMSON: I think also Mike, let's do our fellow Texans from the Gulf Coast so that they may catch their planes and be on their way.

MR. BEHRENS: Okay. That will be, we will move then to Item 8, which is our rules. And Item 8(b)(4) which is a rule for final adoption of concerns of priority boarding for our ferries, both in Bolivar and Port Aransas. I will ask Steve to make that presentation.

MR. SIMMONS: Good afternoon, Chairman, Commissioners. For the record, my name is Steve Simmons. I am the Deputy Executive Director of the Texas Department of Transportation. At the January commission meeting, I presented rules on priority boarding for the Galveston, Port Bolivar and Port Aransas ferry system for final adoption.

As you will recall, Senate Bill 249 in the 78th Legislative Session amended Transportation Code Section 342.04 to allow the department to implement a priority boarding system for our two ferry systems. At the August 2005 commission meeting, proposed rules for the priority boarding system were presented and approved by the commission for public comment.

The rules were published in the September 9, 2005 Texas Register as 43 THC 29.4(a). Public hearings on the proposed rules were held in Port Aransas on September 20, 2005. And the Galveston-Port Bolivar hearing was held on November 29, 2005 in Crystal Beach. The department received a variety of oral and written comments from a total of 81 commenters regarding these proposed rules. 62 of these commenters were generally in support of the proposed rules and 19 commenters expressed general opposition.

Based on the public hearing and written comments, the following changes in the proposed rules were proposed. Added public transportation with more than six passengers to the list of special condition priority boarding, lower fees for motorcycle, car, pickup truck or van from $400 annually to $250 for the first vehicle and $150 for the second vehicle of a household.

For a bus, motor home or single unit truck with up to three axles, lowered the fee from $600 to $500. And for multiple unit trucks or other vehicles with more than three axles raised the fee from $800 to $1,000. Because of generally lower fees, the number of applicants required to start the construction was raised from 400 to 500 per ferry operation.

At the January meeting you requested that we determine if the local jurisdictions were in support of the proposed rules. Since the January meeting, we have received Resolution 2006-06, dated February 6, 2006 from the City Council of Port Aransas and a letter dated February 15, 2006 signed by all members of the Galveston County Commissioner's Court, stating their support of the rules as proposed.

I understand we have some folks here. So do you want me to make a recommendation?

MR. WILLIAMSON: Make the recommendation, and then we will ask you to step back.

MR. SIMMONS: Based on these proposed revisions to the rules, and the local jurisdiction's support of the proposed rules, staff does recommend approval of the minute order.

MR. WILLIAMSON: Okay. Members, you have heard the staff's explanation and presentation. We have witnesses. It has been your habit in the past to take testimony before asking questions of staff. I assume we will continue that.

And so I will call first, did you get them in the order you wanted them to appear, Mike? Do you have a preference, Mayor? I will let you call the shot.

MS. NEBLETT: I think I will let Mr. Frishman speak, and then I will speak very briefly, and then that is all.

MR. WILLIAMSON: Michael.

MS. NEBLETT: Michael, we are waiting.

MR. WILLIAMSON: Oh, he just wants to say you are for it. Then Mr. Frishman.

MR. FRISHMAN: Thank you, Commissioners. I am a second home owner. I am an Austinite. I have a second home in Port Aransas.

And I just came today to voice my approval of this. And I would like to see it happen. There is three reasons I would like to see it happen.

Port Aransas needs the additional infrastructure. If any of you go to Port Aransas in the summertime, you know what I am talking about. The traffic, getting on and off the island both, is horrendous.

And the plan they have put together here I think will alleviate a lot of those problems for the citizens of Port Aransas. Which I grew up in Port Aransas, so I have that view as well, but now live in Austin. And people who own homes there, but don't live there, but travel there very often.

The second reason is the emergencies that can happen with the storms along the coast. And for people in Austin who own homes there, the first thing we have to do is to figure out, okay, when is the storm going to get there.

When do we have to make the decision that we have to drive down there, drive four hours and get on the island, and get our stuff together, get our house boarded up and put together and then get back off the island before they close the ferries or close the causeways and make another four-hour drive back. And this will, I think, alleviate a lot of those problems as well.

Thirdly, this just accelerates the -- this is a way to accelerate needed capacity, getting on and off the island. They are experiencing incredible growth and they are doing things to meet that growth. But this should hopefully accelerate that process. Thank you. Is there any questions?

MR. WILLIAMSON: Members, you have heard the witnesses testimony. Any questions of the witness? Discussion?

MR. JOHNSON: Appreciate your being here.

MR. FRISHMAN: Thank you for your time.

MR. WILLIAMSON: Thank you, Ben. We appreciate it. Okay, Mayor. Mayor Neblett.

MS. NEBLETT: You have had a long morning, so I just want to say a quick thank you. Certainly, Mr. Chairman, you are a man of your word. We are going forward this month with the administrative rules, and the City of Port Aransas and the citizens of Port Aransas thank you.

MR. WILLIAMSON: Members, any dialogue?

MR. JOHNSON: I have a question.

MR. WILLIAMSON: We can't let one of the finest mayors in the State of Texas off the hook.

MR. JOHNSON: Mr. Simmons said that this is Resolution 2006-06, which would indicate to me that this is the sixth resolution this year, by the Council.

MS. NEBLETT: That is correct.

MR. JOHNSON: Kind of as a credibility check of these resolutions, what were the other five dealing with?

MS. NEBLETT: One was dealing with the Water Act, in support of a water act at the federal level. There was one recognizing Public School Week. And help me, Mike, those are the only two that I can remember. Okay, those are the two. But you are right up there with the federal government and public education, so it is a good place to be.

MR. JOHNSON: Well, this will be three out of six and that passes.

MS. NEBLETT: That is good. Oh, transportation enhancement, that was the other one. One of the other ones. So thank you very much. And thank you, Commissioner Andrade, for always being supportive. And thanks to Craig Clark and Howard Gillespie for being here with us today.

MR. WILLIAMSON: Mayor, we appreciate you driving all this way up here, and sorry the morning took as long as it did. And Michael, you are just on record as being in support of. Correct? Okay.

And Craig, anything you need to add? Thank you for the job you do down in Corpus Christi. You do an excellent job down there. Okay, Steve. We have heard your explanation and your recommendation. What is your pleasure, members?

MR. JOHNSON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you very much. And I think we are going to go ahead. We have something in Hays County. Is that correct?

MR. BEHRENS: Well, we have several different minute orders, that we have people out there.

MR. WILLIAMSON: Let's see if we can't release all of our non-capitol area witnesses to find their merry way home on the overcrowded Interstate 35 corridor.

MR. BEHRENS: What about commissioners finding their way home?

MR. WILLIAMSON: We are locked up. Although we are going to go as fast as we can. Is that one of those new computers, Roger? And by the way, Roger, why don't we have a name plate for you, where people can address you properly.

MR. BEHRENS: I'm looking for Dave Fulton.

MR. WILLIAMSON: Did airplane Dave hook them? Oh, no money for McKinney.

MR. BEHRENS: What we can do -- there is Dave. We will go to Item 7, which is our minute order that has our aviation projects for the month of February. And Dave Fulton will present those projects to you for consideration.

MR. FULTON: Thank you, Mike. For the record, my name is Dave Fulton, Director of the TxDOT Aviation Division. Item 7 is a minute order that contains a request for grant funding approval for five airport improvement projects.

The total estimated costs of all requests, as shown in the Exhibit A is approximately $4.5 million. Approximately $4 million federal, $62,000 in state funding and $450,000 in local funding. A public hearing was held on January 23. One comment was received. We would recommend approval of this minute order.

MR. WILLIAMSON: Members, you heard the staff explanation and recommendation. We do have witnesses. Unless I hear otherwise, I will call the witnesses.

And Ted, I tried as best as I could to preserve our ability to ask these witnesses exactly what it was they wanted to do with State Highway 121, but they came up and told me in no uncertain terms that this airport grant didn't have a damn thing to do with State Highway 121. So we need to keep them separated.

MR. HOUGHTON: All right.

MR. WILLIAMSON: Ken, who do you -- or Larry? Which first.

MR. ROBINSON: I will go first.

MR. WILLIAMSON: Welcome once again.

MR. ROBINSON: Thank you, sir. And Chairman Williamson and members of the commission, and Mr. Behrens. That was me that said, amen, a while ago. To this is an airport issue. Airport funding. You all have been gracious to us in the past. My brief comments, I am the city manager for the City of McKinney. On behalf of the city council, we would appreciate your consideration of this item. As usual, I have my airport director that can handle any technical questions that you might have. So unless you have questions of me, I will turn it over to him, Mr. Chairman.

MR. WILLIAMSON: That would be fine, Larry. Is that your wish. And how do we avoid, Ms. Kaminsky, what is her name?

MR. ROBINSON: Cynthia Kaminsky.

MR. WILLIAMSON: Kaminsky?

MR. ROBINSON: Yes, sir.

MR. WILLIAMSON: Is she here?

MR. ROBINSON: I am not sure.

MR. WILLIAMSON: This will be the first time you have appeared here for money, that she hasn't been here.

MR. ROBINSON: That is correct. I believe.

MR. WILLIAMSON: Have you all worked something out with her?

MR. ROBINSON: Not that I know of. We have stayed the course.

MR. WILLIAMSON: Stayed the course. Okay. Well, do you need to add to this?

MR. WIEGAND: No, sir. I don't really. Thank you very much. I am Ken Wiegand. I am Director of Collin County Regional Airport in McKinney. And I would like to thank you for the opportunity to say thank you.

MR. WILLIAMSON: We appreciate both of you coming up here. And we appreciate very much your patience, because we went through the morning.

MR. WIEGAND: Thank you, Mr. Chairman.

MR. WILLIAMSON: You all do a very good job with your airfield up there, and under difficult circumstances.

MR. WIEGAND: We are doing our best, sir.

MR. WILLIAMSON: Now members, do you have questions of either witness?

(No response.)

MR. WILLIAMSON: Okay. You have heard the staff's recommendation or explanation, recommendation. Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. ROBINSON: Thank you.

MR. HOUGHTON: We are going to run 121 down the middle of the runway, or what are we doing?

MR. BEHRENS: Beneath the main runway.

MR. WILLIAMSON: That depends on what they propose.

MR. HOUGHTON: We could run it down the middle of the runway.

MR. WILLIAMSON: You have got to stay focused on the end result.

MR. BEHRENS: Okay, Commissioners, if you will bear with us, we have three different minute orders that we have folks that want to comment. The first being on Item 8(b)(2).

Eric, if you will, Gleason. If you will make your way up here, and get ready to present that minute order. This is under our proposed rules for adoption under public transportation minute order and rules, or minute order recommending rules that will put us in line with the federal guidelines. Eric, if you will present that.

MR. GLEASON: Thank you, Mike. For the record, I am Eric Gleason, TxDOT Director of Public Transportation. The proposed rules before you repeal current sections of the Administrative Code governing rail fixed guideway system state safety oversight, and replace those sections with rules consistent with new regulations adopted by the Federal Transit Administration.

Specifically, Sections 31.3, 31.61, 31.62, 31.64 and 31.65 are proposed for repeal, and new Sections 31.3, 31.61, and 31.62 are proposed for adoption. The FTA has adopted new regulations governing rail fixed guideway systems. It states that safety oversight programs, their final new regulations contain compliance requirements that are more stringent and more specific than the requirements stated in its former regulations.

The new regulations are intended to improve the performance of the state safety oversight program, and to ensure the following outcomes. One, enhanced program efficiency. Two, increased responsiveness to recommendations from the National Transportation Safety Board and emergent safety and security issues.

Three, improve consistency in the collection, analysis or accident causal factors through increased coordination with other federal reporting and investigation programs. And four, improve performance of the hazard management process.

I highlight a few of the new areas for you in these proposed rules. One of those new areas is around notification time, following an event. Currently, there is a 24 hour notice requirement. Under the new rules, there will be a two hour notice.

There are some additional and changed minimum reporting requirements that are included in the new regulations. And there is also a call for an expanded scope of the safety and security program plans that are a part of this regulation as well.

The regulations clarify FTA's oversight management objectives, and streamline current reporting requirements. The regulations also address heightened concerns for rail transit security and emergency preparedness.

Currently the state provides this oversight function for three systems in Texas, Dallas, Houston and the Galveston Island Trolley. All three systems are very much aware of the new regulations, and are already taking actions to meet the new requirements.

The Public Transportation Advisory Committee has reviewed the proposed rules and is in agreement with them as proposed. We recommend adoption of these.

MR. WILLIAMSON: Members, you have heard the staff's explanation and recommendation. We have one witness. Unless I hear objection, I will ask Rod Johnson to step forward. So you are the guy.

MR. R. JOHNSON: No, you are the guy. You're the man. I have an appreciation for the tough job you all do. I have been chairman of some boards before, but this is a different deal. It certainly is.

Chairman, members of the Committee, my name is Rod Johnson. I own a Texas moving company. It was founded in 1978. It is named the Apartment Movers. We specialize in small moves, from one apartment to the other. And that would be kind of obvious, I guess.

It is important, because 52 percent of the people in Texas live in rental housing. And they need an inexpensive way to move. Because of the changes to the rules for household goods carrier, today, there is no insurance product to fulfill the new automobile liability insurance requirements. It doesn't exist.

There are many reasons, but lost history of small members is not one of them. And 27 years, and over 500,000 completed moves, we have not had one single automobile liability claim against our company, or against our auto liability carrier.

We use independent contractors, as do most small moving companies. These independent contractors provide the truck and the commercial liability auto insurance, and we are named as additional insured on their policy. This is very efficient. It has been recommended by the Texas DOT, and has saved Texas consumers millions of dollars.

Under the new rules, both the independent contractor and my company must have two separate commercial auto liability policies, on the same truck, and the same driver. Two policies, one truck, one driver.

If something happens, who is going to pay? Who? The answer is, the consumer. Because it is going to take a lot of time, a lot of money, a lot of attorneys to sort this out. The consumer ultimately pays.

Also another reason is that there is no insurance product, or definitions, new definitions. What was commercial motor vehicles is now just vehicles. There is no definition of the word vehicle in the Texas motor carrier laws today. So the common use is applied.

Webster's says that a vehicle is a means of carrying or transporting something. So vehicle becomes a means of carrying or transporting household goods. On one end of the vehicle, the means definition, we have the typical end of school year, where we disassemble a student's desk, pack it with their computer, their flat screen TV, their books, and we air freight it to them.

The vehicle, the means, is now a jet airliner. A jet airliner to be covered and listed on my commercial automobile policy. On the other hand, now that the vehicle no longer has to have a motor, the means is under the new rules, a means of carrying or transporting goods, would apply to box dollies. Men, men are a means of carrying something. It is that broad.

It is that incomprehensible that someone could do this. How can you enforce this? It scares the insurance carriers to death. That is why we don't have an insurance product today. All these -- I am sorry.

MR. WILLIAMSON: Your testimony is very important to us.

MR. R. JOHNSON: Okay.

MR. WILLIAMSON: Almost as important as the proper creation of our record. So I need for you to stop for just a moment.

MR. R. JOHNSON: Okay.

MR. WILLIAMSON: Mr. Jackson, apparently, Mr. Johnson listed on the agenda item 8(b)(2). But his remarks appear to be addressed to Agenda 8(a)(2). I need your legal counsel on the way to extricate us from this, and do it in order for our record to be correct.

MR. JACKSON: We are not there yet.

MR. WILLIAMSON: You see, Mr. Johnson, we do pay attention to what our witness is telling us.

MR. R. JOHNSON: Well, I am under household goods carriers, here. 1851, 1858, moving services contractor, all persons for carrier limitation of liability. That is where I was. If it is not household goods, please correct me. Where else is household goods?

MR. WILLIAMSON: Well, let's be sure.

MR. R. JOHNSON: It is 8(b)(2). I am on 8(b)(2). I apologize. Is that not --

MR. BEHRENS: We are on 8(a)(2).

MR. R. JOHNSON: Forgive me. It was my error, Chairman. I thought I heard 8(b)(2). Forgive me.

MR. WILLIAMSON: Well perhaps, we are confused up here. So are we on 8(b)(2)?

MR. BEHRENS: No actually, I called Eric up, and he laid out 8(b).

MR. WILLIAMSON: Okay. That is what I thought.

MR. BEHRENS: That was my mistake.

MR. WILLIAMSON: So here is what I need for you to do. No, I need to listen to you. That is what I need to do.

MR. JACKSON: It is your choice. You can allow Mr. Johnson, which I would suggest, let him finish his testimony, take the vote. Eric Gleason, on the Public Transportation Rules, and then have Carol present her rule.

MR. WILLIAMSON: Then please continue. Thank you, Bob.

MR. R. JOHNSON: I apologize. It's my fault.

MR. BEHRENS: No, it is not your problem. It is mine.

MR. R. JOHNSON: I thought it sounded strange.

MR. WILLIAMSON: We just want -- we want your record to be part of the record. And we want to consider your complaint in the proper sequence that you present it.

MR. R. JOHNSON: Okay. Thank you.

MR. WILLIAMSON: So now, please continue.

MR. R. JOHNSON: We were talking about the other end of definition of the word vehicle, or means. And because vehicles no longer have to have motors, because we did away with commercial motor vehicles, and now they are just vehicles, that means box dollies, fork trucks, even the movers themselves have to have VIN numbers and they have to be listed on my commercial automobile policy.

If that sounds absurd, it is. But I didn't write the law, and I don't write the rules. I am just asking for us to have some clarity on this. That is why we had commercial motor vehicle, instead of just vehicle.

Since the bill was first drafted, we have contacted every single insurance broker listed with every mover's association. Not one insurance company can write the insurance as it is required by the new rules.

For months, I have worked with the insurance broker who actually wrote the insurance section of this bill. He is a fine man. He can't write the insurance the way the rules are written. There is no product.

Who benefits from the new rules? It is not the consumer. The price of their $98 move, which is where our moves start, is now hundreds of dollars. It isn't just more money. It isn't just something passed along. They simply can't afford it.

It is not the motoring public. These small moves are most likely in the future be done by the maintenance man, in the back of his pickup truck. Because most of these small movers are going to go out of business. He will have an unsecured load, spraying furniture on the freeway.

There is already in Texas a TV commercial, showing that TV bouncing from the back of that unsecured load in the pickup, landing in the windshield of a person's automobile, and his personal policy paying for it. Is it real? Real enough to them. I guess if they put it on TV, it must be real.

MR. WILLIAMSON: I think maybe we put that on TV, didn't we?

MR. R. JOHNSON: Maybe we put it on TV. It is not the small mover. The insurance broker has predicted over half of small movers will immediately go out of business. That is half of the 825 or so, Class B movers. The rest will be bankrupt in a year.

They simply can't afford the overhead and burden. We have put mandatory workers' comp in a non-mandatory state on all these people. We have got record keeping that will double our staff. Every day we have to get VIN numbers, send them out, make sure they are on our policies.

