May 29 Transcript


Texas Department of Transportation Commission Meeting


Ric Williamson Hearing Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483

Thursday, May 29, 2008


COMMISSION MEMBERS:

Deirdre Delisi, Chair
Ted Houghton, Jr.
Ned S. Holmes
Fred A. Underwood

STAFF:

Amadeo Saenz, 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

 

MS. DELISI: Good morning. It is 9:04 a.m., and I would like to call the May 2008 meeting of the Texas Transportation Commission to order. It's my pleasure to have you here this morning.

Note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State at 4:00 p.m. on May 21, 2008.

Before we begin today's meeting, let's take a moment to place our pagers, cell phones and other electronic devices on silent mode, please.

And as is our custom, we will open with comments from the members, and I'd like to call on the other newly appointed commissioner, Bill Meadows, to begin.

MR. MEADOWS: Thank you so much, Madame Chairman. I really appreciate the opportunity to be sitting here today, and really I know we're going to have the opportunity to hear from the Dallas Fort Worth Partners in Mobility. We have some very distinguished people here with us today, Mayor Leppert -- many mayors, Mayor Moncrief, Mayor Trevino, and many more. I said to someone a moment ago if you don't remember someone's name, just call them Mayor and pretty good chance you're going to be right here today.

I know we're going to have the opportunity to hear from them, but I just wanted to express our appreciation to all who came last night and graciously hosted that reception. It was a really good opportunity for all of us to interact with North Texas business and political leadership committed to transportation, recognizes the importance of transportation to this region, and they really are partners in mobility with us. And I just wanted to thank you all for the reception last night and for being here today. Thanks.

MR. UNDERWOOD: Again, I want to associate myself with my colleagues' remarks to thank the Partners in Mobility for the reception last night. That was excellent. I do worry that we have so many leaders from North Texas in this room, if something happens, we're going to have a void in Texas.

Today is really an auspicious occasion -- I looked that word up, Ned. He's been working with me to improve my grammar and whatnot since I'm the rural commissioner, and I've only got to the As in the dictionary, but I'm getting there, Ned.

(General laughter.)

MR. UNDERWOOD: We have our senior member -- and I mean senior as in tenure, not in age, as you can tell by the gray hair to my left -- but he had a birthday this month, and the commission wanted to recognize that. I talked with a gentleman, talked to the Lone Ranger, got his silver bullet. Then I talked to the airport security and they were a little bit nervous about that going through security. So then I talked to a friend of mine at the Pentagon; they really got nervous when I called airport security and said I'd like to take a heat-seeking missile through, and that was a no-no. So then I talked to another gentleman and whatnot and was able to come up with a gift. I thought about a movie I'd seen and I thought about the first part of the movie and whatnot, and I was able to get hold of a gentleman, Russell Crowe.

Would you all bring that out for me?

Ted, happy birthday to you from the commission.

(Laughter and applause.)

MR. UNDERWOOD: This is Ted A The Gladiator@ Houghton. So happy birthday from the commission.

And thank you again, in all seriousness, for being here. We appreciate everything you do.

MR. HOLMES: You think Ted's been tough, and now that he's got this helmet, it's going to be something.

Welcome, everyone. I'm delighted to see all of you here. As I said last night, I believe, self help is the best help, and the fact that the Partners in Mobility have banded together to come and help educate the commission on the issues that you confront in the Metroplex is a great cause and I appreciate your participation. Glad that you're here. Thanks.

MR. HOUGHTON: Well, I don't know how to follow that, I really don't. Thank you, Fred, very much. How did you get that through airport security?

MR. UNDERWOOD: Well, cheaperthandirt.com, just for the record.

MR. HOUGHTON: Thank you. Can you tell this is going to be a lot of fun, Meadows?

MR. MEADOWS: It's getting better. What are you going to do next?

(General talking and laughter.)

MR. HOUGHTON: I don't know.

Well, I want to welcome everybody and thank the folks from the Metroplex last night for the fine hospitality and the event, and we look forward to, as Bill and I were talking, a new partnership going forward on building some things around this state, especially in the Metroplex.

And Fred, thank you so very much.

Meadows, we were trying to spoof you a little bit but I got spoofed. I had sent Jeremiah in to talk to Meadows that the tradition on the commission was that the newest member -- and you were sworn in yesterday -- had to sing A Texas, Our Texas@ but I got spoofed and it didn't quite work. So welcome. Thank you.

Madame Chair, welcome and congratulations.

MS. DELISI: Thank you. I guess we should only be concerned if you actually wear it. Right?

(General laughter.)

MS. DELISI: I just want to say I'm very delighted to be here today and I'm looking forward to working with these other fine members of the commission. And welcome to the folks from the Metroplex. We're looking forward to hearing what you have to say, and looking forward to a very productive, long-term relationship with you guys.

So with that, let's get on to the real business. Let me start off by reminding everyone that if you wish to address the commission during today's meeting, we ask that you complete a speaker's card at the registration table in the lobby. To comment on an agenda item, we ask that you fill out a yellow card and identify the agenda item. If it's not an agenda item, we will take your comments at the open comment period at the end of the meeting. For those comments, we ask that you fill out a blue card. Regardless of the color of the card, we will limit each speaker to three minutes.

The first item on today's agenda is the approval of the minutes of the April 24, 2008, commission meeting. Members, the draft minutes are in your briefing materials. Is there a motion to approve these minutes?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: There's a motion and a second. All in favor.

(A chorus of ayes.)

MS. DELISI: Now, Amadeo, I will turn the meeting over to you to take us through today's agenda.

MR. SAENZ: Thank you, Madame Chair, and welcome to the commission. Also welcome to our other new commissioner. Look forward to working with you all.