Already in Dallas, the nation's second largest moving market, we find that there are in the yellow pages this month, there is only one small ad left, this big, out of dozens of huge ads that used to be in the yellow pages. That one small ad is me. There isn't anybody else.

That is what is already happening to the market. That is what this is, the impact of this right now. 52 percent of the consumers depend on us. We are gone. We are almost gone.

It isn't even the large movers that benefit from this. They simply can't roll a big diesel and two employees to do a $98 move. It isn't going to happen. They aren't going to do it.

That person in the apartment is going to be sitting there, hiring the maintenance man, throwing it in the back of his pickup truck, giving him some money. And you are going to see the same furniture sprayed all over the highway, we have seen in the past.

It is not even the lobbyist association. The small movers are gone. And drafted benefits, no one. Please modify or delay the enforcement, until an insurance product exists, or there will be no small movers left in Texas.

MR. WILLIAMSON: Okay. Here is what we are going to do. We are going to ask you to take a seat. We have all heard. And we are going to ask you to come back up in a moment.

MR. R. JOHNSON: Okay.

MR. WILLIAMSON: We are going to have some dialogue with you.

MR. R. JOHNSON: Thank you.

MR. WILLIAMSON: What I prefer to do, Eric, is for you to -- are there witnesses on 8(a)(2)?

MR. BEHRENS: No, sir.

MR. WILLIAMSON: You have heard Eric's explanation and recommendation on 8(a)(2), members. Do you have questions or dialogue with Eric?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, Eric.

MR. GLEASON: Thank you, Mr. Chairman.

MR. WILLIAMSON: And now, Mike will do 8(b)(2).

MR. BEHRENS: Okay. And Mr. Johnson, I want to apologize to you. It was my error. I was looking at something. But Carol will now go to 8(b)(2). And we will say it again, 8(b)(2), so we can get it right.

But Carol, if you will lay out the motor carrier rules. And these rules are for final adoption. MS. DAVIS: Thank you.

MR. BEHRENS: And present to the commissioners what this has in it. And then like, Chairman Williamson says, we will allow Mr. Johnson to come back again, and they can interact with him.

MS. DAVIS: Okay. Thank you. For the record, I am Carol Davis, director of TxDOT Motor Carrier Division. The rules you have before you are for final adoption. They amend Chapter 18, concerning motor carriers and vehicle storage facilities.

Basically, what these rules do are, implement the provisions of several bills passed during the 79th Session. And then update some statutory references and clarify some existing requirements.

These rules increase fees that vehicle storage facilities can charge, clarify proof of ownership requirements. They provide for modified liability insurance levels for certain school buses, and provide different -- additional notification requirements for vehicle storage facilities.

They also eliminate alternative motor carrier registration requirements for household good carriers, based on the type of vehicle they use, the size of vehicle that they use. Previously, there were two different types, a Type A and a Type B.

Type B carriers operate equipment that is under 26,000 pounds, which is basically the vans that can be pulled by -- I am sorry. The trailers that can be pulled by a truck. The Type A carriers generally operate equipment like the big vans, like United Van Lines, that you see on the roads.

One thing, when we are talking about Type A and Type B carriers, and people say the small movers, Type A and Type B doesn't have anything to do with the size of the company. It has to do with the size of the equipment they use to haul their goods and to provide their services.

We received two comments on these rules from the Texas Towing and Storage Association, and also from the Southwest Movers Association. The two comments from Texas Towing and Storage concerned fees paid by law enforcement for vehicle storage facilities -- for vehicles stored at vehicle storage facilities. And we agreed with one of those, and changes were made.

And the other one, we did not agree with, because it concerned the regulation of law enforcement activities that we don't have any authority over. Southwest Movers Association made a comment concerning a definition of municipalities, and we agreed with that. And we went back to the original definition.

And then also, they made a comment on clarifying the wording regarding who must register. And we did not agree with their change. It concerned who must register, and the definition of insolvency, and some insurance issues.

And we do not agree with their change. It was not within our authority to regulate. So based on those comments, based on the changes that we have made, we are recommending final adoption of the proposed rules.

MR. WILLIAMSON: A couple of questions before we bring the witness back up. Had this gentleman contacted you when the proposed rules went out?

MS. DAVIS: I don't have that on the record, sir.

MR. WILLIAMSON: And is this the first you have heard from this gentleman?

MS. DAVIS: Yes, sir.

MR. WILLIAMSON: And is this the first iteration of his concern that we have heard in the department?

MS. DAVIS: Yes, sir.

MR. WILLIAMSON: Okay. I am going to wait until Ted gets here, because I know he wants to participate. But meanwhile, Bob, I need some legal advice again, to Carol. Oh, please.

MR. JOHNSON: Are we under any time constraints here with the adoption of the final rules relative to the passage of the statute in the first place? Are we required a certain amount of time to --

MS. DAVIS: Well, the statute was effective September 1.

MR. JOHNSON: But does the statute say we must adopt rules by a certain --

MS. DAVIS: No.

MR. WILLIAMSON: Bob, I should know the answer to this question, and I think I do. But I want to be sure. What is the practical impact of deferring final adoption of any rule?

MR. JACKSON: We can do that.

MR. WILLIAMSON: Thank you. Ted, Carol's basic layout was an explanation of the administrative rules. And I asked her if this gentleman had responded to the initial publication or had contacted the department during that time. And the answer was no. So this is the first time that the department and this section or this Division is hearing these objections.

I think it is appropriate for me to ask this. Do you have any reaction to what you heard in the testimony this gentleman has offered?

MS. DAVIS: I wasn't really clear on the objections. We are not changing the definition of a motor carrier. I didn't understand the objections. I am sorry.

MR. R. JOHNSON: It is the word vehicle. It eliminated the word --

MS. DAVIS: If you could tell me where it is.

MR. R. JOHNSON: The word vehicle, go to --

MS. DAVIS: In the definitions.

MR. R. JOHNSON: I have actually not gotten a copy.

MR. WILLIAMSON: And I know from past experience, Bob, it is okay for us to defer this item for a moment. We are going to leave this pending. And we are going to go on with our agenda.

Here is what I would like for you to do. We told the lady a couple of hours ago, and I kind of wisecracked to you. But seriously, we do listen carefully to our witnesses. And it sounds to me like you either don't understand what we are trying to do, or we don't understand what we are doing to you.

So what I would like is for you two to go back into the back room, and sit down and see if we can either make him feel better, or if we can't then we are probably going to defer this for a month. And let me know here in a few minutes what you all decide.

MS. DAVIS: Okay. Thank you.

MR. WILLIAMSON: So we are going to leave this pending, Mike. And let's go back to our agenda. Well, let's go back to --

MR. JOHNSON: Mr. Chairman, could I ask something?

MR. WILLIAMSON: I am sorry.

MR. JOHNSON: One thing, Mr. Johnson and Carol, one thing that I heard you say, that I would like some clarification or some understanding on, was the insurance portion, and the type of policy, and the use of a named insured as to whether one, we can do that. And two, if it was ever considered.

You went down a path about the availability of insurance for this smaller. And I think at least from a business man's perspective, I think that is a critical part of what you are bringing to us, as one of the fallacies of what we are presenting.

MR. R. JOHNSON: There is no insurance product. The man who wrote this -- who wrote that section of the bill, is a very prominent insurance broker. I met with him two days ago, just to verify that I was correct, in what I was going to come to you and say.

And he said, there is no insurance product today. I called -- I have a staff, called everybody. And with respect to you, we have called your office before. We haven't spoken. But that is what I wanted. I wanted a dialogue. Because this is --

MR. JOHNSON: But by the use of a named insured on an existing policy, my question would be that you two might be able to resolve or at least shed light on, would that suffice for the insurance provision that is required under the statute?

MR. R. JOHNSON: I am sorry.

MR. JOHNSON: I am sorry. You mentioned that nowhere in the proposed rules is the allowance for a named insured under a policy. And yet, I think it is a pretty common business practice, if you are doing something for somebody else, they ask to be a named insured under your policy. And I don't see why that wouldn't be a potential solution here.

MR. R. JOHNSON: It might be a potential solution. Part of it is the definitions of what a vehicle is. Because it goes way beyond a motor vehicles now. It goes way beyond it. And I will be glad to bring that back.

MR. JOHNSON: Well, I think that it is the two of you probably have a much better understanding of the moving parts here, than I do.

MR. WILLIAMSON: Hope, did you or Ted have anything that you wanted to add at this point?

MS. ANDRADE: No, other than I am not sure that we are going to resolve it in the next -- you know, my concern was, when you were saying we were going to put a lot of small businesses out of business. But I was so busy trying to figure out which agenda item we were on, that I lost something.

MR. R. JOHNSON: I didn't figure it out. I was listening to it. Something is crazy here.

MS. ANDRADE: So I am very concerned about this, and I am willing to defer this if we have to. But we certainly are not in the business to put business out of business, okay.

MR. R. JOHNSON: That projection came from an insurance broker. We have met with a lot of them. I said what do you think is going to happen? He said, everybody under five units is simply going to vanish. They are going to go out of business. That is the broker.

MR. WILLIAMSON: Okay. Anything, Ted?

MR. R. JOHNSON: Okay. I am sorry.

MR. WILLIAMSON: We are going to defer this for awhile, and you all come and talk to us here in a little bit.

MS. DAVIS: Thank you.

MR. R. JOHNSON: Thank you.

MR. WILLIAMSON: Now, let's continue.

MR. BEHRENS: Let's try 13(b).

MR. WILLIAMSON: 13(b). Is that awarding our contracts?

MR. BEHRENS: No. This is an item, pass-through tolling. And 13(b) is to -- Amadeo will explain to you, to give us the authorization to execute a pass-through toll agreement with the City of San Marcos. Amadeo?

MR. SAENZ: Good afternoon, commissioners. For the record, Amadeo Saenz, Assistant Executive Director for Engineering Operations.

The minute order before you provides for final approval of the department to enter into a pass-through toll agreement with the City of San Marcos, to construct the extension and expansion of FM 3407, Wonder World Drive, from FM 2439 or Hunter Road, westward to where it intersects with Ranch to Market Road 12, approximately 3.3 miles. And it is to construct a new four lane limited access facility.

The department and the city, the city has submitted a pass-through toll proposal. We brought it before the commission for preliminary approval in May of 2005. And we have been working with the city to negotiate this thing. We have now come to an agreement to reimburse the pass-through tolls.

The amount is $60,600,000 for the construction of this project. The per mile reimbursement will be at 15 cents per mile. The minimum reimbursement amount will be based on -- will be $3,030,000 and the maximum reimbursement amount per year will be $6,060,000. The prior number was also per year. The agreement will expire once all the pass-through toll amount has reached the $60,600,000.

A little bit on the project. The project is almost a $75 million project. The reimbursement amount is $60,600,000. The city is putting in a lot of equity into this project, in the form of a design, and a lot of the work.

We think that looking at this project, it is a good project. The city will also take over the maintenance of two roads that this facility will replace. So two roads that are currently on a statewide system will now become not part of the system. We estimate the payout will be in about 17 years.

MS. ANDRADE: 17 years?

MR. SAENZ: 17 years.

MR. JOHNSON: Amadeo, we have one person who has asked to speak on this agenda item. The Mayor of San Marcos. Mayor Susan Narvaiz. Is she still with us? She signed up to speak for it.

MR. HOUGHTON: I saw them earlier. They may have left.

MR. HOUGHTON: We might have outlasted them.

MR. JOHNSON: If she had to leave, we could certainly understand that. Any questions of Mr. Saenz?

MR. HOUGHTON: The total project, Amadeo, is $75 million?

MR. SAENZ: $74.7 million.

MR. HOUGHTON: And they are putting in, in one form or fashion of about 14 million?

MR. SAENZ: Yes, sir.

MR. HOUGHTON: In way of engineering design.

MR. JOHNSON: How about right of way?

MR. SAENZ: They are providing the right of way.

MR. HOUGHTON: They are dedicating the right of way.

MR. SAENZ: Yes. There is a federal demonstration project that had brought in, I think $10 million that they are using to buy some of that right of way. But that was a significant part of it.

MR. HOUGHTON: So is that considered a part of the total $74 million cost? Do you add that on top of the $74 million?

MR. SAENZ: No. The total cost of the project is $74 million.

MR. HOUGHTON: Including right of way.

MR. SAENZ: Right of way, design. It is a total project cost.

MR. HOUGHTON: So they are using some federal money, plus their local dollars?

MR. SAENZ: Yes, sir.

MR. HOUGHTON: Okay.

MS. ANDRADE: And they are going to maintain it?

MR. SAENZ: No. We are going to maintain it.

MS. ANDRADE: We are going to maintain it.

MR. SAENZ: We will maintain it after it is constructed. What they will maintain is the two roads that this project will replace will go off the state highway system, and then will be maintained by the city.

MS. ANDRADE: Okay.

MR. SAENZ: Which is that Hunter Road, and then the portion of Ranch to Market Road 12 from Hunter Road, up to where this new intersection connects.

MS. ANDRADE: Good.

MR. JOHNSON: You have heard the presentation. And I am sorry the Mayor has apparently --

MR. HOUGHTON: We can defer it until the Mayor shows up again, don't you think?

MS. ANDRADE: I say, I make a motion to move forward.

MR. JOHNSON: There is a motion.

MR. HOUGHTON: Second.

MR. JOHNSON: And a second. All in favor of the motion, please signify by saying aye.

(A chorus of ayes.)

MR. JOHNSON: Those opposed, no.

(No response.)

MR. JOHNSON: The motion carries. Thank you, Amadeo.

MR. SAENZ: Certainly.

MR. WILLIAMSON: So the Mayor wasn't here?

MR. BEHRENS: Is the Mayor of Mission still here?

MR. SAENZ: He is here.

MR. BEHRENS: Okay. Good. We'll then going to go on to Item 16(c)(2), which is a minute order, and it is in our routine minute orders, concerning designating a new controlled access facility on the state highway system as an extension of FM 396. This will eventually tie into a proposed international bridge at Anzalduas.

What we are asking the commission to do at this point is to, we recommend to you to do that designation. It won't become a part of the highway system until the actual construction contract is awarded. But this allows us to continue on, and to continue our planning, and work with the folks that are working on that bridge.

So I would recommend the approval of the individual minute order 16(c)(2). We do have the Mayor here.

MR. WILLIAMSON: So you laid it out, as you would lay out a routine item.

MR. BEHRENS: Yes.

MR. WILLIAMSON: So members, you have heard the testimony of the staff, and recommendation of Mr. Behrens. And we have a witness. A witness who has been extremely patient. Mayor Salinas, it is good to see you again.

MR. SALINAS: Thank you. It is good to see you again, and we really appreciate what the recommendation is going to be here today. I think you know that we have a great project in the Anzalduas Bridge.

We just talked to John Ritchie about it, with the State Department, about two hours ago. He talked to Mr. Vargas out of Mexico City, which the note, the diplomatic note is on its way to Washington. So he should be getting it in a couple of days.

So that means that we should start construction on the bridge, I would think, by July or August. Things are looking real well for us, and this will kind of clench the project we have been working on for so long. And we really appreciate TxDOT, and of course, the Governor for all the support that we have gotten.

And you know that we are growing quite fast. And the things that we have to put together on the road district, that we are also creating, that should be on your -- should be an application to you, on the pass-through toll roads for District Five and trying to access more road for the creation of more traffic that we are getting.

So this project that you all are recommending today, it is a real good project for us, that we have been working on. We have a third project that we also have our chairman here, Dennis Burleson, who is part of our group. So if you all have any questions on anything else, that concerns this project, I am here to answer any questions that you all might have.

MR. WILLIAMSON: Ted.

MR. HOUGHTON: Do you want to sell a bridge?

MR. SALINAS: Well, it belongs to McAllen, Mission and Hidalgo, so I would have to talk to our partners, which I think we are going to hold onto it for a little while.

MR. HOUGHTON: Okay.

MR. SALINAS: It is a corridor that is coming in from Coahuila and Monterrey and straight to Mission and McAllen. It is a good project, and this will give it the final go-ahead.

MR. WILLIAMSON: Mayor says he wants to think about it three years from now, when the traffic is up about 5,000 percent.

MR. SALINAS: Exactly. But we also have another project that you all would be looking at. And it is a road district that we have, besides what you all will create, which will be RMA.

But we are thinking that our district and our precinct and our area is growing so fast that we have started working with TxDOT on some of those state roads that we need to widen and kind of put together and do them on the pass-through toll roads. And I think that application has been turned in to your department.

MR. HOUGHTON: Mayor, I have one question. What is going to be the toll rate for a 53 foot trailer coming across the bridge. Do you know?

MR. SALINAS: We don't know. And right now, the bridge is not access for trailers.

MR. HOUGHTON: Just cars.

MR. SALINAS: Just cars. According to the department that we have for our bridges, it is only cars. But we are going to be working very hard to kind of, as soon as Pharr Bridge is out to a capacity, the commercial traffic will be switching it over to our bridge, which is a direct route to Monterrey.

I would think that you could get in a car in Mission, Texas and be in Monterrey in two hours. So it is going to be real good for us. Of course, this project that you all are going to approve today is what we will be working on for some time, now.

MR. WILLIAMSON: Hope, did you have anything?

MS. ANDRADE: Mayor, it is great to see you again.

MR. SALINAS: It is great to see you too, and all of you. And hopefully, we can get a lot of things, a lot of other projects going in our area. I just want to mention that in the last four to five years, TxDOT has spent about $1.5 billion in our area in the Valley.

And it is a great accomplishment that TxDOT and of course, the administration has done so well for us, in that. I mean, people might not say that, but it is a total construction area that we see every day in the Valley. Of course, Mission was done some time ago, and McAllen, Pharr. Right now you are in Mercedes, Weslaco area, and in Brownsville.

So we travel that expressway every day. And it is something that you all have done that the next two or three years is going to be beautiful. And thanks to all of you for accommodating all those dollars.

MR. WILLIAMSON: Well, you and your colleagues have been good leaders, good local leaders. We do believe in local and regional leadership.

MR. SALINAS: Well, thank you all very much, and thank you for your recommendation.

MR. WILLIAMSON: Did you say Dennis was here? Dennis Burleson.

MR. SALINAS: Dennis is here. Dennis? Dennis is part of our Mission group. And he is with the increment, the Texas increment board that we have. They will probably be working with the state on this pass-through toll road.

MR. WILLIAMSON: And Dennis, is there anything you wish to add? I know you haven't filled a card out. We will let you fill one out in a moment.

MR. BURLESON: Thank you very much, Commissioners. Just appearing before you, I am the -- my current position is Chairman of a development authority for the City of Mission. And we are coming with pass-through toll project for this road. And we thank you very much for taking it on the system.

MR. WILLIAMSON: We thank you for your interest in transportation. It is nice to meet you. That was Dennis Burleson from Mission, Texas. Okay. Members, you have heard the staff explanation and recommendation. You have heard the testimony of a great mayor of the state. What is your pleasure?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, Mayor.

MR. SALINAS: Thank you.

MR. WILLIAMSON: Thank you for your patience today.

MR. BEHRENS: Okay. Do you want to bring Coby back up?

MR. WILLIAMSON: Yes. I think so.

MR. BEHRENS: Okay. We will now go back to Item 2. And Coby, if you will come back up and continue your discussions on our legislative items.

MR. CHASE: Again, for the record, my name is Coby Chase. On Item 2, on state legislative priorities, I went through that very briefly. Would you like me to go through it again? I was under the impression that we had finished on that particular item.

MR. WILLIAMSON: I think, to recollect, you told us that not much had changed in the previous month. That we were communicating our starter list and the commission's directions, as you have received them so far.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: To our partners across the street. You have explained the financial underpinning of the problem that the commission and the state faces, with some displays. And unless we have instructions for you, you are through with 2(a) and you are waiting on the federal piece to come up, number five.

MR. CHASE: Yes, sir.

MR. BEHRENS: We go then to 2(b)?

MR. WILLIAMSON: Members? Any other dialogue with Coby about 2(a)? Anything you want him -- any new items you wanted to put on the list to start researching?

MR. HOUGHTON: Well, I know it is already on the list, but I haven't heard a whole lot of discussion regarding the Rail Relocation Fund, potential revenue sources. Have we been searching and looking under rocks?

MR. CHASE: Yes. But I will be perfectly honest. I am not in a position to --

MR. HOUGHTON: Talk about it yet?

MR. CHASE: To talk off the top of my head what is going on. But yes, sir.

MR. HOUGHTON: Okay. That is fine.

MR. WILLIAMSON: Anything else?

(No response.)

MR. WILLIAMSON: Okay. Well Coby, hang tight, and we will get on the federal legislation business in a minute.

MR. CHASE: Thank you.

MR. BEHRENS: Chairman, I have just been informed. Carol? Let's just go back to your minute order 8(b)(2). I think you have a recommendation for the commission.

MR. WILLIAMSON: Now 8(b)(2) was laid out.

MR. BEHRENS: It was laid out.

MR. WILLIAMSON: Testimony was previously taken on 8(b)(2) earlier in the morning, and that testimony is associated now with Item 8(b)(2).

MS. DAVIS: And yes, sir. We are recommending that this minute order be deferred.

MR. WILLIAMSON: And is there objection, members, to deferring the minute order?

MR. JACKSON: No.

MR. WILLIAMSON: And we are going to do that. Do I need to vote that, Bob?

MR. JACKSON: No.

MR. WILLIAMSON: Since he was permitted in testimony taken, do we need to vote on deferring, or can I just instruct? Okay. I am instructing that we defer that. And we'll attempt to solve this problem.

This man speaks eloquently, and we want him to -- Irving, Texas. Let's see. Is your House member Linda Harper Brown, do you think?

MR. R. JOHNSON: I have never called them.

MR. WILLIAMSON: Your House member is probably Linda Harper Brown. Do you remember who your State Senator might have been?

MR. R. JOHNSON: [inaudible].

MR. WILLIAMSON: If you happen to -- I know your county commissioner is a guy named Mayfield, but he wouldn't have any impact on this. So you might, if you can find out who your House and Senate member is, we would appreciate it if you would let him or her know that we listen carefully to their constituents.

MR. R. JOHNSON: I don't actually live in Irving. I live outside that area.

MR. WILLIAMSON: Well, then you can contact the Irving House and Senate member and then you can contact your home House and Senate member, and we'll get four out of it instead of two. Okay. Item 8(b)(2) is deferred. Thank you, Carol.

MS. DAVIS: Thank you.

MR. WILLIAMSON: Thank you for being here, Mr. Johnson.

MR. R. JOHNSON: Thank you. I appreciate your patience.

MR. WILLIAMSON: Yes, sir.

MR. BEHRENS: And one more item, the Mayor of San Marcos has --

MR. WILLIAMSON: She returned?

MR. BEHRENS: She returned. She heard what Commissioner Houghton said. So I think it would be appropriate if we could at least recognize her, to have her comment on agenda item 13(b).

MR. WILLIAMSON: Which we unanimously passed now, because we were so fearful that she would chew on us, if we didn't pass it. We apologize for the lateness.

MS. NARVAIZ: That is all right. I appreciate it. Thank you so much. Susan Narvaiz, Mayor of the City of San Marcos. Hello, all of you.

Briefly, I had prepared to thank you for your consideration earlier, but now I am here to thank you for your approval. On behalf of the Council, I have several council colleagues and the citizens of San Marcos. This project is important, as you know. And it increases the mobility and safety in our city and in our county and our region.

And we want to express our gratitude. It took your work, the tool of the pass-through finance mechanism and the expertise of Amadeo Saenz and Bob Daigh to pull this all together. And this was a 1998 bond. Local bond issue that started this project. So it was a vision of the city and its citizens, and you helped us to approve that today. So we thank you.

MR. WILLIAMSON: Well, you will hear a lot from us over the next few months and few years, talk about the importance to us of associating short term solutions with short term problems, mid term solutions with mid term problems, long term solutions with long term problems. And the Legislature has given us tools to do that.

The pass-through toll financing is normally a short term solution to cure a short term problem, before it becomes a mid term or a long term problem. And every time we see the perfect application of these tools, we like to comment to ourselves in the hopes that you will also repeat that back in your community.

We have a conference planned to address the transportation problems of this State. And this is a perfect example of a strategy and a tactic properly applied as part of the plan.

MS. NARVAIZ: It is. It demonstrates how local and state entities, governmental entities work together to accomplish what is the citizens request. And that is what is so important about this project.

This brought together our council of neighborhood associations, everyone, on a big transportation project. And it couldn't be done in our size of a city. There are many other cities in Texas without the help of the state. So on behalf of many of us, in my city, but across the state, thank you so much for working so hard for those goals.

MR. WILLIAMSON: Well, thank you.

MR. HOUGHTON: Where were you earlier, when we needed you?

MS. NARVAIZ: Well, we were in the back room, and then I have to admit, I escaped to get a hamburger. I should have brought one back for you all.

MR. HOUGHTON: While we were getting ground up, where were you.

MS. NARVAIZ: But thank you again.

MS. ANDRADE: Mayor, congratulations. I want you to know that I stood up for you. But you should have invited the hamburger.

MS. NARVAIZ: You know, I will send one in.

MR. WILLIAMSON: Thank you, Mayor.

MS. NARVAIZ: Thank you so much.

MR. WILLIAMSON: Thanks for being here.

MR. BEHRENS: Okay. Continue on with Item 2. We will go to Item 2(b) and ask James Bass to come up and continue his discussions, talking about our legislative appropriations request. James.

MR. BASS: Good afternoon. For the record, I am James Bass, Finance Director at TxDOT. And a brief editorial comment. Any time I have the opportunity to hear Mr. Chase speak about a percentage of a percentage, my heart is warmed.

Last month, I provided a brief overview to you of some successes and near misses that we have had over the last four years, as we have attempted to make our appropriations process and final product less confusing. Today, I would like to briefly talk to you of some of the internal processes that we are going through, and will be going through in the coming months, in the development of our legislative appropriations request or LAR for 2008 and 2009.

Over the next couple of months, we will be visiting with each district, division and office, and ask them to identify their needs for 2008 and 2009. A major focus, as always, will be on preserving the existing transportation system.

This past year, we have all been very aware of nature's impact on our state. Hurricanes, wildfires and severe drought. All of these have impacted our system to one extent or another. And the harm will definitely need to be addressed in the coming years. Through our conversations with the districts, we will be able to begin to put a dollar figure on those actual impacts to the system and what it is going to take to put those repairs in place.

Other areas of focus will be on the necessary resources for right-of-way acquisition and engineering and development costs to keep projects on track, to be awarded not only in 2008 and 2009, but beyond. As you all know, our planning horizon is longer than a two year budget cycle, and many of our expenditures are working to make sure that the pipeline of projects will keep flowing into the future.

Of course, we will also be working to define the needs for aviation, public transportation, our regulatory services, and just keeping the lights on. And the early read, we are hearing from the districts is that just keeping the lights on is going to be much more expensive. We are hearing in the neighborhood of 20 to 30 percent increases in the rate for utilities.

That will obviously have an impact on our budget as we move forward. And of course, speaking of rising costs, we need to keep in mind that over the last two years, the highway cost index, which is a type of consumer price index for highway construction has seen increases of 13 percent in 2004 and 24 percent in 2005.

All the while, the demands on our system continue to rise as population and miles driven continue to increase. The other side of the budget obviously, once we have identified those needs, is to work on what resources --

MR. WILLIAMSON: Do you have an opinion about why that 12 and 13 percent increase has occurred?

MR. BASS: I think, from what I have heard second hand, a lot of it had to do with steel being taken out of the market to China. And then obviously, fuel prices going up, increase. Since the highway cost index focuses on the delivery of the materials and of the construction products, the rising fuel costs also had a cost on that.

So we may see this year, as fuel stabilizes, we may actually see those cost increases also start to stabilize as well. But the point is, it is very volatile. And in the last two years, it has moved dramatically.

MR. WILLIAMSON: So if we were to go through another House appropriations process, like we did a year and a half ago, wherein the House members were focused on why we were so much higher than what we originally estimated on a particular project, one of our explanations is going to be, because of the price of diesel, asphalt and steel went through the roof. So maybe, Coby, we need to think about some sort of circular to the House members and Senate members now, reflecting that.

Just so that they are kind of on record as knowing there is a reason why this stuff has gone through the roof. That is something for us to consider.

MR. BASS: And as an example, perhaps to highlight that, in the UTP, project costs are initially calculated at today's costs, but then inflated into the year of planned letting. But they are inflated at a 4 percent per year rate.

That had been kind of a historic average. Obviously, the last two years, we have blown through that historic average, considerably.

MR. WILLIAMSON: Okay.

MR. BASS: The opposite side of that budget equation, once we identified the needs, is looking at again, resources that are going to be available. And that job will fall primarily on us in the Finance Division, where we will continue to refine our estimates of the resources available for those needs. We will then look to the commission and the administration to balance those needs with the available resources.

Obviously, this process usually means deciding which needs would go unmet. As we continue to refine these estimates, we will review the revenue and economic forecast of others, not just internal to the department.

But an early read of the trends of some of the primary revenue sources that we have seen, that again, we'll continue to refine, shows the state motor fuel tax coming into the state highway fund growing estimated at about 1.5 percent per year. And the other main state revenue source in the state highway fund is vehicle registration fees. Because, primarily, we have some natural growth in there.

But also, statutorily, there is an unwinding of an earlier transfer to the benefit of GR that is being staggered and unwound over time, beginning in 2006. Early read, as we can -- we'll probably forecast somewhere around a 4 percent annual growth on vehicle registration fees.

MR. HOUGHTON: It's a 1.5 percent in the motor vehicle tax revenue.

MR. BASS: Motor fuels tax. Yes, sir.

MR. HOUGHTON: Okay. And the population growth in the State of Texas is 9 percent?

MR. BASS: And another point I was going to -- those are the nominal growth figures. They do not take into account yet the impacts of forecasted inflation going into the future.

MR. HOUGHTON: Right. So right there, we have a nice spread.

MR. BASS: Correct.

MR. WILLIAMSON: Well, and it gets worse when you consider that 9 percent growth of people probably yields a 15 percent growth in vehicle lane miles. Which is a truth.

MR. HOUGHTON: Well, that begs to his registration of 4 percent in the baseline of current registered vehicles. Correct?

MR. BASS: Right. I believe what we have seen over the past 20 years or so is almost a two to one, looking at percentages. As the percentage of population goes up X percent, the percentage of vehicle miles traveled has gone up 2X.

MR. WILLIAMSON: Oh, so it is 18.

MR. BASS: Close to it.

MR. WILLIAMSON: A 9 percent increase in population would be closer to an 18 percent, I said lane miles? I mean vehicle miles traveled -- VMTs.

MR. BASS: So as the population increases, the demands on our system grow at a faster rate, because not only are those new people driving around on the network, but also the goods and services that they need and require travel along the same network in order to deliver those services to them.

MR. WILLIAMSON: Okay.

MR. BASS: I brought up those two state funding sources, because historically, those two make up about half of the revenue to the state highway fund. Obviously, the other key element is federal reimbursement, we have heard about earlier today.

And our early projection actually show these revenues trending down over the next three years. That will obviously be surprising to a number of people. But this is in large part due to our implementation a few years ago of the tapered match approach.

This technique of tapered match did not deliver any more federal funds over the life of our projects, but it brought those funds in faster, and created something of a funding bubble that allowed us to accelerate project delivery. We will soon be coming out of that bubble.

And if you would like, I will attempt to explain tapered match. But just in general, it didn't bring any more money, but our partners gave us that money up front on the life of a project.

MR. WILLIAMSON: We basically applied it to Interstate 10, west of Houston and to a couple of projects in the lower Rio Grande Valley. Was that not the case?

MR. BASS: Correct. In addition to this situation, we have recently been reminded of the uncertain nature of the federal funds. While the multi-year Federal Transportation bill may be in place, the annual obligation authority is subject to the annual federal budget process, and subject to any Congressional action or more recently, Congressional inaction.

At times in this process, the states will be directed to give back previously awarded federal authority. Again, this just recently happened. And as you heard earlier, federal estimates show that the balance of the federal Highway Trust Fund will be depleted by the end of the current bill, somewhere around 2009, plus or minus.

Honestly, putting existing balances to work is not a bad thing. But I merely raise this point to highlight that during the current bill, what is being distributed to the current federal bill, what is being distributed to the states, is not only incoming revenue, but an existing balance. As that balance is depleted, going forward in the next bill, if nothing else is done, they would only be able to distribute incoming revenues.

An anticipated decrease of federal funds, again, without any other change. As a reminder, in 2008 and 2009, we will still have some benefits left from the Texas Mobility Fund and from Proposition 14. These will go a long way in closing any gap that we find ourselves in, between the needs over the next two years, and the available resources.

The reason I put this at the end, as I don't want the department -- don't think that we will, again, since our planning horizon is much more than two years, but we can't find ourselves getting comfortable and relying on these tools to always fill the gap. Because by the end of 2009, both of these tools, Proposition 14 and Texas Mobility Fund will likely nearly be exhausted for the near term.

Having said all that, that was kind of just the brief overview of what we are going to be working on in the next couple of months. I will be coming back before you, throughout the summer. And as always, if there is any particular aspect that you would like us to focus on, or have any questions on, we would be happy to bring that forward in forthcoming months.

MR. WILLIAMSON: Members, you have heard James' presentation on the discussion item. And we can discuss, if you so wish.

(No response.)

MR. WILLIAMSON: Michael, I think that we are updated, and we look forward to hearing from Coby and James on these two matters again next month.

MR. HOUGHTON: Percent of a percent. That was pretty good coming from a -- what is he?

MR. BEHRENS: We go to Agenda Item 5 now, which will be discussion of our federal legislative initiative. And Coby is going to talk about a report that he is going to recommend for you to adopt that makes recommendations to accelerate the delivery of our transportation infrastructure projects. You can explain the percent when you get up there.

MR. CHASE: No really, I can't. I appreciate James' rousing endorsement of my --

MR. WILLIAMSON: Mathematical skills?

MR. CHASE: Yes. Exactly. This -- again, for the record, my name is Coby Chase. And I am here today, to appear before you. It is part two of a two part series on the commission's federal legislative priorities.

Something that we find we are often asked on the federal level by our members of Congress, the United States Department of Transportation, and others, interest groups, whatever the case may be is whatever we are focusing on, on the federal level. And what has been presented to you in report form, is very similar to what was presented to you in Conroe, with only a few little changes around the edges.

Some tweaking of some words, brought to our attention by the Aviation Division, I believe Transportation, Planning and Programming and perhaps PTN. But I can't recall off the top of my head. And the over-arching these so to speak is, you should never rest on your past success.

The state, with the help of a few others from outside the state, was very successful in SAFETEA-LU, the bill that succeeded TEA-21. As I just say, kind of casually, the highway bill, which is not exactly true, but that is just what we call it. And really, the cornerstone of our success in there was flexibility, which can be a little hard to explain sometimes to the public.

But that is where most of our successes were. In groups like, we worked very closely on that legislation with groups like MOTRAN that represent La Entrada, Ports-to-Plains corridor, especially the I-69 Alliance in Texas, and NASCO, the official voice in Texas for I-35. And they understood without exception that their priorities won't get funded.

Federal money isn't there to the degree to build these roads in any of our lifetimes. And they understand that flexibility is key to those, and innovative finance. And they were all very helpful now. What this does is build on it.

And our federal agenda, I would say, federal priorities venture out of Congress more than they have in the past, and into the rulemaking process. And that is what you will see in this report. And let me walk through it with you.

And I will take any questions you have. And I hope by the end of this process, we have an agenda that we can start working on for the remainder of this session of Congress, for the rest of this year. Expanded federal tolling authority. We plan to work with the Federal Highway Administration in its new tolling apprising team to ensure the state is able to take full advantage of new financing tools. And SAFETEA-LU expanded the ability of state DOTs to utilize tolls on certain types of federally funded projects.

A tolling and pricing unit has been established to assist and review DOT. Expressions of interest, as they are called, for special federal tolling programs. TxDOT will work with the Federal Highway Administration and the review team to ensure that the state takes full advantage of these new financing tools.

And one thing I should have started out with, and I will insert now, and go a little bit backwards, these tend to be expressed in terms of fairly broad goals. They are not overly prescriptive on each individual action. It gives us a lot of operating room to shift as dynamics change in Texas.

And that is particularly something that Commissioner Andrade raised at the commission meeting, because she is in the throes of some work with PTAC. And we wouldn't want to do anything that would on the federal level that would tie our hands to say, well, now we can't say it. That doesn't -- none of this prohibits us from operating underneath a very large umbrella, so to speak.

One issue, on page -- on the report, is enhancement funding flexibility. We had a little bit of a discussion about it in Conroe. And a little bit of it was raised today by me when I was reporting on the memorandum that Chairman Williamson asked us to prepare, or the white paper so to speak, on federal funding. But is the use of enhancements.

And I will have to make a correction in the report. It says $290 million of Texas transportation funding. It is closer to 333. That error is mine. That was a placeholder number, but then it was calculated properly later, and it is closer to $333 million. I apologize. We will correct that.

But what a transportation enhancement program is, since when ISTEA was passed in the early '90s -- '91 I believe. Billions, and since then, billions of dollars have been taken away from congestion relief and other traditional mobility needs and put into enhancement projects. And sometimes we are criticized for doing things like building a hike and bike trail or whatever the case may be, without people understanding the feds tell us you have to spend the money in that type of a way, or you lose it.