Our first agenda item are two discussion items. The first discussion item will be led by Phil Russell, who will discuss the market valuation process that is set up in Senate Bill 792. Phil.

MR. RUSSELL: Thanks, Amadeo, and good morning, commissioners, Amadeo and Roger. For the record, I'm Phillip Russell. I'm the assistant executive director for Innovative Project Development.

As Mr. Saenz mentioned, the first discussion item is related to market valuation. Many of you have been involved or somewhat involved in that discussion over the last year or so, but just as a bit of a backdrop, of course, market valuation was a creature of Senate Bill 792.

The process is fairly straightforward, it's a fairly linear process. Essentially, the process begins with both parties, both TxDOT and the local tolling authority, sitting down and begin discussing what the business terms are. In language, that really is only the toll rate, the toll escalation rate, and the scope. Once those business terms are agreed to, then we begin the selection of the market valuator. Once that is agreed to, then we get into the actual market valuation itself.

There's about a 90-day process once the market valuation is completed in draft form where either party can provide input. At the end of that 90 days, it becomes the final market valuation, and then other time lines kick in. For instance, the local toll authority has six months to decide whether to exert primacy or not. If they waive their right and determine they don't want to develop the project, then it kicks back over to TxDOT, we have two months to develop the project, and then we move on from there.

Now, it's been an interesting process, and I think at the very least it's been very frustrating, not only to TxDOT but the local toll authorities and probably members of the public. We've had a little bit of a mixed bag as far as how the process has gone. On the one hand, we've had 281 in the San Antonio area that actually went very quickly. 161 has been the subject of a lot of discussion over the last few months. We finally completed that market valuation about a month or so ago, with the help of Mr. Saenz and many others, and that process took about nine months. And so you have kind of the opposite extremes.

We have testified on this process considerably over the past two months, I guess, for various interim committees, both the 792 Committee, as well as the Senate Transportation Committee, and there, again, are about as many opinions as there are stars in the skies about what we need to do to improve that process. But at the end of the day, again, it's been a pretty frustrating process. I don't know that it's really working as everyone had conceived back during the last legislative session, and so we have several folks here that I think may desire to comment on the process and what could be improved. Of course, I'd be happy to address any questions you all might have as well.

MS. DELISI: Does anyone have any questions for Phil?

MR. HOUGHTON: Are we going to take testimony first?

MS. DELISI: We have one person signed up to speak, if you want to hear from him first.

MR. HOUGHTON: Yes.

MS. DELISI: Dr. Figueredo from NTTA.

DR. FIGUEREDO: Good morning, commissioners. Jorge Figueredo, executive director, North Texas Tollway Authority. Appreciate the opportunity to speak with you this morning about market valuation.

Chairwoman Delisi, congratulations on your appointment. We're looking forward to working with you. Same with our former vice chairman, Bill Meadows, congratulations on your appointment.

MR. MEADOWS: You're just glad to be rid of me, I think.

DR. FIGUEREDO: Well, it's been eerily quiet at NTTA since you left.

(General laughter.)

DR. FIGUEREDO: I also would like to recognize Mr. Ken Barr, one of our new appointee board members, who is here in the audience on behalf of NTTA.

I just have a few comments about the market valuation process -- as I put my reading glasses on -- and I'd like to say that, first, I very much appreciate the hard work that your agency did through that process. Bill Hale and his team, Bob Brown, Brian Barth, we spent a lot of afternoons and evenings together working through the process. And throughout it all they kept good spirit, they kept focused, and even though we disagreed fiercely sometimes, it was very professional, and I want to commend them for the work they did.

I know that there were dozens of people involved on both sides, and we had some very significant and difficult deadlines that we were trying to meet, and each time everyone showed commitment to get to the end game, and we did ultimately, we got to the end game. It took some help from some legislative leadership, from the governor's office, from the lieutenant governor's office, but in the end, we were successful and that's what counts.

I'm hopeful that we won't have to do that again, and I know that the Dallas District, and I believe Maribel over in Fort Worth doesn't want to do it either.

We face many challenges. The process of market valuation was brand new, and it was outlined in statute and there was room for interpretation, and so not only did we have to conduct a market valuation, we had to create the process as we went through it, and that was very difficult. Now, the good news is that we found a way through it and we found the possibilities for a template to use if we go with market valuation moving forward, so it shouldn't be as difficult if we have to do it again.

We also came to the realization, I think, that a lot of our early negotiations and debate about some of the very minor details of projects, the hundreds and hundreds of details that we had to negotiate one at a time, at the end of the day when we got to the end -- and we were talking about revenue lines moving up or down 5 or 10 percent causing a swing of $50- or $100 million -- some of those early negotiations were like negotiating the hair on the end of the tail of a dog because at the end of the day, we were talking in orders of magnitude much greater. So I think we learned -- at least I learned that it's probably okay in the early part of the negotiations to broad-brush a few things because at the end of the day, the negotiations get around some very significant dollars.

Additionally, I think that we learned that market valuation, the way it's structured, is a do-or-die situation, and what happens when you run into an impasse where both sides can very much believe that they're correct and both sides have data to support that they're correct, but you have to pick one approach or the other, and it falls into private sector approach versus public sector approach, and how do you overcome those obstacles.

We had the good fortune of having the RTC help us. Michael Morris sat in and helped mediate -- and at times said, Okay, guys, you've got to get along, let's talk -- but we had help of a third party. Now, I don't know if the MPOs are the right organizations or somebody else, but I do think that we need to find a way when we disagree and we both feel that we're right to be able to come to agreement out of that disagreement. And so I think that's a lesson learned that we move forward.