And it is a calculation. It is 10 percent of your STP money, the bulk of your mobility money. And it is -- I don't tend to have too many opinions. But that is a real question for people who have to decide. It is kind of hard when people are stuck in traffic in Houston, Dallas, San Antonio, Austin, El Paso, whatever the case may be, and you are looking at $333 million that you can't put to getting anybody home safer or faster at night, or move goods more quickly, or whatever the case may be.

And as we have noticed, and as you have heard me say over and over again, the federal government in particular operates in a state of perpetual funding crisis. Anytime something big and important comes up, like a war on terrorism, like a hurricane, like wildfires, there is no money for it. And so they have to clobber through other parts of the budget to get it.

And we experience that with $159 million in rescissions. After all the legislation has passed, guaranteeing you a certain amount of money, they come in later, and over the last four years, that has totaled about $300 million. It comes out of our transportation money.

What we have suggested to our members of Congress is that this enhancement money be made more flexible, so we can use it for things like preparing for the next hurricane, or staging areas for wildfire fighting, things of that nature. And I don't know what they did in Galveston County, but they did say, as Mr. Johnson kind of got out of them, that they did pass a resolution on enhancements.

I am kind of hoping it was one of the counties that passed the resolution saying the federal government should allow the states to have more flexibility in how they spend these monies. I suspect it would. I mean, if any county it would make sense, it would be that one.

But Commissioner Houghton in particular has been -- has discussed this with a number of counties along our coast. And they have produced resolutions agreeing with this. And I know Cindy Mueller in our D.C. offices has been working hard on this. And it is kind of -- we are getting traction.

I am not going to say that we are not. But it will take a while. This kind of money, while it makes sense to us, here at the statewide level, is money that people find near and dear. So this will be something that we will have to work on very hard. But the case is compelling.

Environmental streamlining; this is a case of developing rules. We want to make sure we don't go in backwards. Texas is one of five states that was designated in SAFETEA-LU to have the ability to take on a lot of the environmental federal approval process within its own DOT.

The idea being that you can streamline the process, never ever shutting the door upon our partners at the federal level. But trying to make a lot of the decisions where we can, here at TxDOT. That will be, as Dianna Noble will tell you, a long and involved process to finally get all of that done. And we are working on that. And we primarily want to make sure that on the federal level, that it is not undone. This was a program that we and the White House had proposed. And the White House has proposed it for any DOT who wanted it, but it got narrowed down to five, and we were one of the five. And we are going to -- a lot of eyes are on us, on what we are going to do.

And frankly, within the agency, there is a lot of interest to see how we implement it. Because it is a truly big charge, and it will make us appreciate everything the feds have to go through on these projects. We want to make sure that the rules are drafted correctly, and they work right, and they work the way they are supposed to, the way they are intended.

Moving on to private activity bonds. Private activity bonds as we have discussed in the past are fairly new to road building, but fairly common to other public projects with a public purpose. The idea being that if a private company wants to bring private capital to a public project, the bonds that they issue are federally tax-exempt. That has been done forever, apparently, with water projects, water development projects, schools, airports, stadiums.

We have gotten some interesting headlines out of stadiums in those. But never the road building business. And this is the first time it has been allowed. The House and Senate put that in, up to $15 billion nationwide in tax-exempt PABs.

And we want to be at the front of the line. I know there is an agenda item this month, addressing, giving our Executive Director the ability to start discussions on behalf of TxDOT when the need arises and is appropriate.

On design build contracting, a lot like the environmental streamlining, so to speak, Congressman Burgess from North Texas is one of a handful of members of Congress who deeply understand the nature of design build contracting and why that is a benefit, and why that works in a lot of situations. As a matter of fact, he was given an award by the Design Build Institute of America for his work on this.

What he has forced the United States Department of Transportation to do is reopen their rules on design build contracting. Because right now, the rules are this big, and they basically don't allow -- they make it almost impossible. Very difficult to use design build.

And what we have advocated and what we want to continue to see, what we want to see put in the rules process is that the feds will recognize state processes for awarding these types of contracts. And understand we are doing what is in the best interest of taxpayers, and not some large Byzantine set of rules on the federal level that really can't -- make it very hard to squeeze out a design build project. So we are working with that.

On transportation development credits, that is another item for proposed adoption, or to be put out for public comment. Transportation development credits. Again, this is Congressman Burgess of North Texas. I believe everybody in this room understands what a transportation development credit is.

But briefly, what this will allow us to do is when a toll road is built in Texas and if there happens to be any federal money in it, everything that is not a federal dollar will be counted as a toll credit. For instance, if you build a toll road in Austin, and it is -- completely making up the numbers here -- it is a $100 million toll road and 50 million of it is federal and 50 million of it is from other sources, you get 50 million in toll credits.

And with toll credits, as they have been historically applied here in Texas, those can be turned over to transit operators in the state to use to help them with their local match, to draw down federal projects. And the commission will have before it today a set of proposed rules that address -- I mean, we are standing on the brink of billions of dollars in toll credits.

I am not entirely sure the feds understood what they did for us, with the Trans-Texas Corridor. I mean, that is an easy $6 billion in toll credits. Whatever San Antonio chooses to do, that is toll credits, and there have been some very well thought out, very well crafted rules that will be presented to you that shows how a region can benefit if they choose to toll themselves.

And so we want to make sure that on the federal level, there have been different interpretations sometimes about how these can be applied. We want to make sure it remains as pure as possible. So this is the watch and get engaged item on our agenda. Make sure we never go backwards on that.

Rail relocation and improvements, at the top of our state legislative agenda as Commissioner Houghton reminded me, indirectly, is rail relocation in Texas. What we did, language that we proposed in SAFETEA-LU made it in there, two thirds of the way, let me put it that way. And our idea was, that if a local, if a region wanted to invest some of its federal highway dollars in a rail relocation for all the reasons we have discussed before, they should be able to do that.

We got as far as up to the point where it could be an automatic transfer of highway dollars to do it. So what if they did. Everybody agreed that it was a good idea, but they stopped a little short of creating a formula program or something of that nature. But what they did, which is both promising and frightening, they made it an appropriated program. Which means, that it is eligible for money.

So every year, if the Appropriations Committee decides they want to put money into it from somewhere out of the highway funding, they can, up to $350 million a year. And something like the first half of it has to go out in little $20 million projects, which is not a good thing, but that is just the way they operate. And then the remaining half can, I think, all go out at once, or a much larger part of it, actually.

Now the State, I know, has worked on a rail plan. I don't think there is any need to wait for a rail plan. I think there are compelling needs around the state. And those of you who know me, I am not a sit and wait for a plan kind of guy in the first place.

But Harris County in particular, El Paso has made some things clear to us. San Antonio, Dallas. I think we need to start poking around, and trying to get that fund funded, and then see what we can get out of it. And so that is what you will be seeing us do if you adopt this one today.

Highway Trust Fund, as you know, SAFETEA-LU appointed two overlapping commissions. They can be a little bit confusing in the sense as to what they are both, to the casual observer. But they are both looking at different elements of transportation finance in the future. There is a question of whether or not we will get a Texan on one of those.

But we will be working with those commissions who in theory are looking at the next generation of how you finance highway infrastructure. Because there seemed to be general agreement and I will say a little proudly, because of the way the State of Texas and the Governor was pushing on Congress to explain that it is not just the gas tax anymore, that is just not working.

Even if you raise it, it is just not going to work to the degree that anybody would think it would. That we need to figure out new ways to deliver infrastructure. These commissions were created to look at that.

And there was general acknowledgment, not a whole lot of public acknowledgment, but a lot of -- you know, the next generation, the next bill or two just can't be a gas tax bill any more. It just has to be something else. And so to the degree we can, we are going to be active in those commissions.

And it mirrors a whole lot -- I mean, I am proud of my state. The Legislature tends to get out ahead of things like Supreme Court eminent domain decisions and something like this. And you know, the state legislature and the Governor created a commission that will do something very similar.

Demonstration projects, that is -- let me finish with demonstration projects. I will move that to the end.

Improved Texas highway funding. I just want to make sure anything that we have gained, as paltry as that chart is that I showed you this morning, if nothing else, we don't want to go backwards from there. And so we will have to do what we have to do in every six year period between major reauthorization bills, and make sure we don't go backwards.

Because there will be plenty of opportunities for people trying to drag you backwards. In other states, the administration, or the case may be.

We will be working with Homeland Security, federal motor carrier safety, the United States Department of Transportation on international trade, to identify methods to expedite commercial and private vehicle flow through our ports of entry, while ensuring a maximum level of safety and security which is frankly kind of new for us, to get that engaged in that. But Cindy Mueller in our D.C. office has started some productive discussions with Homeland Security.

We are working with NASCO on some issues on I-35 that are kind of promising, and they have opened a few new doors. We are doing hand-in-hand with them in D.C. to take care of these matters.

There is also federal aviation reauthorization. We would like to include provisions to provide a stable funding source for general aviation airport improvements. Our program is one of -- it is not the only -- it is one of two block grant states, where the feds send the money, and Dave Fulton and his professionals work with communities to decide where that money goes. And then it goes to commission approval.

The other states get theirs project-by-project. The Congress kind of know how that goes. So it is actually kind of a pat on the head that our Aviation Division, and it is kind of a nice thing to be able to say we want to keep it the way it is. You don't get to say that too often.

And then there is a Water Resources Development Act. We want to include provisions -- and it is called WRDA -- to allow continued funding of operations and maintenance of the Gulf Coastal, Gulf Intracoastal Waterway. And then on public transportation, we would like to explore alternative methods to fund growing operational and capital needs, and work with federal partners to further the coordination of public transportation resources throughout the state.

And I will be kind of blunt about that. That is, our new duties from the Legislature from two sessions ago, the coordination of Health and Human Services or medical transportation, however that is all explained, is a completely new world for us. And it is -- we kind of stare at it, in Washington, D.C., not knowing what the promise or the challenge is.

Although it is all a challenge. But we are not really sure what the promises are. And we are trying to wade into that part of the business and understand it better. But it is difficult, and it is very new for us. But we are chipping away at it.

One last thing I would like to end with is demonstration projects. We had a conversation at the previous commission meeting about demonstration projects. And it has made a lot of headlines these days. And there are two kinds that have been pointed out. Basically, things that are done for the privates, i.e. to benefit a business, something that has a much harder time with the smell test.

And then there are the kinds that we traditionally deal with, that where either authorized money, which means, you find in SAFETEA-LU or its predecessor TEA-21, or its predecessor ISTEA and so forth and so on, where members of Congress take part of your allotment and designate it for certain places in the states. And painting with a broad brush. It is never enough to build a project.

That is not broad, that is just true. And it tends to be -- it tends to focus people on, and it is a constant sum game. It is if Congressman Houghton gets money, I mean, Texas is guaranteed a certain part of money. So Congressman Houghton gets $10 million and Congressman Behrens doesn't get any, you took it from Congressman Behrens. And I don't think that people completely realize that.

And then that is all kind of dumped at our lap at the end of the process. And we have to sort it all out and figure out what we can fund, and so forth and so on.

MR. WILLIAMSON: Let's make sure we understand that. One, two, three, four, five, six Congressional members. We represent Texas. The federal bill says, Texas, you get 60 million. And the 60 million, absent anything else is cranked through your system, and approved fast. And you go out and spend it.

But each of us come along and say wait a minute. I have got a million dollar project in my district, and John has got a million dollar project in his district, and so on and so forth. So we want to earmark $1 million of that each.

What that means is, the pot didn't grow by 6 million. The same 60 million gets lower by six to 54, and the six gets spent where we earmarked it.

MR. CHASE: Right.

MR. WILLIAMSON: As opposed to where the congestion index says it should have been spent, or the enhancement safety index, or the air quality index, or the economic opportunity index, or the asset value index. Forget that. We are going to go spend it where we want to spend.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: But in some cases, if I understood previous testimony correctly, we were already working with each of these Congressmen to identify a demonstration project that would still match other criteria.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: But nonetheless, it puts us in a position of starting projects. Can we think of one that has been in the newspaper lately, or that has been on our radar screen lately that there was a demonstration project we had to start. There wasn't near enough money to finish it. And now everybody is mad. What about that road around Bryan?

MR. CHASE: There was --

MR. WILLIAMSON: Do you know what I am talking about, Mike? The school, where the new school was built?

MR. CHASE: Is that Highway 6?

MR. BEHRENS: Old Reliance Road and State Highway 6.

MR. CHASE: And somebody fill in the details, because I am going to miss something. But I believe that what it was, was a case of a school, a high school was being built there. And we advised the school district and the city and everybody else that there would be some safety issues in relation to that.

We didn't have the funding to -- and I believe the funding is 17-19 million, something large like that -- to make those improvements. They knew it. It was -- I might be overdramatizing it. But it was ignored.

MR. WILLIAMSON: The school district was put on notice by our district staff, that if you build a school here --

MR. CHASE: You will cause $19 million worth of taxes.

MR. WILLIAMSON: You will cause $19 million worth of needed transportation infrastructure, and we haven't got it.

MR. CHASE: And we don't have the money. That is exactly right.

MR. WILLIAMSON: And then the school district then went to, or the City of Bryan, whoever, went to a Congressman and said, we need some money to address this problem, which is a result of our decision to build a school here. And this Congressman earmarked --

MR. CHASE: $2 million.

MR. WILLIAMSON: $2 million of the state's pool for this project. But because it is going to cost 17 to $19 million, the earmark can't be spent rationally, and we still can't address that schools needs.

MR. CHASE: Right. You have to find $17 million more. And it wasn't as if they went and found $2 million from some new magic pot of money. It was from a large pot of money that was coming to Texas anyway.

So that $2 million came from somebody else's project somewhere. But it is such an anonymous process, it is hard to go pin it to one thing.

MR. WILLIAMSON: So that would be an example of a demonstration or earmark project that we weren't a participant in, that ended up costing more. Or actually ends up being guaranteed to be a failure.

MR. CHASE: Right. And if we want to end up spending that $2 million, and if the school district, which I hope we are counseling them, and I believe we are, then they need to look at their tax base to figure out how to do something like a pass-through financing agreement or something of that nature, to leverage that project. But otherwise, we would let the money lapse if we don't find another $17 million.

And I would contend that that has been done over and over again at the agency through highway bills. And so it isn't that it is just a $2 million problem. It becomes the entire $17 million if you don't want those funds to go away.

MR. WILLIAMSON: So our position might not necessarily be in our federal package that we want to do away with earmarks, but our position might be, if you are going to do this, we wish you wouldn't. But if you are going to do it, it needs to be done in some coordinated fashion.

MR. CHASE: Right. There are smart ways to do it. And sometimes, there is money to be made. Like in the appropriations process. That is -- I mean, it is still our gas tax dollar, but it is new money, so to speak. It is discretionary.

I mean we are historically losers in that game. But for instance, with NASCO, we are working on some technology earmarks which would be truly new money. But you are right.

There are -- but what this also suggests in this report, is that we advocate the Texas model and remind people that if it comes to us, it will get passed back through to the MPOs. Because it is put into the regular formula distribution programs, and pushed back out to them for them to use.

MR. WILLIAMSON: Now wait a minute, are you saying --

MR. HOUGHTON: It is part of the formula.

MR. WILLIAMSON: You are saying that in effect, the earmarks take out of the MPOs the ability to direct that money.

MR. CHASE: Yes.

MR. HOUGHTON: And that is part of the formula.

MR. CHASE: Yes. But let me clarify, and make sure we are both saying the exact same thing. When I showed the chart earlier today, the 83 cents is really 70 cents.

MR. HOUGHTON: Right.

MR. CHASE: Or the 84 cents is. And you hear people say, well you get a 92 percent rate of return. It is 92 percent, I am telling you how much of the bill, what percentage of the bill, about 90 percent of the bill.

So when you start doing the match of that 84 cents, you are only guaranteed back 70 cents. And so, that is called the scope. And that remaining money falls outside the scope. So you are guaranteed 92 percent of 90 percent, you know. And so we are all supposed to fall for it.

And that remaining -- and what they do within the scope, and I am not talking appropriations, Commissioner. I am talking about SAFETEA-LU, the six year bill, the five year bill. What they do is, under that scope, is demonstration projects. That didn't used to be the case.

So if Texas is 92 percent of its share of demonstration projects is $100 million for instance, which is a low ball. And you get a million, and you get a million, and you get a million, and you get a million, and you get a million, and you get a million, that is $6 million. But what happens to the remaining 94 million is, it is pumped back through the normal TxDOT formula system, or the federal formula system, and it is distributed out to the MPOs.

So the ones that are sort of picking off money first, are taking it from other Texas cities and putting it into their towns. They are not taking it from New York at that point. They are taking it from somewhere else in Texas.

MR. HOUGHTON: The old system, then again, that prior to the formulas that we have on Category Two, Category Three, all the categories. Correct?

MR. CHASE: Exactly. I mean, I --

MR. HOUGHTON: Do we have any discretion as to if Johnny Johnson gets a million dollars, that goes to his allocation end of that MPO region?

MR. CHASE: No. It is put on top.

MR. HOUGHTON: According to federal statutes or federal rules?

MR. CHASE: No.

MR. HOUGHTON: So we can change the rules.

MR. CHASE: Yes.

MR. HOUGHTON: If in fact, you get demonstration money or earmarks, that will count to your allocation.

MR. CHASE: That would be a decision that the agency could --

MR. HOUGHTON: That may be -- that could be a solution.

MR. WILLIAMSON: Hey. Do we meet regularly, Steve, with the MPOs, or do we meet just when we think we should. I am not talking about -- I know that Bill Hale meets with the MPO in Dallas, but I am talking about, do we here in Austin have a monthly or quarterly or annual meeting with the MPO world?

MR. SIMMONS: For the record again, Steve Simmons. We still are working with them on the metropolitan mobility plan update. It is to be due later in the week. So we are meeting with the eight metropolitan planning organizations.

And then staff is interacting with -- the district staff is interacting with them you know, almost daily. And TP&P also interacts with each one of them on a fairly regular basis. But do we call a meeting and have them all come down here? I think the answer is no.

MR. WILLIAMSON: What do you think, members, about asking the administration just to go ahead and contact them, and tell them it is our view that we might ought to start cranking those earmarks into the process. Just to get their reaction. Just to see what they think.

MR. HOUGHTON: That falls under the jurisdiction of Mr. Saenz.

MR. SAENZ: Well, it seems to me --

MR. WILLIAMSON: We want you to do it. You are meaner. Not meaner. You look mean.

MR. SAENZ: I guess, it is something that the commission, it is by rule how we distribute the money. The way that it was distributed before, we worked on funding categories. That the eight large metropolitan areas, they worked on the distribution of their total category.

It has always been that any demonstration money was basically given to them on top of the formula money. What it does, it affects -- the more demonstration money you have, in essence, you are impacting the amount that you have by formula.