I also think that as well-intended as market valuation, I think, was in the legislation as providing a mechanism for us to reach an end point, unfortunately, it pitted two agencies against each other and it pitted all of our resources against each other, and that was expensive, cost us a lot of money, and it cost, I'm sure, the department a lot of money. And that's money that could have been spent putting asphalt on the ground or putting guardrails up or putting in safety devices for people. And so I think for efficiency sake, we need to find a way to enter this process and not be in a conflict position. It doesn't benefit anybody other than the folks that we're paying by the hour to help us. And so I don't know that I have specific recommendations on what we do, but I think there are themes out there of how we do this.

Also, the other thing, I've heard it said, you know, sometimes you forget what you're fighting about and you just fight because you do. And I'm looking forward to a spirit of partnership with the department, of trying to mutually respect and understand each other, and work in a way that at the end of the day we're doing the people's business. And that's the approach that I'd like to take and I know you'd like to take, and we've just got to stand down a little bit, and this process, unfortunately, pitted us against each other and kind of sharpened the point on the arrow for a while, but the good news is we got through it.

Maribel Chavez and the Fort Worth District and I have started negotiating on the next project, Chisholm Trail, we're trying to finish off the partner agreement on Southwest Parkway, and we're trying to draw from lessons learned. And she and I are talking about how do we maybe bundle those projects, how do we maybe put a package together that makes sense, that's transparent, that will get buy-in from all the folks that need to buy in, so we can end up with a project much quicker rather than later. Because as you know -- I've seen presentations here -- every month that goes by is millions of dollars of inflation on these projects, so the more we argue, the more money we're costing ourselves.

And so I look forward to any improvements in market valuation. We can do away with it, as far as I'm concerned. Let's just decide who does what and move forward. But for this process, I think there's some lessons to be learned and I'm looking forward to continuing the dialogue with Amadeo and with Bill and Maribel to see if we can refine market valuation moving forward.

Thank you for your time.

MS. DELISI: Thank you. I think we have one more person to testify. Mike Heiligenstein.

MR. HEILIGENSTEIN: Good morning, commissioners, Chairman.

Real briefly, I believe, also, that the market valuation process is broken and it needs to be either fixed or eliminated. We've been through a couple of market valuation meetings and there were more attorneys in the room than there were folks trying to get the thing done. So I really would like to see us change that, and the discussion that I think we need to have is how we do it directly with TxDOT, as opposed to having this process in the way, so to speak.

I know that there was a lot of good will and a lot of well-intentioned thought put into 792, but I think this particular provision, along with possibly primacy, does give us some problem. I think there's opportunity for a direct relationship with the DOT that would memorialize and put in concrete what we really need to do.

Thank you.

MR. HOUGHTON: Don't go too far, Mike.

MS. DELISI: One more person -- and don't go too far, that's right -- Terry Brechtel is here also.

MS. BRECHTEL: Good morning, commission members. Terry Brechtel with the Alamo Regional Mobility Authority. I appreciate the opportunity to discuss this issue with you today.

The Alamo RMA is the first RMA to have completed the market valuation process for our proposed toll road project, and we also successfully took that vote to our metropolitan planning organization, specifically for the 281 North project.

I do have some specific thoughts about market valuation, but I want to let you know that because we had great cooperation at the district level in working through our process, we were able to move very quickly

Let me give just a bit of background for those of you that may remember. In 2005, the Alamo RMA began working with TxDOT on evaluation of an unsolicited CDA proposal for 281 and 1604, and so as a part of that process, we had begun already a very in-depth evaluation of that corridor, and so I think that put us in a unique position to be able to move forward very quickly through this process.

The prior work we had done got us to a point where we were able to agree upon the business terms for inclusion, because we had been talking about those, into our market valuation, and so over two afternoon sessions, we sat down with the district and substantially completed the market valuation negotiation. It did show that for 281 and 1604 a significant subsidy would be required, anywhere from $190 million to $265 million, depending on what you do with peak period pricing.

And so, from this exercise, what did we learn? Market value for new RMAs and new projects in communities that do not have an established toll system already in place may not produce a surplus for many, many years. The process offered under current law does not give us any guidance on how to proceed with additional market valuation studies if the business terms and escalation rate -- which are two key components of that study -- don't change. We feel like the duplication in modeling leads to delay in projects which, of course, increase costs and could ultimately produce similar results in startup, or our regions in particular.

While there are some carve-out provisions applicable to the RMAs, the process appears to be an attempt to a one-size-fits-all solution to a problem which varies from region to region and the final outcome from each market valuation, more likely than not, will not be anything but uniform as regional differences and histories have to be incorporated into the model evaluation itself. The results of the market valuation studies for RMAs are a source of confusion to the financial markets. For RMAs, these studies have less relevance to the final financing terms presented to the rating agencies, bond insurers and bond buyers.

So across the state, RMAs face a number of challenges -- and you're familiar with those -- particularly because of lack of history on our projects, can't take advantage of economies of scale, and other things. As a result, the market valuation process is disconnected, in my opinion, from the realities of what we face in the financial markets.

So conclusion, while local involvement is crucial to a successful project development, surrounding the process with excessive steps, duplicative efforts and tense negotiations over a public improvement project can hinder, more than help, the development of the project. I think we need to clarify the role of the MPO, particularly in terms of how many times we go back with votes if things have not changed.

We do look forward to working with the commission on this issue, and we've had a very good working relationship with you to date, and I look forward to continuing that working relationship.

Thank you for allowing me to speak.

MS. DELISI: Commissioners, does anyone have any questions of any of the speakers?

MR. HOLMES: Yes, Chair, I do. It's really directed to all three, but I think probably Jorge would be in the best position to reflect on this.

Jorge, if you'd come back up. If one thinks about the market valuation process, it was clearly an attempt to highlight the value of a given project so that the local community could understand what value was in 161, or whatever the next one might be. If I reflect back on my business career, looking at appraisals on real estate projects, you can get a pretty good variation, and I would see that that would be the case -- in fact, I don't know how it would be different in evaluating a road project.