MR. HOUGHTON: So you go back to the old way of doing things, prior to the allocations that Chairman was a part of, and Chairman Williamson, that it is the biggest stick in the fight that gets the demonstration projects. And the major metropolitan areas could, or my favorite resort that gets a road or something like that, then --

MR. WILLIAMSON: He brought that up. I didn't.

MR. HOUGHTON: That is in the El Paso district, by the way.

MR. SAENZ: It is. And one way to approach that would be that we can change the rule. The other way to approach that is when an earmark goes to an MPO, or a city within the MPO, and they wind up that they are short of money. It is probably a project that is not funded anyway.

So guess what. The MPO needs to decide whether they are going to take money from all of the other members or projects that they have identified as priorities to fund this one, or this one is going to lapse.

MR. HOUGHTON: Which, it seemed to me, would put the heat on Congressmen and women to in fact then, consult with their MPOs.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: As to what would be in the best --

MR. SAENZ: And that would be the way. Because what usually happens, they are going to go to the MPO, and the MPO says, well, we already allocated all our money.

So their next approach is to come to you all to say, okay. We have this demonstration project. The project is $10 million, but we only picked up a million. Can we have commission strategic priority for the other nine.

MR. JOHNSON: It occurs to me, it is very logical and of course, we deal in sometimes an illogical world, that if the state is penalized from its pool of money by earmarks. In other words, the earmarks are taken out of our pool, that the same thing is, we distribute our pool, the same thing should occur to the recipients of those distributions.

MR. SAENZ: Yes, sir. And we can do that, and make that as part of the way that we allocate the funds.

MR. WILLIAMSON: But we don't want to fall back into the world of lecturing to local and regional government. I think what we need to do --

MR. JOHNSON: I think they can figure it out, though.

MR. HOUGHTON: Yes. They sure could.

MR. WILLIAMSON: I think we need to notify them that we are concerned about this, and we think that it is a change we ought to make in the distribution of funds.

MR. HOUGHTON: Coby, did each Congressional congressman get just an on the top earmark of what, $16 million? It was across the board?

MR. CHASE: I don't think so. Let me back up a little bit. Let me answer that. To the credit of our MPOs, we, a number of years ago, Tonia and David Soileau and I got them together to talk about federal priorities and stuff.

And they did, equally concerned about earmarks. Because rarely do you see them in the fight. They get them, and they don't know what to do with them, either. So they are of a like mind.

Back to your question, no. I am not exactly sure how it is determined how much money each member got. But they don't self-determine. The Chairman and the ranking member of the Committee --

MR. HOUGHTON: So it is not an across the board. It is as if you had been playing the game, or had been a good person, you get X or you get Y.

MR. CHASE: There you go.

MR. HOUGHTON: Okay.

MR. CHASE: And then it happens in the Senate, and then it happens in Congress.

MR. HOUGHTON: So one community in the state could be disadvantaged by somebody getting zero, and the next district gets another --

MR. CHASE: Yes.

MR. HOUGHTON: Yes.

MR. JOHNSON: Coby, just as a piece of information, I digress. Did the bridge in Alaska that you referred to earlier, that was going to affect 60 Alaskans and one polar bear, did it come out of Alaska's pool?

MR. CHASE: No. That is a separate deal. And we are going to have to discuss this, when we discuss this with the MPOs. And this is still within the confines of SAFETEA-LU. We are not even talking about appropriations yet. That is a different creature. That would truly feel like more money.

So we might need to refine our thoughts there. But what they did, which in this report that Chairman Williamson asked us to produce, and that you all have, they sliced some off the top. And they are referred to as above the line. Before any of us, any state shared in any money, how many million, Tonia, was shoved off? Was cut off the top? Or billion?

I am sorry. It is in the report. I can find it. And only a handful of members, not one being a Texan received it. And that is where for instance --

MR. HOUGHTON: Not one being a Texan?

MR. CHASE: Pardon me?

MR. HOUGHTON: No Texan.

MR. CHASE: No Texan. There is an interesting story there, but no Texan. The bridge in Alaska is a case. A certain House district in California is a case.

MR. HOUGHTON: Southern California, as I remember.

MR. CHASE: Yes. And a few others. Well, they did take it away from all of us. Everybody kind of lost in that one, except for a handful of people. But you are right there. I am glad you brought that up.

MS. ANDRADE: I have a question.

MR. CHASE: Yes, ma'am.

MS. ANDRADE: Mostly clarification. So the example that was used were $2 million was earmarked, but that wasn't enough to complete the project. Is it restricted? I mean, you can't use it for anything else, right?

MR. CHASE: No, ma'am. You have got to use it for that.

MS. ANDRADE: For how long?

MR. SAENZ: So it sits.

MS. ANDRADE: It sits there?

MR. CHASE: Amadeo, we have 4 years. We have six years, five years to obligate it, and then four years to spend it after that.

MS. ANDRADE: Could you send it back?

MR. CHASE: Could you send it back? You could just not spend it, and then what it would do, it would be folded in. It would go back and it would be split up among states.

MR. HOUGHTON: So you lose it, if you don't use it.

MR. CHASE: Now, we have been known to benefit, and it is not a lot of money, mind you, from other states who kind of have problems where they can't spend the money. And it goes back and other states spend it. I mean, it is a pittance.

MR. WILLIAMSON: Part of our federal program needs to be -- I know that we are pushing on the notion of credits or auctions for state apportionments unspent. But we ought to, parallel but separate from that, we ought to push them to give us a process to purchase their unobligated earmarks as well. Just to see if we can get anybody to nibble on that.

Because I bet you there are a bunch of states that have some cash potential in earmarks they can't spend. And we might could buy their obligations for 50 cents on the dollar.

MR. CHASE: Absolutely. That is a great idea.

MR. WILLIAMSON: Let's do that.

MR. CHASE: Okay.

MR. WILLIAMSON: Objection to that, members?

MR. HOUGHTON: None.

MS. ANDRADE: No.

MR. JOHNSON: Coby, one other question that popped into my mind. Let's assume for a moment that the entire Texas delegation foregoes any earmarks, and there are no projects. Would Texas be penalized in any way from our pool of money?

MR. CHASE: No, sir. Not in a big reauthorization bill like SAFETEA-LU. It is a different game in appropriations where they divide up a certain chunk of money every year. And we historically lose in that fight.

That is a whole different ball game, and we would operate, I would hope, differently in that environment. That is actually new money. And make sure it is money we can spend. But no. Because it is -- it used to be called minimum guarantee, and now it is called equity bonus or donor state bonus. I forget what it is.

But what that says is, well, in this case, it is covered by the guarantee. And it is a little different, unlike say, just a regular program, where you are guaranteed a certain percentage of the money. Here go spend it as state law and federal guidelines dictate. The same with demonstration projects, but they let members of the Congress slice off different pieces of it, and then whatever is left over, which tends to be the majority of it, a lot of it, goes back.

And it is sprinkled through those formula categories. It doesn't come back and say, here is a big chunk of demo money. Go do your own big giant demo. It is pulled out, and pushed through the different federal categories.

So it pops up that way. So yes, there is. And interestingly enough, we had to fight long and hard. And TEA-21 was the first year they ever gave you a minimum guarantee on demonstration projects, and they didn't really know what they were voting on. David Laney worked long and hard on that. And so did Tonia.

And it is a funny story to tell you one of these days. But they did it. And they took it out in SAFETEA-LU. Because they didn't know that it was in there, and that we had spent a lot of time and effort convincing them to put it back in, and they did. And that is why it is better than it used to be, but there is still a lot of ways to improve it.

MR. WILLIAMSON: Do we, on our top federal agenda, do we work with our partners? Not just our city and MPO partners, but like NASCO? Do we work with NASCO, Ports-to-Plains?

MR. CHASE: Absolutely.

MR. WILLIAMSON: Some of the others.

MR. CHASE: La Entrada.

MR. WILLIAMSON: La Entrada, MOTRAN, I-69, NETMOB --

MR. CHASE: And with, I would say, half of our RMAs. The others are just trying to organize. They haven't quite set their sites on D.C. But yes, sir. We do closely. And to great success. Traditionally, the agency years ago had -- there were some problems with that.

And I don't mean that in a bad way. It was just hard to link up priorities. Now we are doing an excellent job with that, I might say. And I am going to brag a little bit.

My Executive Director and Deputy Executive Director and Assistant Executive Director and another one in training, they go out and meet with these groups aggressively, non-stop. Explaining what we are trying to do on the federal level, and all sorts of levels. And engage them. And it has been very productive. Yes, sir. Thanks for asking.

MS. ANDRADE: I just think we have got a great educational challenge here. Because in my travels, I hear about people saying, oh I am going to Washington to try and get some money earmarked. And you know, we have got to help them understand that it is not going to help you, if you don't have the rest of the money.

MR. CHASE: Yes.

MS. ANDRADE: So I think that we also need to educate as we speak, throughout the state.

MR. CHASE: Absolutely.

MR. WILLIAMSON: Okay. Members, what else for Coby on this topic?

(No response.)

MR. WILLIAMSON: And the paper, the white paper that I asked for, that you distributed.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: Obviously, it is subject to Open Records now. But I don't see any reason to hold it. I think we ought to send it out.

MR. CHASE: Okay. Absolutely.

MR. WILLIAMSON: Members, do you all see any reason why we shouldn't? I mean, it is what it is. It is a straightforward look at how we look at federal funds. Or the unreliability of federal funds. I went through it last night.

It was a good paper, Tonia. It was a good job. It told me everything I wanted -- I mean, it told me what I wanted to know. Anything else, Coby?

MR. CHASE: No. Just, I request they adopt the report, minute order.

MR. WILLIAMSON: Okay. You have heard the staff's explanation and the staff's recommendation to adopt this recommendation.

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you. And I trust somebody took notes on the additions that we wanted to make.

MR. CHASE: Absolutely.

MR. WILLIAMSON: Particularly with regard to buying the other states unbuyables or unspendables.

MR. BEHRENS: Okay. We will go to Agenda Item 6. It is a couple of more discussion items. The first one relating to an audit that we are directed by statute to do. I asked Owen to come up and interact with you on the scope of this audit, and get some of your input on which direction we need to go. Owen.

MR. WILLIAMSON: Mike, you didn't turn the air conditioner down in an attempt to run all those people out earlier in the day, did you? Am I the only one that is cold? Are you cold?

MR. HOUGHTON: It feels good.

MR. WILLIAMSON: I think we are hanging meat. This must be sausage making season or something. Chicken. Owen, it is so seldom we see you. Who are you busting today?

MR. WHITWORTH: Like I told you last time you asked that question, I am not allowed to tell you. I am Owen Whitworth, Director of the Audit Office. Chairman, Commission members.

I am here today to bring up a topic that is new. We have not done it before, but we have got a statutory requirement to have an audit of our management and operations. And I have got a little background here for it.

It is in the Transportation Code, 201.109(b)(5) basically says, the commission shall provide for contracting for an independent audit of the department's management and business operations in 2007. And the background I got from this, this was definitely not something I was aware of in terms of the background.

But GBE staff, primarily, Jefferson Grimes somehow dug this out of the history, and told me how we got here. But it is, the primary background I think, is that it was in the background. It was back to some discussion with the Sunset Advisory Commission back in '89 and '90, where Senator Barrientos asked that we have this independent audit, so that the Legislature, the public, and the department could benefit from an additional layer of review.

MR. WILLIAMSON: I thought you were going to say an additional layer of bureaucracy.

MR. WHITWORTH: And Jefferson, I thank you for helping me come up with that background, because I wouldn't have had it otherwise. We interpret this statute, to the independent audit of management and business operations that means we have got to go out and contract for an auditor to come in and do this.

We assume that if they wanted the State Auditor to do it, they would have directed them to, since they work for the Legislature. There is a new statute this year as well, that requires us, any time we go outside the department to get audit services, to procure audit services, that we do get a delegated authority from the State Auditor do to that.

So we will have to go to them and ask for their concurrence in this contract. And basically, what that will be is submitting to them the RFP and so that they can see that the RFP does comply with some of their requirements. And because of the size of this, it is going to be, we are guessing, a couple of million dollars. We will also have to get the Texas Building and Procurement Commission to review the RFP and approve it. That is just some basic background information.

What I would like to do as we go over this is, for the commission, if they have things, questions about it, suggestions about it, to provide comments. Because this is the first time we have done it. And we think it could be pretty significant that you know, doing this thing as an additional layer of review along with sunset process.

And the objective of the audit will be to assist the commission and the department in meeting its goals and objectives. And I think that is my addition there. I would like to use this thing in helping further your objectives, and to comply with the statutory requirements.

The auditors, we will ask the auditors to obtain input from the commission, the department, executive, managers, employees as well as the Sunset Commission to determine the objectives as well as that they review all other recent audits, in the work they do in deciding what they would look at. In order to gain a professional expertise with differing perspectives, and to promote independence, it is anticipated that we will select multiple audit teams.

And that will be included in the RFP, and we will ask for multiple audits there. Each team, we'll ask them to tell us about their method, their experience in analyzing, prioritizing and selecting activities for audit that will determine, deliver maximum benefit for the audit services expended. We have got really three procurement procedures that we could go forward with, in trying to do this.

And I would like to do a purchase of service, which is, I think to get the broadest pool of bidders. We could go with purchase of service. We could go with a requiring a CPA firm, which would be a professional service. And we could also go with a consultant engineer type of contract, if we required engineering, which would be a select and negotiate.

I think if we go with something other than a purchase of service, I think we will eliminate some potential providers that we may want to consider in just the consultant management type companies that can, I think, do this kind of service. It may not be the typical audit that you might think of, if we go with the purchase of service right.

If we go purchase of service, we will not be able to require them to comply with generally accepted government auditing standards, which is, I think might come to mind when some folks here audit, than then, it would have to be this typical -- but we are not asking for a financial audit; we are not asking for a financial opinion.

And I think to move the commission's agendas forward, as well as comply with the requirement, we would want to get a broad perspective. We would want to have as big a pool as we could get, to bid on this job.

MR. WILLIAMSON: Ted, I should share with you, and I am sorry I missed some of your testimony, Owen. If I am going over something you have already covered, stop me.

But I had suggested to Owen previously, I was interested in the notion of not just one firm, but perhaps, Owen individually visiting with each commissioner and ascertaining what was most important to him or her, or what he or she was most concerned about. And then, not be afraid of at least asking the Legislative Audit Committee if we couldn't break it into components.

In other words, if Houghton and Company is the best at auditing the way we hire engineers, let's retain them for that. If Johnson and Company is the best at determining whether -- I am giving Owen some things that are of concern to me. If Johnson and Company is the best firm at determining whether or not our highway construction index is properly estimated every month, then let's retain that firm.

Let's take advantage, though. Let's don't view this as a legislative burden that we have to carry. Let's view this as an opportunity to step outside, and look inside and see where we can improve. We recently had a conversation about a topic that might be of interest to you in that regard. And this might be a good opportunity to take advantage of them.

MR. WHITWORTH: I would propose that we have a selection team. That the selection team be made up of -- the selection team would report to an oversight committee. The selection team would be made up of a broad perspective of department expertise.

The oversight committee would consist of the Deputy Executive Director as Chair, the Government Business Enterprises Director and two district engineers, along with myself. The committee would identify functional areas that we would group together to put in a proposal, that we would get our responses to and evaluate and select from.

The committee would provide guidance and direction throughout the RFP selection and audit, and provide responses to the reports, the audit reports. The results of the audit, I think, would require that the drafters draft report and final report must contain a description of the methods, the considerations, and the results, including the recommendations for improved management and operations, as well as an explanation of why audited activities were selected.

And I am thinking we have got to be fairly specific in what we want those folks to know we are going to ask them to do so that this document or these documents that we are going to pay to be produced has I guess, defends themselves, or defends the department in how these things can be categorized as an independent audit. And that the results show that they went through a deliberative process, and we went through a deliberate process in having this independent review.

One of the things that I think is worthy of thinking about, consideration, is the timing of all this. This is the first time we have done it. We are in the initial stages right now. I think we could have one or multiple contracts ready to sign probably next December.

It takes that long to go through the RFP process and to get all of the people involved that we need to have involved. And then, within you know, six to eight months from that, we could ask, we could designate that that is when we want the audits done. Or we could go clear to the fall of 2008, I guess, to have the audits delivered.

The department's self-evaluation report is due to the Sunset Commission in August 2007. So we are -- which is a whole new process that we will be -- it is not a new process, but it is a very time-consuming and deliberative process that we will be going through, starting in the fall of 2007. And the 2009 Legislature then would be reviewing TxDOT for Sunset.

So the timing of the report, you might want to give some consideration to, and provide input to me about the timing of that report. If we do it as I have laid out here, and we have the RFP signed, or the contract signed and executed sometime next December, then the summer of 2007 would be when we would have the reports, the audit reports ready, and we would have those things that could be -- we could provide those to Sunset along with our self-evaluation report.

And I guess GBE will probably be the Sunset -- they typically have coordinated that effort. So they are going to have to turn in our Sunset self-evaluation report in August 2007. Any questions or comments about who we keep in the pool? How broad we make the pool? Timing?

MR. WILLIAMSON: My view is the summer of 2007 for the final product is appropriate. Because that actually gives us about a year and six months to react to those audit findings where we can, on our own. So that when we go into Sunset, if for example, Representative Turner who was concerned about our Katy Freeway issues, if there is something that gets picked up in the audit report that we can control, we can go ahead and act on it.

And when we go into the '09 session and we are asked about it, we can say yes, Mr. Turner that is a problem. We have addressed it. And here is how. That is sort of my instinct.

As far as the pool, I am just thinking individual interviews with the four commissioners and the executive director to determine the areas that the five of us deem to be of particular interest to ourselves. And then find the very best specialist that we can to do that, in terms of what we tell our proposers we want. And I am presuming it maybe go something like this.

Touche Ross, or whoever they are now, basically knows they are proposing, and that they have to put together a team of the very best subcontractors to address the individual areas that the commissioners and the executive director deem need to be investigated. And in this regard, I would like the executive director to be contributing to that as well.

Because he may see some things that need to be looked at that would be different from what we see. Ted, you started to say something?

MR. HOUGHTON: Well, I echo that. That we get the audit team per the specialty and the operation, instead of just blanket that it is one for all and all for one that most -- I say most. A good portion of these groups do. They believe they can handle it all, and that is not necessarily their specialty.

MR. WHITWORTH: That is a good point. We can incorporate it into the RFP. I guess we could let all providers bid on any one of the RFPs, but we would -- would we limit that, we will only award one audit contract to one vendor. In other words, you can't have three contracts.

MR. HOUGHTON: Right.

MR. WHITWORTH: Would that be your intent?

MR. WILLIAMSON: Yes. And I again counsel you to visit with your colleague with the State Auditor and Legislative Audit Committee, and maybe even LBB to get kind of their reaction to this approach.

MR. WHITWORTH: Okay.

MR. WILLIAMSON: Just to make sure there is not difficulty we are creating for ourselves that we don't see right now.

MR. WHITWORTH: Okay.