But irrespective of the difference, wouldn't the value stay within the region anyway? I mean, is that correct or incorrect?

DR. FIGUEREDO: Well, if I understand properly, my view is that the revenues will come to the project over time, no matter what, unless you horribly mismanage it or unless you do something that's revolutionary, but the traffic will be there, and there's so many variables that affect that but it's a closed system. And one of the debates that we had during this process was we had a difference in philosophy: the department was talking about getting the highest value possible for the project, and we kept talking about getting the real value for the project, and even both of those are subjective.

My belief is when you have a toll agency like ours that takes a project, it's a closed system, all of the revenues stay in the region. Now, one advantage that I believe the private sector has is that they are able to pull maybe a little bit more of the money up front, but even if you don't pull it up front, what you've done is -- and I'm quoting one of the private guys -- you've increased the asset value of the agency, and that funding will be available later for capacity or other improvements.

One of the fundamental changes that occurred to the tolling industry in market valuation was that there was a price or a value given to an asset in the region and it created the opportunity for an up-front payment and that up-front payment would then become property or possession of the region and then you would take the funds out of the toll system and into the region in other projects. And that's okay, except to the point where an agency like ours, we need some of the positive projects with some of the positive side to be able to deliver the projects that have a gap or are upside down. And so we have to look at it as the health of the enterprise to be able to deliver all types of projects.

So I think that's a long way of saying that, yes, sir, the monies stay in the region, it's a closed financial system, in my view.

MR. HOLMES: But the difference in NTTA would be whether it stayed within NTTA for work within the system or whether it would stay within the region.

DR. FIGUEREDO: Yes, sir.

MR. HOLMES: And so it could either put a greater strain or lesser strain on the financial outlook of NTTA.

DR. FIGUEREDO: Absolutely. And that was why it was so important for us to get the projects that had a positive side to them because we are going to be asked to deliver the projects that have a funding gap and we will have to tap into our capacity to do that. And that was why it was so important to keep the good projects as best we could with us, and at the same time, share some of the revenue with the region.

MR. HOLMES: The harder question is that if you minimize and take the most conservative valuation approach to the high value projects and you keep those within the system, how do you build the low value projects? I mean, where does the cash come from to build those? If you take a 121, for instance, and instead of it being a $3 billion concession up front, that $3 billion goes into the system on a regional basis, and instead of valuing it at $3 billion, you're value it at $100 million and so the value stays within the NTTA closed system, how does the region finance some of those more difficult projects to finance?

DR. FIGUEREDO: Outside of NTTA?

MR. HOLMES: Yes.

MR. HOUGHTON: That's a challenge, and I'll tell you, we had legislative approval last session -- and we're trying to work through this -- to where after we pay all our debt service and O&M and all those things, there's a bottom bucket of money and we're able to take 10 percent of what's there and use if off- system, and so we're looking at ways that we can do that to partner with the region. But it's a struggle, and I completely understand and respect the view of the region that they need help with off toll road projects, and I understand why excess or up-front revenue from our program is valuable to them and important.

Without either us providing up-front money like that or some revenue-sharing on the back end, then you're going to have to look at other more traditional ways of raising revenues for local entities.

MR. HOLMES: But theoretically, the value stays in the region, it just depends on how it's allocated.

DR. FIGUEREDO: Yes, sir.

MR. HOLMES: And if you have the ability to do off- system projects, if NTTA has the ability to do off-system projects and the willingness to do it, then it's shared on some consensus basis.

DR. FIGUEREDO: Yes, sir.

MR. HOUGHTON: Well, therein lies the real issue is when you look at the 30,000 foot, we look at the entire system, the tolling authorities look at their system, and the question is how many miles do you have in your system versus the TxDOT system in the Metroplex, and that's our responsibility and that's why we try to extract the dollars on these projects to invest into the greater system.

With that said, Commissioner Meadows and myself and others sat in a room, what, last year, Bill?

MR. MEADOWS: Last April.

MR. HOUGHTON: Last April and came up with a protocol on how to do these things, and the legislature, in their infinite wisdom, said, No, we don't like that. And we did, we had a protocol set up to build these and we thought we had a deal done. Matter of fact, to the point of Michael Heiligenstein and Terry Brechtel, we have ways of creating partnerships with TxDOT, they're the general partner and we're the limited partner and we can get these things done, just like we can in the Metroplex, but our view then still is the system, the larger system, and the parochial view of just our -- I don't know how many lane miles you have in your system Jorge.

DR. FIGUEREDO: Sixty-two right now.

MR. HOUGHTON: Sixty-two lane miles. Michael, how many lane miles in the state system in the Metroplex?

MR. MORRIS: Three thousand.

MR. HOUGHTON: Three thousand. Therein lies the rub and how do we get to that to maximize value for the entire Metroplex and to extract those dollars out.

DR. FIGUEREDO: I completely understand and I see the problem that you're laying out. I'll tell you, the evolution of toll agencies has accelerated in the last five years or so. There was a time when toll agencies were off on their own and they just didn't play with other people, and as the gas tax has dried up and challenges have become greater, this has got to be a we're-all-in-it solution. The only thing that I have to make sure is that we are viable and healthy enough to be able to step up when we're asked to.

MR. HOUGHTON: Well, Jorge, one of the things that can be done, when you're talking about distributing 10 percent on the bottom after it gets washed through, one of the things we did on 130 5 and 6, this asset that Amadeo negotiated, is that we get it off the top for the region, and whether that's a penny, whether it's a percentage or you add to the toll rate, but the RTC and the Metroplex get something right off the top in perpetuity off of that road instead of waiting for some event of profitability out here in the out years. And we've got to get that. We can't wait for, as you say, inflation -- as we're sitting here talking about market valuation, spending lots of dollars, time is killing us, steel prices, I think Commissioner Holmes told me, are up 60 percent since the first of the year, it's killing us.

So I guess my point is we've got to get to a percentage off the top to these MPOs in perpetuity instead of washing it through, and oh, by the way, here's some money for the region when you're talking about 3,000 miles of road versus 62. And I'm not poking at you, it's just a matter of how do we maximize the revenue to these regions.

DR. FIGUEREDO: And we've had some discussions and we're going to have more. The only issue for us is we borrow our money and so the deal that we come to has to be viable in the financial markets, and to the extent that they are and to the extent that the region wants us to step up and deliver the projects that have gaps in them, those are the only really controlling factors: our ability to do that and remain healthy. We want to partner but the financial markets have to accept the deals that we put together.

MR. HOUGHTON: Well, I'm not sitting here wanting to negotiate with you right now, but I'm all for getting back to a protocol that Bill and I and others put together last April that seemed to work and let two agencies get this thing worked out and move on, but getting some money off the top and putting a penny or two, Michael, on top of the toll rate that goes to the MPO and gives them income in perpetuity for the region, as into the CTRMA, as to the Alamo RMA that these MPOs are the benefactors of taking some hard licks and doing things in their communities that need to be done.

MR. HOLMES: Excuse me, Bill, just one more thought.

Jorge, I tend to agree with the comments that you and Terry and Mike made that the market valuation process is an extremely difficult process and needs to either be materially amended or waived. I like Ted's idea -- because I was in that meeting with Ted and Bill last year -- of working out a protocol, or we could take a different approach and simply partner projects so that the value of the project, a portion of it stayed in NTTA and the portion that -- the, quote, 50 percent, to make up a number -- that TxDOT would keep would go back to the RTC for distribution in the region, and that might be a way through it that felt better from both sides.

As Ted said, I'm not attempting to negotiate, it's just a thought process.

DR. FIGUEREDO: I do want to throw one more item in, and that is that I truly believe that there is a role for the private sector in the future. I think that what we're going to end up doing, as we get to these difficult projects, is blending the strengths of each, blend the department, the private sector, ourselves, who does what's best, who's best positioned for it, perhaps a role for local communities, but I think that the picture is going to get more layered and it will give us more strength over time.

MR. MEADOWS: I'd just like to make a couple of observations, having been involved in this process some, and as has been pointed out, there have been a number of us have been talking about what the process really should be to determine who develops what projects to serve the people that we're trying to serve. I mean, we really need to get it down to that most simple, simple equation.

And the fact is that you first have to observe that we all appreciate the fact that this conversation is taking place and this agenda item was on this agenda. I mean, that really is important because this is where we need to start. There is nobody -- there may be somebody, I don't know who it might be, but I don't think there's anybody that thinks that the market valuation process, as set out in 792, is a process that yields success. I mean, it really hasn't yielded success. There may be some instances where you could point out and projects that might have even been revenue-neutral or negative where it might have worked, but the fact is it is a process that, as well-intentioned as it was, with absolutely laudable goals -- no question we all wanted to get to the same place -- but it's a process that really did not promote competition, it fostered conflict, and that's not good, that's not partnering.

And you know, it seems to me like we're at a point where we've got willing parties. All of the parties that are part of this process, as prescribed in that statute, are all standing up here saying hey, this deal ain't working, can we figure out a better way to do it. And I'm seeing willing parties that are talking about partnership, so the question now that's posed to all of is how best to move it forward.

And I'm not sure that I know the answer, but I suspect it's going to be some sort of working group that takes the people that have been actively involved in the process, that have been seated at the table hour after hour and know what the fundamental flaws are and begin to think about how we construct partnerships, how we just reach agreement on who's going to develop what and how the capital that these entities like the NTTA have come to bear and serve the people. We've just got to put the money to work, and I would certainly be open or encourage us to consider putting together some sort of working group quickly and figure out how we get about the business of building roads.

MR. HOUGHTON: Well, with that, Jorge, and Mayor Moncrief and Judge Whitley, I say to the engineering community, anybody can build these roads, it's all about finance and it's the financial creativity that gets us across the goal line and gets money to the MPO, the RTC to build the needed non-tolled projects or rail projects in the community, in the Metroplex area, or in the Austin area or in the San Antonio Alamo RMA area. So the magic is in the finance -- with all due respect to my engineering executive director down here.

DR. FIGUEREDO: NTTA would love to participate in that kind of discussion with the department and anyone else in the region, the RTC, to find a path through this. And it's limited resources, again, it's about the financing and how can we put it together to squeeze out the most that we can. So I'll follow up with Amadeo and see if we can get something together.

MS. DELISI: Does anybody else have any other comments or questions for Jorge or any of the other speakers?

MR. HOUGHTON: No. I just think a comment, Madame Chair, is that we started down a path about a month ago to stop the market valuation process because it was going nowhere, especially on the revenue-negative type projects -- which are most of the 87 that we outlined. We're spending loads of dollars, tens of millions of dollars for an end result that we already know. So my recommendation is that we cease on the market valuation and we start looking for partnering opportunities with our sister agencies at HCTRA, NTTA, Alamo RMA, CTRMA, et cetera, and if you'd like any of these board members to participate in that.

MS. DELISI: Absolutely. I haven't heard anything different from any of the members or the members of this commission, so that is the direction I think we need to move down. Our goal is to get infrastructure built, not fight over who's going to build it, so that is the direction we will head in.

Oh, one thing before we move on -- I'm sorry -- I know there are a lot of people standing. There is another room downstairs with monitors and seats if you want to move, we understand, so I just want to open up that opportunity to folks.