MR. JOHNSON: I might go a little contrary to that. My sense is that you are looking for the best value. And if Firm A, Firm Houghton can provide the best value and do the best work for this particular component and also component C, I see no reason not to engage them to do A and C.

MR. HOUGHTON: I agree.

MR. JOHNSON: And maybe not B, D, and E and F. I don't think that we should necessarily limit ourselves to one per customer if you will.

MR. HOUGHTON: They may have this -- yes. You are right.

MR. WILLIAMSON: Well perhaps, I think where you were getting to is you want -- you were asking us, do we see a general contractor, subcontractor relationship. And I think the answer is twofold. Yes, but the general contractor might also be the sub for a particular expertise. Is that what you are saying, John?

MR. JOHNSON: Well, I am saying, if we compartmentalize, then we should not restrict ourselves to a particular firm getting just one of the compartments. If they are the best at what they do, and can provide the best product, the best service. Can we talk about price in this dialogue?

MR. WHITWORTH: Yes. There is an option.

MR. JOHNSON: They can bring the best --

MR. WILLIAMSON: Well, unless it is an engineering firm, we can't talk about price anyway.

MR. WHITWORTH: Well, that is why I don't want to select an engineering service.

MR. JOHNSON: I mean, we have a little hybrid here. It is between financial audit and business practices. I mean, that is what we are engaged with. My interpretation is.

MR. WHITWORTH: Well, and I think there is some firms that if we called it generally accepted government auditing standard requirements, you might not get -- some names that come to my mind. Rand Corporation or McKenzie and Company. They are not going to have -- they are not going to be able to comply with those requirements.

So I would like to keep it very broad, and find the best we can, no matter what their designation. If they are the ones that have the best experience that they can demonstrate, and the best experience in evaluating transportation operations, whether it is financing or information systems or engineering, that's -- yes.

MR. WILLIAMSON: That is the view of the commission.

MR. WHITWORTH: How about the oversight committee? Do you have any thoughts about the oversight committee?

My initial thought was to -- it would be good to have one, and at the top level of the department, the deputy executive director would be our leader. Having Coby on it, to keep in sync with Sunset. Me to keep in synch with Audit, and a couple of district engineers for operations and management. Okay. One other thing I would like to bring up --

MR. JOHNSON: You might want a division head or two. Some of the divisions do a lot of work, and their scope of work and business practices might be a good area. Now I don't think they should be on the committee if their particular division is being audited, per se, or examined. But I do think that they can add a lot of -- a different look than a district engineer might.

MR. WHITWORTH: I think they could be on there, whether they were getting audited or not. I wouldn't want to exclude that area to be considered for audit. But the point, I think one of the things that you might have been referring to there, which I have a little more -- another area that I have given considerable thought to is conflict of interests. Who would be eligible to bid on this?

And I know we are going to have to work with our purchasing people, as well as General Counsel to make sure we can do this thing right. But you know, some of the engineering firms that may be very good at management of engineering operations, we do a lot of business with. So the conflict of interest there, I wouldn't want them to be able to make recommendations that they might benefit from, or that they might try to implement.

So there is some issues there with conflict of interest that -- or if KPMG is the -- has a contract with the State Auditor, to audit TxDOT operations, which they have had in the past, would there be any conflicts there. So we are going to have to work through some conflict of interest issues with General Counsel and with our purchasers, and probably the people that you suggested I talk to as well, Chairman.

And I would be -- I would surely like input from the commission about conflict of interest issues that you might see. Let's see if I have got anything else here I wanted to particularly -- I think that is everything that I had.

So I appreciate you putting me on the agenda. And I look forward to going forward with this project.

MR. WILLIAMSON: Yes. If you would, set up appointments with each of us. Give us a week to two weeks to think about the areas we are concerned about. And start setting up appointments with us, our staffs. And we will give you some ideas about where we want to go.

MR. WHITWORTH: All right. Thank you very much.

MR. WILLIAMSON: Thank you, Owen.

MR. BEHRENS: Continuing on with Agenda Item 6(b). I will ask Amadeo to come up and discuss some of the project evaluation indexes that the commission has directed staff to look into. And gives us a way that we can measure our goals that we now have for projects, when we look at those projects. Amadeo.

MR. SAENZ: Again, good afternoon, Commissioners, Mr. Behrens, Roger. For the record, Amadeo Saenz, Assistant Executive Director for Engineering Operations.

This item basically is to give you an update of where the group that we have put in place, internal, has been going in the area of developing these project evaluation indexes. And of course, we had our meeting in November, and we presented. And we got them started in November.

They have been meeting during this time, considerably, to come up with these indexes. And they have made some headway, and there is still some work that needs to be done. One of the things that you all told us, is you wanted to make sure that we didn't do it in a vacuum. We have not.

We have TTI on board, and TTI is evaluating some of the efforts that we have done to date, and giving us some recommendations. Our goal is to also include some people from our districts, as well as from the MPOs. Because we are going to be asking the MPOs later on to use these indexes as they develop their plans. What we see in the indexes with respect to, you can use them two ways.

You can use them on a project-specific fashion or manner, very similar to what we are doing in pass-through tolling. But we also would probably want to be able to use them as a program, as a whole. So that when the MPOs put together their plan, they should be able to tell us, this is the impact that I had on air quality.

This is how much improvement my plan that we are putting together for the next ten years or the next 25 years, this is what it will have on air quality. This is what it will have on safety. This is what it will have on congestion and such and so forth.

So we concentrated on trying to identify the indexes on a project-specific manner. We started by defining what short-term, mid-term and long-term solutions were. And what the group has been looking at has to do with focusing on level of service. And the amount of time that this particular facility once its developed or enhanced, will stay at a level of services that is acceptable.

For example, I have a two lane road that is level of service here. We add capacity to that road. We add an additional two lanes. And it will remain at a good level of service for the next 25 years. We have in essence incorporated a long term solution to that particular facility.

But if we go out there, and we go make some operational improvements, and we really don't have that much of an impact on the level of service, it is probably a short-term solution, or maybe even a mid-term solution. So that is one of the areas that they have come up with in trying to determine whether a solution is short, mid or long-term.

As far as defining and coming up with definitions for local, regional and state roads, the group has been looking at basically how the roads are functionally classified. Some things are very simple. The interstate system, we know it is a statewide facility. U.S. and state highways are also statewide.

When we get into some of the farm-to-market roads that were at one time, were basically to let the farmers bring their crops in from the farm to the market, now some of those are acting not just as regional roads or maybe more of local roads. And that is where you need to look at the project. Each road would have to be looked at on its own merit and weighed on its own just to see how it is functioning, to determine whether it is actually functioning in a local capacity or in a regional, or is it functioning in a statewide capacity.

With respect to the indices, on reduced congestion, we have been focusing on the level of service. As I explained the last time, this is the direction we started. We have been able to say okay, we go in there and we add capacity to this project.

You increase the capacity. It has so much volume that goes through it. Your volume over capacity is increased. So therefore your level of service is improved, and the length of time that that level of service, that you are able to keep that level of service is a way to measure how much reduction or how much reduction of delay you can save.

And then you can quantify that delay into some kind of a dollar figure. TTI is looking at trying to get us this quantification of the delay by being able to say okay, we reduced congestion. We increased travel speed. That will result in less timing going from here to there.

So therefore, we are reducing delay. And that will be able to put a dollar figure to say, okay, this project will improve congestion because we have a better level of service, and we will have this much in delay savings.

Enhanced safety, what we have been looking at here, we have been looking at the accident rates on the particular facility as it exists today. And depending on whether we are able to address accident rates based on the enhancement. And if we are addressing accident rates, and if we have high accident rates for the past three years, we look at three years worth of data.

And if all three years are high accident rates, and by doing the improvement, we lower that accident rate, then we basically would rank that high, that project much higher versus a project that would have lower accident rates, or less than the average accident rates. And so that way, we can rank them instead of a high, a mid and a low, we have been talking about using a one, two, three, four, five scenario.

In essence, so that you start looking at -- we wanted to make it something very simple, but we also wanted to make it something that people would buy into. Economic opportunity is the one that has challenged us the most, with respect to coming up with a measure or an index for economic opportunity.

We started looking at, again, level of service and the decreases in travel time, and decreases in delay. We are trying to that will probably also -- we are looking at the amount of available land adjacent to this asset. If you are building a new asset and you bring in this, or is it tied to some kind of an economic opportunity that is being planned that would not come unless the road is there.

And so we will be able to come up with some measures that say if these happen, then -- if all of these happen, then you get a higher number. You get a five. If it is less than that, you would get a four or a three or a two. And that is kind of where we are at.

We are still kicking around economic opportunity, and we still need to hash that out a little bit more. Air quality improvements, I think we have been able to do the same thing based on volume over capacity.

And as you add the additional capacity to the facility, you improve travel speeds. That will allow for a reduction in, or an improvement in air quality, so we will be able to measure.

One thing that we do notice, when you look at it on a project-by-project basis, those improvements in air quality are very small. You really get benefits when you look at the whole system. But you can still see that by making improvements to that project, you will get an improvement in air quality.

So the better you do on that project, and the better you improve your volume over capacity ratio, and improve the speeds, you will be able to do that. We are asking TTI has some work that they are doing in this area, and they are going to take what we have done and try to carry it further. Of course, increasing the asset value of our facilities, we talked a little bit about this morning.

We are able to now determine basically on every project, what the costs are, what the maintenance costs are for a 20, 30, 40 year life period. And then also we can also determine the amount of revenue that is generated by the people that use that asset through the gas tax.

MR. WILLIAMSON: Tax revenue.

MR. SAENZ: The amount of tax revenue. I was going to say, the amount of revenue generated through the gasoline tax. And so, what that does, when you add more, when you expand this facility, you do two things. You improve level of service. You increase in traffic, You would generate more gas revenue.

You would also increase the cost, and you would increase the value or the cost of that facility. But when you look at it, when you subtract it, you will see what happens to your gap. If the cost is so much, and you don't get any of the benefits of the traffic, you are in essence not having an improvement on the asset value of the facility.

You are going to see it is going to cost you more. So we need to see what benefits are we gaining from the other indices to offset this. So you could have a project that by doing an improvement, it costs you more than the revenue that you are going to be able to generate, even with the increase in traffic, but you could have some benefits that come from air quality and safety and such and so forth.

We are still kicking around the committee. Like I said, we have TTI on board. We have given TTI a very short time frame, a month and a half to two months to review this, and then we are including the MPOs and the districts to help us button this up and bring this back to you all.

MR. WILLIAMSON: And I don't think, this commission wishes to signal to the MPOs that this is the beginning of a new kind of control. I think what we wish to signal to them is, these are things we are going to look at as we start determining strategic priority money.

And this may be something you should adopt internally. And we will require externally, if you are going to come to us and ask us for SP money in conjunction with your MPO money.

MR. SAENZ: We wanted, I think that is reasonable. We wanted to give them a tool, so that they can see that they are not just picking projects. Right now, they concentrate on based on what they did under the metropolitan mobility plan, the only index that they had was the congestion index.

And we want to give them some additional tools. Because just as I explained, you could -- your projects in some of these major urbanized areas are so expensive, and you don't make that much of an impact on the congestion index.

But you do have a bigger impact on safety and on economic opportunity and on air quality. So this way, they will give them more indexes to show that the program they are putting out there is basically making an improvement.

MR. WILLIAMSON: It would be nice to get to a point someday where the MPO can represent to his constituency, you know, this $17 million decision we have made is going to not reduce congestion, but it is going to improve air quality, because we are going to keep this traffic moving further.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: It is not going to do anything for economic opportunity but it is going to preserve the value of our highway. We don't have to spend so much on it, maintaining it.

MR. SAENZ: And some of them are already talking with TTI. They say okay, you go out there and you add capacity to this road, and that may be good in day one. But guess what? People will find out it is easier to drive on this road, than it is on the other ones, so they will move to this road.

This road will be congested again, very soon. But you have improvements on all the adjacent roads, because they will find the path of least resistance.

MR. WILLIAMSON: Or I will do the flip side and point to portions of our Central Texas toll system where I am quite certain that the building of the toll road in one sense is going to improve congestion and air quality in some places, but it is actually going to reduce and result in more congestion on neighborhood side streets in other cases. And I am certain we didn't consider that when we were making our toll decisions, but perhaps were laying the groundwork for our --

MR. SAENZ: If you look at it on a project-specific, but then, once you develop the project, you have got to see what impact it has on the system.

MR. WILLIAMSON: Right.

MR. SAENZ: The group has worked. That is one of the things that has come up from the group, and they have been working on that.

MS. ANDRADE: It also helps us tell our story.

MR. SAENZ: Yes, ma'am.

MR. WILLIAMSON: Well, it is never easy to be accountable. All four of us are self-employed. We struggle every day with trying to figure out ways to help our employees to be accountable for their actions. It is never easy to do that. But I think in this era of a new way of financing things.

And as we heard this morning, in an uncomfortable way, it is incumbent upon us, if for no other reason than self-defense, to develop some clear measurements of success and failure that the public understands, and that we can apply. Say this is not a road to nowhere. This is a road to clean air.

Or this is not a transit system to nowhere. This is a transit system to take freight off the highway, or whatever the case may be.

MR. HOUGHTON: Some of the things that are a little troubling to me on the -- using the strategic priority dollars are some people look at this as new money, where it is not new money. It is tax, it is tax money.

MR. WILLIAMSON: It is the state version of the tapered match.

MR. HOUGHTON: Right. It is not new money. And they look at it as free money.

MR. SAENZ: Right.

MR. HOUGHTON: And I am seeing programs that are coming out, you know, the way that they are financed and I look again for that metaphor, skin in the game. And how much skin in the game in my opinion, depends upon what the road is used for.

I mean, I have seen your indexes here. I don't know what you are looking for. But the skin in the game is, if the road is bounded by economic development opportunities by the private sector, the private sector ought to be involved.

MR. SAENZ: Right.

MR. HOUGHTON: And they ought to be encouraged to be involved, on the expansion of the road, or they suck up the engineering costs, the design costs, right-of-way costs, and we will finance the concrete and steel that goes. You know, whatever it may be. And on the El Paso project we passed last month, the inner loop, that is all on federal or city right of way.

MR. WILLIAMSON: I thought that was your ranch.

MR. HOUGHTON: It is close to it. It is very close to it.

MR. SAENZ: And that is one of the things that we have been incorporating. We don't have the final indexes, for example, to determine -- I won't use skin in the game, but to determine the amount of responsibility, or the amount of benefits that we the state will get by building this facility versus a city will get by building that facility.

And then again, how much economic development land is available out there. How much economic opportunity is available out there. Is it more for local circulation versus for statewide connectivity.

And later on today or this evening, I guess maybe, we have got the pass-through toll for Forney. And in that Forney, those projects had a lot more benefits to the local and they are putting up a lot more into those projects to get those projects built.

MR. HOUGHTON: And that is something that that we are going to have to hold to, is that they have to put that up.

MR. SAENZ: Yes.

MR. HOUGHTON: I mean, that is just something they have to do.

MR. SAENZ: That is the first thing that we tell them. There are two things that happened with pass-through tolling is, the transfer of risk. Because now you are going to have to develop the asset.

And it is your responsibility to make sure that it meets all the requirements. And also we determined to who is going to benefit from this, and what percentage should you have and what percentage should we have.

MR. HOUGHTON: Right. Thanks, Amadeo.

MR. SAENZ: Or as Commissioner Houghton says, what skin in the game.

MR. HOUGHTON: Or blood.

MR. WILLIAMSON: Any other discussion with Amadeo about this?

(No response.)

MR. WILLIAMSON: Okay, Mike. Thank you, Amadeo.

MR. SAENZ: Thank you.

MR. BEHRENS: Okay. Now we go to Agenda Item 8, which is our rules for proposed adoption. The first one being Agenda Item 8(a)(1). And these are rules concerning transportation development credits. James.

MR. BASS: Good afternoon, again. I am James Bass, Director of Finance. This minute order proposes rules for the award of transportation development credits, formerly known as toll credits. Some brief highlights of the rules, proposed rules, is that 75 percent of credits earned by local toll agencies, or by TxDOT in the area but RMA will be available only to that area for a period of three program calls. 25 percent of these locally earned credits and all of the non-locally earned credits, which would be a TxDOT project falling outside the area of an RMA can be awarded at the discretion of the commission, or through a program call.

In addition, if a project seeking to use credits is in the area of an MPO, the commission will consider the expressed opinion of that MPO. If you approve, the proposed amendments would be published in the Texas Register in order to receive public comments. And staff recommends your approval.

MR. WILLIAMSON: Members, you have heard the staff explanation and recommendation. Do you have discussion?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, James.

MR. BEHRENS: Okay. We already took care of 8(a)(2), because somebody took care of that earlier. So let's go to other rules for final adoption. And this would be 8(b)(1), which is rules concerning toll projects. And Phillip.

MR. RUSSELL: Thanks, Mike. Good afternoon, Commissioners. For the record, I am Phillip Russell, and I am the Director of the Turnpike Division. The rules before you relate to the operation of toll roads.

And broadly, they fit into two general categories. One element of these rules relate more to every day operational or business type issues. For instance, it would set the price of a toll tag at $9.65. It would create the formula, the process that we would utilize for assessing administrative fees for those folks who choose to drive on one of the roads and not pay the toll.

It provides a little flexibility in waiving some credit card convenience fees. The idea being, of course, to encourage more folks to utilize electronic toll collection.

The other general area of these rules relate to the process that we would utilize in selecting a CDA concessionaire, an operational concessionaire. This would differ from our normal CDA concessionaire in that there would be no design or construction elements in the CDA. The idea being that it is an existing TxDOT project, and this would be the process; that we would select a proper concern to come in and operate that facility.

The process, effectively mirror images our existing CDA rules, in that it is a two step process. It would be a request for qualifications, followed by a request for proposals.

These rules of course, were proposed in December. The deadline for comments was January 30, and we received no comments. So staff would recommend approval of these rules.

MR. WILLIAMSON: Members, you have heard the explanation and the recommendation of staff. Do you have questions or discussion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, Phil.

MR. BEHRENS: We have already discussed 8(b)(2). And that one has been deferred. We will go to 8(b)(3) under traffic operations. And Carlos, the first one, 8(b)(3)(a) is concerning MUTCD.

MR. WILLIAMSON: Do you need Amadeo to raise that?

MR. LOPEZ: Well, Phil was just here, so it is just fine.

MR. WILLIAMSON: Oh.

MR. LOPEZ: Good afternoon, Commissioners. My name is Carlos Lopez and I am director of the traffic operations division. The minute order before you revised this Section 25.1 regarding the Texas manual on uniform traffic control devices.

State law requires the department to adopt a manual for the installation and maintenance of traffic control devices on all public roadways in Texas. This manual is also required to be in substantial compliance with that manual that is adopted by the Federal Highway Administration.