MR. RUSSELL: I guess, Mr. Saenz -- of course, this was a discussion item -- the next step forward would be a minute order or simply to move forward with some sort of partnership capability and let's get on the business of building infrastructure.

MR. HOUGHTON: My recommendation is I don't think we can wait for a minute order.

MS. DELISI: Right. I say we just get going.

MR. HOUGHTON: We move on.

MR. RUSSELL: Clear enough.

MR. HOLMES: With recognition that all these projects are different, each one is going to have a slightly different nuance and flexibility.

MR. RUSSELL: Absolutely. But the gist, I guess, of what I'm hearing is to begin to go back to the protocol days and try to gather up all the projects in the region, look at them in whole, and try to develop that protocol partnership really on who's in the best position to develop which project and let's move forward.

MS. DELISI: Our goal should be that we should be both on the same side of the table, not on opposite sides of the table.

MR. RUSSELL: Now, the one minor caveat -- and I'm sure Bob Jackson is in the audience -- we are living under Senate Bill 792, and I think what Bob would tell me is that to do that we still must agree, the first step would be to agree on those business terms, but there are only three: toll, toll escalation, and scope. And in the case of Dallas-Fort Worth, Michael Morris, I think, has done a pretty good job of vetting all of that and that's established already regardless who develops that project. So hopefully, that's a very quick, painless process, just three, and we move forward with a protocol agreement.

MS. DELISI: Thank you.

MR. SAENZ: Thank you, Phil.

Commissioners, moving on to agenda item 2(b), is another discussion item that's being led by James Bass dealing with financial transparency. James.

MR. BASS: Thanks, Amadeo. Good morning, commissioners. For the record, I'm James Bass, chief financial officer at TxDOT. I'm here this morning to help lead you in a discussion on financial transparency at TxDOT.

As many of you have already learned, if you want numbers, we have numbers and we have lots of numbers. We have lots of numbers for different purposes and different reasons and different documents, but over time they were developed for very specific reasons and became very focused on that one specific reason. The challenge that we have faced and continue to face is how to put all of those different numbers in context and allow our partners and other stakeholders to easily follow a number throughout the process.

And so what I want to start off with today is talk about some of the different documents that contain some of this financial and planning data, how they relate to one another, some of the challenges we've heard, open it up to certainly get your comments, your concerns, and ideas and concerns that you've heard from others, and then if you'd like, update you on some of the things that we're doing and get your ideas on other things we could be doing to improve that process.

Just quickly, some of the major financial planning documents of the department include the Unified Transportation Program, the UTP that we've talked about the past couple of months. In addition to that, there's the STIP, the Statewide Transportation Improvement Program; our legislative appropriations request, or LAR; the General Appropriations Act; the annual financial report; the cash forecast; and the infamous DISCOS document as well. All of these are prepared for different purposes. Some of them are in prescribed formats by entities other than TxDOT that we must adhere when we do those, so unfortunately, it's not realistic that all of those documents will have precisely the same number, however, we should be able to simply explain why those documents have different numbers and how they relate to one another.

One of those -- just in the simplest format why they wouldn't have the same number -- the cash forecast that we do is for the entirety of the State Highway Fund, our appropriations request is for TxDOT's piece of that. So just in that simplest, basic format, those are going to be different numbers because they cover a different area, a different context.

It appears that the focus and interest of our local partners is on the planning documents, the UTP and the STIP. The UTP, as a reminder, is the eleven-year planning document of the department; the STIP is a federally required planning document, financially constrained for four years. One of the issues historically is that the UTP has been over-programmed. In an effort to ensure a minimum amount of projects are developed and ready to go to letting in a year, that planning process has put more in on the front end of the process to try and ensure that the minimum amount is reached each year. That is not a definition of financial constraint. The STIP, the federally mandated, four-year program, has a financial constraint, and so historically, even those two planning documents have had differing numbers in them.

The focused interest of the legislature obviously is on the appropriations request or the General Appropriations Act, and how the UTP feeds into that and how that's reported and reflected in our cash forecast. Again, the UTP, the eleven-year planning document, really focuses on letting and the award of major highway contracts, be they for added capacity or for major maintenance. And so it's a limited focus of the responsibilities of the department, it's that highway contracting piece, and it's letting. The appropriations request includes everything that the department does, it includes Vehicle Titles and Registration, Motor Vehicle Division, Auto Theft, Public Transportation, all of the other important functions the department carries out. So there's a difference there in the scope of the two documents.

The appropriations request and the Appropriations Act are budgeted by cash expenditures. The UTP is limited by the letting dollars, the contract awards we plan to do in a particular year. Why that disconnect?

One of our major partners, of course, on the contracting side is the Federal Highway Administration. The dollars that they give to states through their process every year is controlled and managed by an obligation authority, not a cash expenditure, an obligation authority: how much they will agree to participate in contracts in a particular year. Our internal process has matched that federal process to ensure that we get that $2-1/2- $3 billion a year from our federal partner, but that has created a disconnect, if you will, between the UTP planning process and the budgeting process.

So that's just a very quick overview. One of the things we've done in the past couple of months, when you approved the planning targets in the UTP, those were financially constrained dollar amounts and did not include an over-programming allocation. So the historic disconnect, if you will, between a financially constrained STIP and an over-programmed UTP, we've adjusted for that as best we can. So hopefully that will continue on in the future.

One of the things we're working on currently, either as a part of our appropriations request or as supplemental information, is a table showing that the payments that we're requesting in 2010, the cash expenditures that we're requesting appropriation for, to show those expenditures and how they relate to letting from different years -- so some of what we expect to spend in 2010 will be associated with letting from back in 2007, 2008, 2009, 2010 -- to try and put, hopefully, on a sheet of paper an easy crosswalk of here are the figures in the UTP and here's how they convert and show up in our appropriations request and hopefully in the Appropriations Act.