Recently, the FHWA produced a revision of their national manual. This proposed rule action will adopt a Texas manual which the FHWA has approved. Additionally, we have incorporated findings and recommendations developed as part of our research program, including guidance for the signing of toll road interchanges, and incorporating city and county input.

Notice of the proposed amendment was published in the December 2, 2005 edition of the Texas Register. And only three minor comments were received, and we incorporated them into the proposed rule package. We recommend approval of this minute order.

MR. WILLIAMSON: Amadeo, I have a question. Anybody else? Will this in any way address the situation that arose with Senator Carona's friend a couple of years ago. Not friend, but constituent. Excuse me. Not friend. About the malfunction of the lights?

MR. LOPEZ: No. It just gives requirements for how signals should be set up and how they ought to be installed. But it doesn't have anything to do with the type of bulb that it uses.

MR. WILLIAMSON: So no way would anyone construe this amendment or these amendments to be punitive of that individual.

MR. LOPEZ: That is correct.

MR. WILLIAMSON: Members, you have heard the staff's explanation and recommendation. Is there discussion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Did you have a question, Hope?

MS. ANDRADE: No. Co-second.

MR. BEHRENS: Agenda Item 8(b)(3)(b) is adoption of rules concerning speed zones, amendments to those rules.

MR. LOPEZ: Yes. These proposed rules make changes to the department's procedures for establishing speed limits and also bring the rules into compliance with House Bill 2257. The proposed amendments expand a list of counties that may have a maximum 75 mile an hour speed limit when such a speed limit is found to be safe and reasonable by the commission.

Allows a maximum 80 miles per hour daytime speed limit in ten counties on Interstates 10 and 20, when such a speed limit is found to be safe and reasonable by the commission. And it makes several technical changes related to speed study operations period, school zones, and equipment used during a speed study.

The proposed amendment was published in the December 2, 2005 edition of the Texas Register and no comments were received. We recommend approval.

MR. WILLIAMSON: Members, you heard the staff's explanation and recommendation. Is there discussion?

MR. JOHNSON: I have a question.

MR. WILLIAMSON: Please.

MR. JOHNSON: Carlos. On the counties listed -- speed limit to 75 miles per hour, I find conspicuously absent Parker County. Is there a reason?

MR. LOPEZ: They have more than 15 people per square mile.

MR. WILLIAMSON: And all 15 of them are against these ridiculous speed limits. I sure am glad you are concerned about my home county.

MR. JOHNSON: Well, what about I-20 coming through there, and let's move up to 80 miles an hour. That is not up to 75.

MR. WILLIAMSON: I think we need to move down to 55. And I think we need to let people start selling billboards on their private property again. What do you think?

MR. JOHNSON: Not necessarily a good idea.

MR. WILLIAMSON: Okay.

MR. HOUGHTON: City limits of El Paso and the city limits of San Antonio to 85 miles per hour.

MS. ANDRADE: I agree.

MR. WILLIAMSON: I am in the minority on this deal.

MR. JOHNSON: Does that mean that you are going to move somewhere between San Antonio and El Paso?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries.

MR. BEHRENS: Item 8(b)(3)(c), also rules for final adoption. And I think these are dealing with HOV lanes.

MR. LOPEZ: Yes. Commissioner, this minute order implements House Bill 1986 of the last session. This legislation allows the department to contract with a coordinating county transportation authority for the design, operation, construction and maintenance of high occupancy vehicle lanes.

The department proposed amendment to existing 25.41 to incorporate this change into our congestion mitigation rules. The proposed amendment was published in the December 2, 2005 of the Texas Register and no comments were received. We recommend approval.

MR. WILLIAMSON: Members, you have heard the staff's explanation and recommendation.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, Carlos.

MR. LOPEZ: Thank you, Commissioners.

MR. BEHRENS: Okay. We have covered 8(b)(4). Moving on then to Item 9 under transportation planning. A couple of minute orders. First one.

MR. WILLIAMSON: So that is why Jimmy Randall is here.

MR. BEHRENS: First one dealing with Cameron County with some MPO boundary revisions. And the second one concerning new members to our Port Authority Advisory Committee. Jim.

MR. RANDALL: Jim Randall, Director of the Transportation, Planning and Programming Division. Item 9(a). This minute order approves revisions to the Brownsville MPO metropolitan area boundary through [inaudible]. New urbanized areas based on information received from the U.S. Census Bureau.

Pursuant to Title 43, TAC, Section 15.3, revisions to metropolitan planning area boundaries must be approved by the Governor or the Governor's designee. Additionally, all documentation and rationale supporting your recommended boundary change must be provided to the Governor and the department.

In accordance with federal regulations, a metropolitan planning area boundary shell as a minimum cover the urbanized area and the contiguous geographic area likely to become urbanized within the 20 year forecast period covered by the metropolitan transportation plan. The Brownsville MPO policy committee by resolution has approved the adjusted metropolitan area boundary to match the location of the 2000 urbanized area boundary.

The new boundary includes the area of Los Fresnos, south of FM 510, which increases the size of the entire boundary. On October 4, 2005, Governor Perry delegated the authority to the commission to approve metropolitan area boundary changes.

The staff has reviewed and concurs with the proposed boundary changes, with the provided grounds for the MPO. Staff recommends approval of this minute order.

MR. WILLIAMSON: Members, you have heard the staff's explanation and the recommendation. Do you have discussion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: There's a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries.

MR. RANDALL: Item 9(b). This minute order appoints three members to the Port Authority Advisory Committee. This seven-member committee provides a forum for the exchange of information between the Texas Transportation Commission, the department, and committee members representing the Texas port system, and others who have an interest in the Texas water ports.

These members need to be appointed to fill the terms of three current members which are expiring on February 26, 2006. The following individuals are recommended to serve for three year terms, expiring on February 26, 2009. Bernard List from the Port of Brownsville, A. J. Pete Reixach from the Port of Freeport, and Tony Rigdon from the Port of Palacios. Staff recommends your approval of these appointments.

MR. WILLIAMSON: Members, staff has made a recommendation and they have explained the recommendation. Is there discussion?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, Jim.

MR. RANDALL: Sir, Mr. Rigdon had signed in, but I don't know if he is still here from this morning.

MR. WILLIAMSON: Probably back seeing if anybody is minding the Port.

MR. RIGDON: I'm still here.

MR. WILLIAMSON: Well, come on up and talk to us.

MR. RIGDON: I don't really have anything to say, except thank you.

MR. WILLIAMSON: Well, maybe we need to be saying thank you to you. Volunteer public service is tough stuff.

MR. RIGDON: Thank you.

MR. WILLIAMSON: Well, we appreciate you being here. We appreciate you watching all day long. It is sometimes boring. Sometimes illuminating. If we can help you do your job, let us know. Thank you, sir.

MR. BEHRENS: Agenda Item 10(a), concerning comprehensive development agreements. And Phil will come up and make a recommendation to move forward to issue some requests for qualifications on I-69.

MR. RUSSELL: Thanks, Mike. And again, for the record, I am Phillip Russell, Director of the Turnpike Division. Commissioners, you know the department has been working diligently for many years to secure environmental approval to build I-69.

During that process, the department and many others have also worked diligently in trying to figure out financial solutions to actually get it built. As Commissioner Houghton has so eloquently mentioned before, the difficulty of looking at traditional funding streams in building I-69 in our lifetime is probably insurmountable.

The minute order before you would allow us, as Mr. Behrens pointed out, to look at an alternative method for building this, and that would be through a comprehensive development agreement. As we have discussed before, the CDA process is a two step process. It is a request for qualification, followed by request for proposals.

By approving this minute order, you would essentially direct staff to begin that process by issuing an advertisement for qualifications and we would start that process. We anticipate it would be a very similar process that we followed for Trans-Texas Corridor 35.

So Commissioners, staff would recommend approval of this minute order. And I would be happy to address any questions you might have.

MR. WILLIAMSON: This is pretty momentous stuff, members. I am sure we would want to ask Phillip whatever is on our mind.

MR. HOUGHTON: When would you send out these RFQs. When would they hit the streets?

MR. RUSSELL: Commissioner, I think the next advertisement period would be March 8. By the time we could get it in, assuming we approved it today. We'll get it in the Register and get it out.

MR. HOUGHTON: And it is following the same type of procedure we did on 35, TTC-35.

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: Any interest out there you hear about?

MR. RUSSELL: I think so. Obviously, you were very involved, and the Chairman was on our CDA workshop. And I think part of that is marketing, and making sure that we have good competition. And the more involvement we can get from these folks, the better it is. So yes, sir. I think there is quite a bit of interest in this project.

MR. HOUGHTON: Great.

MR. WILLIAMSON: Hope.

MS. ANDRADE: I just had a question on the time line.

MR. RUSSELL: Yes, ma'am.

MS. ANDRADE: So we are going to advertise on March 8.

MR. RUSSELL: I think that is right.

MS. ANDRADE: Supposedly. And how long of a period do they have, would we give them to answer, to respond?

MR. RUSSELL: I think, Commissioner Andrade, if memory serves me, the minimum is 45 days. We typically have looked at 60 to 90 days. We want to -- these are going to be very complex teams. They are going to be very large teams. And as Commissioner Houghton just pointed out, we are going to bring in a lot of different folks from all over the world. So we are going to look at that very closely.

Ultimately, it is usually 60 to 120 days. Probably 90 is about the median. We want to make sure that we have enough competition. We want to accelerate to compress the schedule. But at the same time, we don't want to limit the opportunity for competition.

We had the workshop on January 17. We have another one scheduled for April. And I would anticipate that should generate more interest in our programs.

MS. ANDRADE: So it could be that by summer we would know their response.

MR. RUSSELL: Yes, ma'am.

MS. ANDRADE: Right. Thank you.

MR. JOHNSON: Well, I think the chair said it very appropriately. This is a momentous occasion. It took a lot of work to get us to this point. But I think this is a tremendous accomplishment to be where we are. And I look forward to seeing what the results are, near term and obviously, long term. I think this is momentous.

MR. HOUGHTON: Unfortunately, Commissioner, this won't get the press that it deserves tomorrow, in tomorrow's paper. Some other things on today's agenda will. But this is huge.

MR. WILLIAMSON: I have been thinking all last night and this morning. I have been thinking about something. When I was at the county official's business at A & M, Wednesday, I had three or four guys, some politely, some not so politely just insist that they had absolutely no idea of what we were doing on TTC-35.

That we did it completely without involvement of the public. That we never informed the public. That still to this day, we haven't informed the public. And I am sitting here looking and thinking about the agenda for the last day and a half, thinking you know, this is going to happen on TTC-69.

A year from now, somebody is going to stand up in a room full of people and accuse us of making these decisions and not telling the people about it. It is just the strangest thing. Phillip, I have a couple of questions.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: I won't ask you to be specific if the answer is yes. But have we learned enough in the TTC-35 experience to know what to avoid in the TTC-69 experience?

MR. RUSSELL: I think, Commissioner, it is an ongoing process. We clearly have learned some areas to dodge. So I think, the bottom line is, I think this process should go more efficiently, more smoothly. One of the dilemmas I think, Chairman, we have had on all of these, is each one, each procurement morphs a little bit.

So we look at it and say okay. We have got some lessons learned. And then we morphed it. We are constantly growing. I think in this case, there are enough parallels between TTC-35 and TTC-69 that there will be a direct correlation that should make it a more efficient process. Yes, sir.

MR. WILLIAMSON: And sort of a subset of that question is, specifically in negotiating our development agreement with Cintra--Zachry have we been able to develop basic business terms and concepts that we won't have to revisit that?

MR. RUSSELL: Clearly. No question. Clearly over the past year or so, so many of these concepts are brand new to the department, that we have been -- and nearly everything is a policy decision. Very few decisions we have to make are just binary yes or no decisions.

They are nearly always policy decisions. So although the terms of every project will be a bit unique when you talk about revenue sharing and vans and all those sorts of things, I think clearly we have established a baseline that should help us in all of our future negotiations.

MR. WILLIAMSON: And then the final question was more in the line of -- is in the nature of an instruction. It was an illegitimate accusation three years ago. It is an illegitimate accusation as of this morning, but the accusation will no less be lodged, that we are seeking and selecting and negotiating in secret. I think it is incumbent upon us to, if necessary, spend money to make sure the public knows that we are going through a competitive process to select the person or the company we are going to negotiate with, and that there were certain key criteria upon which we made our decision that was competitive.

And let's be thinking about that, as we see who all responds to our deal. Because when the time comes, we need to be up and down this footprint, or potential footprint. We don't know what the footprint is, yet.

Telling people we have used a competitive process to select John Johnson to negotiate with, because John Johnson had the best ideas, and the best financing package to bring the best value to the state, as best as we could tell. I know we did that with 35, but we didn't market it as aggressively as we could have. And I think we need to.

Because 69 in many ways is going to be far more controversial than 35. Everyone in Texas knows how bad 35 is. Not everyone in Texas is prepared to say that it is time for us to make sure that doesn't happen on 59 and 77 and the other roads that are affected by the growing traffic. So we have got an almost bigger hill to climb with 69.

MR. HOUGHTON: Chairman, let me understand one thing. Phil, the RFQ is for qualifications. This isn't the detail, yet.

MR. RUSSELL: Yes, sir. That is correct.

MR. HOUGHTON: This is, I call it, the beauty contest. Right?

MR. RUSSELL: It is qualifications, and financial and conceptual plans. And then Commissioner Houghton --

MR. HOUGHTON: And then you get into the drill down and into the actual contract.

MR. RUSSELL: Right. And of course, I would bring that back to the commission. You all would look at it. We'll look at who we had short-listed from that RFQ process and bring it back to you all. And we talk about the issue of stipend and authorizing us to go forward to that second step.

Chairman, to make sure I am clear, as far as your comments on the marketing to make sure that we are not accused of the secret deals, essentially, that process would start today, assuming you all approved it. Correct?

MR. WILLIAMSON: Yes.

MR. RUSSELL: Aggressively.

MR. WILLIAMSON: Aggressively making sure the public understands where we are headed, and why we are doing what we are doing. And even to the extent, Phillip -- I know that all these meetings are recorded, so I am aware of what I say, and the fact that I am going to get to read it again.

I mean, I think you ought to take opponents of this stuff, and send them letters. And say look, we are fixing to do this on the 69 footprint. If we ever know what it is.

And if you have got a better idea about how to do this, Texas -- what were they called? Toll Party? Is that what they are called? San Antonio Toll Party.

MR. JOHNSON: Terri Hall.

MR. WILLIAMSON: Make a proposal. If you have got a better idea, we are not opposed. But you have got to get qualified first. Get your qualifications together.

MR. HOUGHTON: What is the anticipated -- Amadeo or Phil, either one. What is the anticipated costs, from where it comes into the state on the northern, northeastern side to where it may exit the state on the southern side.

MR. RUSSELL: Obviously, Commissioner, the route is pretty fluid. But I think $8 billion to $10 billion. Is that what we are talking about?

MR. SAENZ: That is what we were looking at --

MR. RUSSELL: Yes. Obviously, start looking at rail components. It could increase by quite a bit after that.

MR. WILLIAMSON: One of my greatest --

MR. HOUGHTON: Yes. I think that is important, that number. $8 billion to $10 billion, and when you talk about in the scope or the scheme of what we are doing today, our annual budget. What we have for Category Two funding, federal, gas tax revenues. That is important. I think the public needs to know that.

MR. WILLIAMSON: Well, I think it is too. I agree.

MR. RUSSELL: Chairman, you know, I was thinking back about your comments yesterday and reflecting upon those, with the one gentleman that had some concern. And you talked about the public education. That is why I was kind of struck about what a huge audience we have back here to listen to this I-69 discussion.

MR. WILLIAMSON: Yes. I missed this one. I should have put this one at the front.

MR. HOUGHTON: This won't get much publicity. It is unfortunate.

MR. RUSSELL: But I think your comment is well taken. We'll be very aggressive from today forward, making sure that people understand what we are embarking upon.

MR. WILLIAMSON: Invite people to offer their qualifications. Like, I started to say a while ago, one of my greatest disappointments in my tenure as commissioner is the absence of a proposal from Texas A & M to build the corridor from Bryan-College Station to Houston and Dallas. I would have thought all that cash you all have is your share of UT's Permanent University Fund.

MR. RUSSELL: UT's Permanent University Fund.

MR. WILLIAMSON: Used to build a super-corridor and get more people in the campus. Can't you talk to those guys, Mike?

MR. BEHRENS: I don't think we are getting as big a cut out of that, anymore. It goes to the football pool.

MR. SAENZ: The share for the Rose Bowl.

MR. WILLIAMSON: Twice. Rose Bowl, twice. How did our basketball team do last night?

MR. SAENZ: They won. Barely.

MR. WILLIAMSON: Okay. Members, you have heard the staff's explanation and recommendation. What is your pleasure?

MR. JOHNSON: Could I mention one item? There is a misrepresentation as being embellished upon and exaggerated as to who has the right of eminent domain along these corridor developments.

MR. RUSSELL: Yes, sir.

MR. JOHNSON: And I think every chance we get, from the informational stage on, we need to highlight that this agency is not ceding its eminent domain authority. In fact, we cannot cede our eminent domain authority to anyone in the development of these corridors. That is a TxDOT charge and we take that very seriously, and we are not going to relinquish that, nor can we relinquish that to anyone.

MR. HOUGHTON: I agree.

MR. WILLIAMSON: Are you telling me that some previous testimony offered today was in error? Possibly?

MR. BEHRENS: Potentially.

MR. WILLIAMSON: Potential. Okay, members. You heard the staff's explanation and recommendation.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Let's go tackle the next tiger.

MR. RUSSELL: We'll do it.

MR. BEHRENS: Okay. Agenda Item 10(b). Amadeo, if you will come up here. I know we have had some discussion on this. But sort of lay out to the Commissioner what we are thinking about here and have some discussion with them.

MR. SAENZ: Yes, sir, Commissioners. This item here is basically, we are drafting a policy for the commission to adopt dealing with how do we provide some -- providing commitments to the local entities. As these MPOs are developing projects, and putting together plans, and they look at toll feasibility for projects.

And they look at those toll feasibilities at different levels of toll feasibility study, and they identified that basically, if I go through a CDA process, and the CDA process would generate, based on some financial studies, X number of dollars, that I can then apply to Project A, B and C. One of the things that we are hearing is well, if it doesn't come, then what is going to happen to my other commitments that I have tried to put in my plan.

And how can the department help the locals address those commitments. There are some requirements in House Bill 2702 on how concessions can be spent that need to be looked at, and we are still studying that. With respect to that concession money can only be spent on certain types of projects. And we are having to address that.

But sometimes some of these projects, sometimes they are called near term, near neighbor projects. And the MPOs are looking, or wanting to have some information. Okay, what commitments can TxDOT make if we go with you through a CDA process. Should the CDA in the future, once it is finalized, not provide enough funding for those commitments to those projects that were made, do they now go away, or can the department help us in keeping these commitments.

And we are trying to put together a policy to bring to you all. Today it is more of a discussion. And trying to get some feedback to help us put that policy together.

MR. WILLIAMSON: Members, some background on this. During the unpleasantness in North Texas over State Highway 121 and the discussion about who is the appropriate constructor and manager of not only State Highway 121 but I presume almost any toll road in Texas.

MR. SAENZ: Any toll road in North Texas. Yes, sir.

MR. WILLIAMSON: You know, as these things do, as they did in San Antonio, as they did in Houston a few years ago, as they have now in North Texas, the rhetoric and the spoken word perhaps got a little bit heated and emotional and more abrasive than the participants intended.

But one thing that came out of all of those discussions and interviews with the press was a clear sense that citizens who were going to be immediately most impacted by those tolls, and I think that is fair to say that is Collin County, although they are only 40 something percent of the tolls, they are immediately affected by it, had some reservation about the private sector process. If they were going into it based on a preliminary estimate by us that we thought that the best proposer, whether it was A & M or NTTA or private sector would generate a certain amount of money immediately for local projects.

And it occurred to me that we are going to go through this in El Paso. We are going to go through it in Hidalgo. We are going to go through it in San Antonio someday. We are going to go through it in Houston, if we ever become a partner with them.

And that is the notion that if we got to regions and say that we believe that the CDA public-private partnership for this area is in the long term best interest of your region, and we believe it because we think someone out there is prepared to immediately build $300 million of overpasses or interchange just for you, that you need, we are going to probably have to be prepared to say, and if they don't, we will make up the difference.

And so this was put on here originally as a minute order just for North Texas. And then staff revised that as the beginning of --

MR. SAENZ: Coming up with a policy.

MR. WILLIAMSON: Coming up with a policy for the entire state. And then it was put on the deferred list to give everybody an opportunity to think about it. But I do think, as a matter of -- staff thinks, and I agree, as a matter of forward planning, we probably ought to begin to talk about this on a steady basis. Because this is going to come more and more.

Communities are going to come to us and say, well what do you think we are going to get out of this deal if we let the private sector build this toll road and operate it? And if you really think we are going to get that out, are you willing to guarantee it.

And I think we ought to probably think about whether we are going to guarantee it. Not to the private sector, but to our communities. In other words, if we say to South San, we are sure that if you will accept this private toll proposal, you will get these three interchanges that will immediately relieve congestion in your community.

And if it turns out the proposals are not there, we probably ought to be prepared to step in and do the difference with strategic priority money. At least we all ought to start thinking about that policy, thinking about how we approach that. So that was the purpose of this.

MR. SAENZ: Yes, sir. And then I guess that my plan would be that during this month, this next week, start visiting with each individual commissioner and kind of getting some additional feedback so that we can start putting something together.

MR. WILLIAMSON: Well, we want to be clear when the people hear this, because they will read about it and hear about it. We are not talking about making a gap up with a proposal with cash. We are talking about if projections are made to our communities about what transportation assets they will get that they wouldn't otherwise get, we would step in with SP money and make up the difference.

So don't be afraid to do this, one way or the other. You will get this intersection fixed. We believe that strongly. Anything else you want to add?

MR. SAENZ: I think just the only thing I would add is that this will probably, where RMAs already exist, or will be formed, the RMA has the same authority as TxDOT in doing a CDA with a public private partnership partner developer. So I think you will see this more.

Where you have any more -- you have possibly other entities that don't have that same capability that can enter into these types of agreements. The other thing is of course, we have a lot of people who are financial experts that are doing a lot of work for us, and we look and study projects.

Of course the more information we know on the project, the better we can come up with a proposal. And so we want to -- we will make sure that as we develop these projects and we make these commitments and these proposals that we have the best information possible.

MR. HOUGHTON: Well remember, Amadeo, the point where I think this all -- not where it all started, but a big part of it is that asset that the RMA or a private concessionaire developer is going to build on is an asset of the State of Texas.

MR. SAENZ: It is an asset of the State, and that in itself has value.

MR. HOUGHTON: That has a value to it. The RMA, my opinion is, you don't hand over the asset and say well, again, we have got that lineal piece of transportation asset. And the issue of the connectors and the region have now been ignored. So that asset has value to the region. And that is what we are looking for.

Now, RMAs are public. They are not private. But there are certain provisions in the tax law that allow private concessionaire, foreign, pray tell, foreign private concessionaires to take certain tax deductions, depreciation. They can transfer that depreciation.

MR. SAENZ: Right. And I think it is really any private concessionaire whether it is foreign or not foreign.

MR. HOUGHTON: That is right. That is correct.

MR. SAENZ: There are some tax breaks.

MR. HOUGHTON: There are tax breaks.

MR. SAENZ: In fact, there are certain tax breaks that sometimes private activity bond are not really worth going out.

MR. HOUGHTON: Yes. They are not worth going out.

MR. SAENZ: If you can get tax breaks that give you more of a benefit.

MR. HOUGHTON: And this is the out of the box thinking that we try to encourage our partners to look to, and think about, and research. And it is happening more and more.

MR. SAENZ: So we will, like I said, I will set up some meetings and discuss with each individually, and get some feedback and try to put policy together. Bring it back to the commission in the form of a minute order.

MR. WILLIAMSON: Yes. Let's just keep it as -- I mean, we are deferring this. We are not going to act on it. But let's keep it as a discussion item and start steadily talking about it.

MR. SAENZ: Okay.

MR. WILLIAMSON: We have got a few transportation people left in the room, other than our own employees that will get the word out for us, and start getting reactions.

MR. SAENZ: Okay.

MR. WILLIAMSON: Thank you.

MR. SAENZ: Thank you.

MR. BEHRENS: Agenda Item 11, our state infrastructure bank for this month -- you want to defer this item, Mr. Chair?

MR. WILLIAMSON: Yes. Who is deferring.

MR. BEHRENS: This one.

MR. WILLIAMSON: Yes.

MR. BEHRENS: Oh, okay.

MR. WILLIAMSON: Oh, you mean Webb?

MR. BEHRENS: Yes.

MR. WILLIAMSON: Yes. I don't see why not.

MR. BEHRENS: Amadeo stood up again.

MR. WILLIAMSON: Hope, ask him. What is this.

MS. ANDRADE: I am going, no. Wait.

MR. BEHRENS: This item will be to consider final approval for a SIB loan to Webb County.

MR. BASS: Item 11 seeks final approval of a loan of just under $250,000 to Webb County to pay for a preliminary engineering design study of portions of Bob Bullock Loop. Interest would accrue from the date funds are transferred from the SIB at the rate of 4 percent with payments being made over a period of 15 years.

One item I will point out on this loan. It is considered a small loan, since it is just under $250,000. So this is the one and only time that it will be before the commission for consideration.

MR. WILLIAMSON: Amadeo didn't plan it that way, did he?

MR. BASS: It is $3 under. No. Staff recommends your approval.

MR. HOUGHTON: 4 percent. Is there a hassle factor or surcharge to it?

MR. BASS: We can obviously consider that, if that is the will of the commission.

MR. WILLIAMSON: And what is going to happen with this money?

MR. BASS: It is to be used for preliminary engineering and design studies.

MR. WILLIAMSON: For the city or the county.

MR. BASS: It is for the county.

MR. WILLIAMSON: But the study is for the county. I know that the county is borrowing money, but the study is for the county?

MR. BASS: Yes.

MR. SAENZ: Cuatros Vientos is a road into the county. It is outside of the city.

MR. WILLIAMSON: Members, you have heard the staff's explanation, weak as it is, along with its recommendation. Is there any discussion?

MS. ANDRADE: So moved. I am waiting for a second.

(All talking.)

MR. JOHNSON: In the interest of her safety and sanity, I second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries.

MR. JOHNSON: It is getting late, folks.

MR. BEHRENS: Agenda Item 12 under finance. I think James, you have those five that require action. If you go through those one at a time. And then I think the last one is the report.

MR. BASS: 12(a) item is as part of the documents for the lease with an option to purchase for the Houston District Headquarters Complex. The commission agreed to provide the unaudited financial statements of the department in a status report for the project on an annual basis. The agenda item asks that you accept these items, so that they may be distributed.

MR. WILLIAMSON: Why don't you explain all of them and we are going to act on them at once.

MR. BASS: Okay. 12(b), as part of the indenture for the Central Texas Turnpike System, the commission agreed to present audited financial statements in an annual update of financial operating data to the bond market. The agenda item asks that you accept those items, so that we may distribute those to the market.

Item 12(c), as part of the master resolution for the Texas Mobility Fund, the commission agreed to present audited financial statements for the TMF and an annual update of financial operating data to the bond market. This agenda item asks that you accept those, so that we may distribute them to the market.

12(d) authorizes the department to proceed with the development of the State Highway Fund Revenue Bond program, often referred to as Proposition 14, and to submit an application to the Bond Review Board for the issuance of $600 million of bonds, and other obligations to be backed by the revenues of the State Highway Fund. The department has plans for additional future issuances of bonds under this program, although the timing of the subsequent issuances is not definite at this point.

12(e) would authorize the department to file one or more applications for private activity bonds with the U.S. Department of Transportation and to submit comments to the U.S. DOT on how the $15 billion PAB program should be administered, and for the department's CFO to declare official intent to reimburse costs of authorized projects from tax-exempt bonds. And for all those items, 12(a) through 12(e), staff would recommend your approval.

MR. WILLIAMSON: Okay, members. We are going to vote on them one at a time. We are not going to vote them at once. I just wanted to get the explanation out of the way. We are on Item 12(a), Harris County. You have heard the explanation and recommendation. Is there a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Item 12(b) concerns Travis and Williamson County and the Central Texas Turnpike system. Do I have a motion?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Item c relates to the Texas Mobility Fund and providing a supplemental resolution. Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Item 12(d) relates to the State Highway Reserve Fund financing program and approving that plan. Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. And Item (e) relates to filing the applications with the United States Department of Transportation for the federal private activity bond program, a big deal. It is a very big deal. It is buried down here. Have we got a motion.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. BASS: Thank you. The last item I have is Item 12(f). It is not a minute order, but a required report that requires no action on your part. It is a required report on the status of the Public Funds Investment Act.

A couple of items that I have to report to you are that I am happy to report that both Mr. Munoz and myself, as investment officers of the department are in compliance with the required training. And secondly, the Legislature made a couple of changes to the Public Funds Investment Act, just to make you aware of.

One was adding criteria for institutions that offer certificates of deposit. A list of criteria that they must apply to in order to be considered eligible investments under the Act. And also another change for municipalities that own a municipal or electric utility. That would not have any impact on the department.

MR. WILLIAMSON: And you don't require action from us, just an acknowledgment that you made the report.

MR. BASS: Yes, sir.

MR. WILLIAMSON: Thank you for that report, James.

MR. BASS: You are quite welcome.

MR. WILLIAMSON: Michael.

MR. BEHRENS: Agenda Item 13(a). This will be a pass-through toll project for the City of Forney that Amadeo will explain to you and ask for your consideration.

MR. SAENZ: Thank you, Mr. Behrens. Good afternoon, Commissioners. For the record, Amadeo Saenz. This minute order before you provides for final approval for the department to enter into a pass-through toll agreement with the City of Forney for improvements to FM 740 from Ranch Road to US 80. FM 741.

MR. WILLIAMSON: Ranch Road? That is the name of it? Ranch Road.

MR. SAENZ: Ranch Road is the ending point where we are going to develop 742. 740 starts at --

MR. WILLIAMSON: Is that like Ranch Road 350 or Ranch Road --

MR. SAENZ: No. It is just Ranch Road. It a --

MR. WILLIAMSON: It is Ranch Road.

MR. SAENZ: Ranch Road. Yes. It is not -- 740 turns right there at that point, if I remember correctly. At that point, 740 turns and goes in one direction, and Ranch Road continues.

MR. WILLIAMSON: It is kind of like every urban county has got a Belt Line or a Lee or a Midway? Okay.

MR. SAENZ: 740 from Ranch Road to US 80, 741 from Bois D'Arc to east of the Forney --

MR. WILLIAMSON: Bois D'Arc?

MR. SAENZ: Bois D'Arc. That is how I pronounce it. How do you pronounce that?

MR. WILLIAMSON: Bois D'Arc.

MR. SAENZ: It sounds like Bois D'Arc, something.

MR. WILLIAMSON: You have never had a Bois D'Arc class?

MR. SAENZ: No, sir.

MR. WILLIAMSON: Cranapples? Horse apples?

MR. SAENZ: I am from South Texas. We didn't have anything like this. See, just east of Forney High School, which is about .25 miles east of 548. And then of course, also the construction of an interchange on US 80 and FM 548.

We received an application from the City of Forney back in May. It was reviewed and brought to the commission in August of 2005 for preliminary approval. You all provided preliminary approval.

We have taken some time to negotiate with the city. There were some things that were going on in the city that has taken us some time. But we have now reached agreement on this project. And as I mentioned earlier today, this project, the two FM roads are projects that are more local to regional projects.

And the city has agreed to a higher commitment for those instead of getting full reimbursement. The US 80 project is a statewide project. It is on US 80. It has got a lot of safety benefits. Because with that intersection.

So that one, we are reimbursing at 100 percent. The two FM projects, we are reimbursing at no more than 75 percent of only the eligible costs.

MR. HOUGHTON: 100 percent reimbursement?

MR. SAENZ: For the interchange. For the interchange on US 80, we are reimbursing, we would reimburse 100 percent of the eligible costs.

MR. HOUGHTON: Of the eligible costs.

MR. SAENZ: Right.

MR. HOUGHTON: Which is a something --

MR. SAENZ: Which is a percentage of right of way, a percentage of utility adjustments and such and so forth.

MR. HOUGHTON: Okay.

MR. SAENZ: For the farm-to-market road project, we have determined the eligible costs. And then of course, for the farm-to-market road projects within this area, the locals are required to provide the right of way and just the utilities. So those were taken out.

They also took responsibility for some landscape features and enhancement features. And then we also then will be able to pay for 25 percent of the additional construction.

MR. HOUGHTON: So bottom line, at the end of the day total price.

MR. SAENZ: Total price originally was $64 million, is what the estimate from the city was. Our pass-through toll reimbursement will be for $40,191,406. When we looked at the traffic, and we are looking at this thing as a system, we would be reimbursing at a total rate of ten cents per vehicle mile of travel, with a minimum ten year payout and a maximum of 20 year payout.

The minimum payout will allow for a maximum payment of $4,019,140.60 per year, and the minimum payment per year will be $2,009,570.30 per year, which will pay back in 20 years when we looked at the traffic. And we projected the numbers at the ten cents per vehicle mile traveled, this project will probably pay out in about somewhere between eleven and twelve years.

MR. HOUGHTON: So this is about a 66 percent financing after tolls.

MR. SAENZ: Yes, sir.

MS. ANDRADE: Amadeo, how many miles?

MR. SAENZ: These three projects wound up being -- I knew you were going to ask me. It winds up being about three miles.

MS. ANDRADE: Small projects.

MR. SAENZ: They are small projects. They are two small farm-to-market road projects, and then the interchange. I am sorry. The interchange is a mile.

MR. WILLIAMSON: I think there are a couple of things interesting about this project. It is probably the first time we have really started applying our matrix of local road, regional road, state road.

And it directly impacts traffic generated by a public school, which is very similar to the Bryan Independent School District problem that we can't seem to get the Bryan Independent School District interested in doing the same thing that the Forney ISD is interested in doing. So it is kind of an interesting situation.

MR. SAENZ: Staff would recommend approval of this.

MR. WILLIAMSON: Members, you have heard the explanation and recommendation.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. BEHRENS: Okay. We have already covered 13(b). Item 14 will be deferred to March. It shouldn't have been on this one. We just didn't get it off of our agenda when we were supposed to. We go to Item 15, our contracts for the month of February, both maintenance and highway building contracts.

MR. BOHUSLAV: Good morning, Commissioners. As a note of fashion, I wore my yellow shirt yesterday. So I missed out on that one. Item 15(a)(1) is for consideration, award or rejection of highway maintenance contracts let on February 7 and 8, 2006, whose insured estimated cost is more than $300,000.

With 15 projects, an average of 4.4 bidders per project, we recommend award of all projects. Any questions?

MR. WILLIAMSON: Are there questions, members?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries.

MR. BOHUSLAV: Item 15(a)(2) is for consideration, award or rejection of highway construction building contracts let on February 7 and 8, 2006. 78 projects, an average of about 4.1 bidders per project, and about a 3 percent overrun.

We are recommending all projects be awarded. Any questions?

MR. WILLIAMSON: Questions, members?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, Thomas.

MR. BEHRENS: Item 15(b), we have one contract claim in Potter County. Amadeo?

MR. SAENZ: Good afternoon again, Commissioners. For the record, Amadeo Saenz.

MR. WILLIAMSON: Is this your last contract claim report?

MR. SAENZ: Yes, sir. It is. This is the last contract claim that I heard. In fact, Zane was going to present it, but Zane had other commitments so he delegated it.

MR. WILLIAMSON: I know how disappointed you are.

MR. SAENZ: Or upgraded. Let's put it that way. He upgraded to Steve on the priority boarding and upgraded me on this. I think I got the better deal though.

The minute order before you approves a claim settlement for a contract by First National Insurance Company of America, a surety that took over a contract that had been defaulted. The project was CPM 904-0089 in Potter County, et cetera, in the Amarillo District. On January 12, TxDOT contract claim committee considered the claim, and made a recommendation for settlement to the contractor. The contractor accepted the claim committee's offer.

The committee feels that this is a fair and reasonable settlement of the claim and recommends your approval. I will be happy to answer any questions.

MR. WILLIAMSON: Questions, members?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. SAENZ: Thank you.

MR. BEHRENS: Agenda Item 16 is our routine minute orders. You have already approved 16(c)(2). All of the remaining routine minute orders have been duly posted.

They are all listed there for you to look at. I don't think any of them impact any commissioner directly, so we would recommend the approval of the routine minute orders, except 16(c)(2) which action has already been taken.

MR. WILLIAMSON: Members, do you have any question or any discussion about the routine minute orders?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Mr. Jackson, is there any reason for us to be in executive session?

MR. JACKSON: No, sir.

MR. WILLIAMSON: Then the most privileged motion is in order.

MR. JOHNSON: Could I ask a question?

MR. WILLIAMSON: You may.

MR. JOHNSON: When we go to Daylight Savings Time, is it going to affect the length of these meetings? I move that we adjourn.

MR. HOUGHTON: Depends on who is counting. Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Mr. Jackson, for the record we are adjourned at 3:34 p.m.

(Whereupon, the meeting was concluded.)


C E R T I F I C A T E


MEETING OF: Texas Transportation Commission

LOCATION: Austin, Texas

DATE: February 23, 2006

I do hereby certify that the foregoing pages, numbers 1 through 315 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Department of Transportation.

                    02/27/2006
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731

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