That UTP document becomes the planning document not only for TxDOT but for our regional partners, the MPOs. One of the things that's been difficult is standard management reports so all parties have access to the same set of information so everyone knows what their current allocation is. Currently, on a legacy system -- meaning a main frame system, some 20 years in the past developed -- in order to see what a district or an area has available to them in a particular category, they'd have to run several reports. They'd have to run one for fiscal year 2008, one for 2007, one for 2006, and backwards to see how much is truly available.

What we've begun, in working with our Automation Division, is taking that database and using some of our budgeting software to try and put that in a browser-based environment, more of a point-and-click environment, to show here's all the funding you have available in 2008, here's the source of it, it will be aged so you can see this money originally came to me in 2006 or 2007. But you'll be able to see on one sheet the total amount that's available to that region or that district in a particular year, and then track against that the planned projects for that year, the engineer's estimate for those planned projects, and how that relates to the funding they have available, replace that planned dollar amount once we receive the low bid, if there's a change order on the project, charge that change order against that allocation, moving forward, and hopefully, to put in one central location all of the data that people are interested in that they can all have access to so there's not different sets of numbers, potentially, dealing with the same issue.

At this point I'll be quiet and open it up and see what concerns or issues members of the commission may have.

MS. DELISI: Members?

MR. HOLMES: James, does the hardware have the capability of making the changes within somewhat reasonable time frame?

MR. BASS: I believe so and hope so. One of the things, when this moved over in the transition, the reorganization under Amadeo's leadership, the group that oversees this planning system was already working with our Automation Division to create a central database, and so they've already been working on that and made a lot of progress on it.

What we're attempting to do right now is take software that we had for our operating budget system and apply it to that database to generate management reports, and in two minutes there's a walk-through of the progress that they've made so far. So we're hopeful that there's going to be a quick win that we can do that. I don't know that that is a long-term solution, it may be an intermediate step, but I think we'll be able to get the data to the interested parties in an easily understood format in a point-and-click environment rather than having to log onto a main frame and submit batch projects and waiting for that to run.

So yes. Not 100 percent sure, they're actually looking at the latest round right now in a couple of minutes to see how much progress they've been able to make in the existing systems.

MR. HOLMES: I know in the past a request for financial information had taken extremely time periods to generate the answers to, and it was always my understanding that the limitation was basically a main frame system that had to be programmed specifically for a given request, and so it would take weeks, months to get information out of the system, and I'm concerned as to whether we have an updated, modern system that can generate the financial data that we and our constituents need.

MR. BASS: On the accounting system, the financial system, it was developed and programmed in the early '80s before anybody had ever heard about bond proceeds being utilized at TxDOT. I think the light switch was turned on in 1984 or 1985. It's a good case/bad case. It does the reporting requirements that need to be done, it reports accurate information to the comptroller's office, Federal Highways and others. The difficulty it has as a main frame, legacy-based system is getting that information out to the managers to be able to use on their day-to-day decisions in an easily understood format. That is the challenge that it's run up against. We're looking at opportunities, again, kind of a shell over that database, but it is a challenge, and to update that financial system is a huge undertaking, both dollar amount, time resources, obviously very important with the dollar amounts we're talking about.

Concurrently, the comptroller's office is going through and there's a statewide accounting system that they're going through and updating and modernizing and we're looking at is there an opportunity for TxDOT to be fully integrated as a part of that, or as we currently are with the statewide system, we're a reporting entity. And that's because to get the $2-1/2-, $3 billion a year from the federal government, we have to track it at project level. Well, the statewide system doesn't track at that project level so we just report summary data to them.

So I guess the bottom line answer, it's doing the minimum amount that is needed. Is it a modern, up-to-date, here's the question, here's the data snap? It is not.

MR. UNDERWOOD: James, when you sit there and say that the comptroller takes figures basically different than what we send to the feds. Is that correct?

MR. BASS: No. It's a different level of detail. When we send to the Federal Highway Administration, we send at a project level because when the Federal Highway Administration agrees to participate in a project, it is a specific project from Point A to Point B. And so when we invoice them for their participation, it has to be at that project level.

MR. UNDERWOOD: But that's not what we actually spent that year. Is that correct now?

MR. BASS: Well, unfortunately, as the overly-anal accountant, I'd have to ask what do you mean by spent: do you mean cash expenditures, expenditure of resources.

MR. UNDERWOOD: Right. When we report to the comptroller, we're talking about we've spent so much this year, yet the project may be a million dollar project but we've only spent $250,000 of it.

MR. BASS: Correct.

MR. UNDERWOOD: But that gets very confusing for the legislature when they're trying to track it and they see one figure over here saying here's a million dollar commitment, over here we say we spent $250- and it's going to be so many years.

MR. BASS: Right. And then there's another confusing point but it's what we deal with. The annual financial report is more of a time base when the expenditure was made closer to a cash-based expenditure. The document that most people are familiar with and focus on is the budget. Well, the budget is based upon when you receive the good or service, not when you had the expenditure. So the overused example is copier rental in the month of August. Well, you have copier rental in the month of August but you don't get the invoice until sometime in October and you make the payment in late October, early November. The expenditure shows up in the annual financial report as an expenditure of cash in year number two, but in the budget because you received that service in year number one, you charge it back to year number one.

So there's a reporting difference that the comptroller's office, Generally Accepted Accounting Principles, GASB require us to do in the financial statements, and there's a reporting requirement that the legislature, through the LBB, requires us to do as part of the appropriations request.

One of the difficulties is, I think, most state agencies operate out of the General Revenue Fund, TxDOT, by large part, does not. We operate out of the State Highway Fund, we're the primary user of it, so we are tasked with developing and preparing the financial statements for the State Highway Fund. So we have two sets of data; most other state agencies, they only have one, they're not preparing an annual financial report, they are a piece of the overall financial report prepared by the comptroller's office and there's no link between them.

We are somewhat unique in that we are tasked with developing that financial report for all of the State Highway Fund and we have our appropriations request, and so I think it's natural for people to think those should be the same number, and they're not. Number one, annual financial report is for all of the State Highway Fund. We report activity by DPS, attorney general and others because that's what we are tasked with doing. Our appropriations request just deals with TxDOT. So a lot of those are because of the prescribed formats that we get from other entities, but we should be able to, I think -- hopefully better than I just did -- easily explain why those are different documents and why the numbers are different because they've been prepared for different purposes.

MR. UNDERWOOD: One other question. On the point-and-click, could you elaborate on that, I mean, when you say point-and-click. Well, that's not fair to you. What I'm really saying is my vision of point-and-click is you have to go to this menu to get this, go to this menu to get this, go to this menu, and then you finally get your Big Chief Tablet out and write down all that information and then you can total it up. Isn't that going to be what's going to happen at this point in time?

MR. BASS: No, that's definitely not what we want. What's happening currently at this point in time, people have to log on to a main frame system, so they're typing in their login number, their user ID, pulling up a different job, submitting it, waiting for that job to run, then going through the different files, then printing it out or exporting it.

What should be is -- and I won't use, I'm sure, the IT correct terms -- but whether it's the financial system, FMS, or the planning system, DCIS, it should be that data is put into one single database, data source, and what I would envision is a menu of these are the different data elements that are in that data source. So if I want a report and there's 25 different data elements, I'm only concerned about three of them. So each of those 25 would be listed with a little circle next to it and you'd click, you know, one, two, three, these are the three I want; I want the primary sort to be this one, I want this field to be the secondary sort, and this one, by default, would be the third one. And you'd click A Run Report@ and it would run the report, it would come up on your screen; if you wanted to print it out, you could print it; if you wanted to save it, you could save it to a PDF format.

MR. UNDERWOOD: But if you're someone on the outside and you want to track what's going on in your region, you're going to be doing a lot of clicking, James.

MR. BASS: Well, I think on that one, since there are fewer options, I think it would be for a particular district within a particular year, here are all the various categories in the UTP, 1 through 12, and on a summary sheet, say Houston District: in 2008 this is how much I have that was allocated to me and available in Category 1, 2, 3, all the way through 12, this is what I've committed out of that, and here's my remaining balance.

Then if you wanted to drill down and say that's interesting, that's kind of the district-wide level, I want to see the activity within Category 2, well, then on that same sheet on the screen you ought to be able to click on Category 2 and it pull up the details. Okay, your total in Category 2 was $50 million; well, $30- of that came from your 2008 allocation and maybe $20- of it was left over from '07. You ought to be able to see that quickly just by pulling up that one sheet for a total of $50-. Well, then I've committed $35- of it, how have I committed that $35-? It should list the projects and/or change orders -- the initial letting/awarding of the contract and any change orders where you've utilized that Category 2 funding, transaction by transaction, that adds up to $35 million.

MR. UNDERWOOD: How many menus are you going to be going through and pages to be able to get that information?

MR. BASS: In that format right there, it would be two, and if you knew that you wanted the detail for Category 2, you could select a specific report for that so you wouldn't have to go to the district-wide summary and then drill down, you could go straight to that detail for Category 2 if that's what you wanted. If you just wanted to see a summary for the district, you'd run the summary, and if by looking at that summary it raised a question in your mind that where did this $50- come from, I don't remember using $35 million, what are the details of that, you'd be able to click once on that category and get the detail of the transactions. So at most, it would be an intro, summary screen and then jump to the detail for that particular category.

MR. UNDERWOOD: Thank you.

MS. DELISI: It's pretty clear to me that given the situation we find ourselves in, the agency finds itself in right now and the difficult discussions that we're having to have on the financial side of things, that the more transparent and the more readily available not only to the agency and not only to the commissioners, but to the legislature and the public, all of that data is, the better off we all are, the more productive the conversations would be. And I think that we have to explore ways to make that data more readily available to the public. It's no question it's a complicated subject matter, but I think there's a lot more that we can do and that we can, as a commission, explore about getting that data out there to the public, to the legislature, to the MPOs, to our partners so that there is the public trust that here are the numbers, they are what they are, and we're going to make the decisions off the same set of numbers.

Here's what I'd like to propose, commissioners, on this, and going back to the previous discussion item we had on market valuation, is I'd like to set up a couple of subcommittees of commissioners to take on these tasks, to delve deeper into these issues, and to report back to the commission on a regular basis.

So first, on financial transparency, Fred and Ned, if you two would be willing to take that on, understanding that the overall goal is complete financial transparency of the numbers of the agency and making them readily accessible to the public, to the legislature, to anybody who wants them when they want them.

And then going back to the discussion on market valuation -- I think we had a good discussion and there was a lot of agreement that we need to move forward, so Ted and Bill, if you would be willing to take that on, I'd appreciate it and we can just get moving, get it done. Sounds good.

Okay, so that's great. Let's move on then.

MR. BASS: Thanks.

MR. SAENZ: Thank you, Madame Chair, and staff will start working with our commissioners on both of these items so that they can prepare reports and come back to the commission at a later date.

Moving on to the next item, agenda item number 3 is our Regional Report from the Dallas-Fort Worth Partners in Mobility. This is their 14th year, and the Dallas-Fort Worth Partners in Mobility have always been kind of on the leading edge or the cutting edge and have been the most proactive in the development of the transportation system for that area, and we look forward to their presentation.

MAYOR LEPPERT: Good morning, Madame Chair, members of the commission, and Director Saenz. I'm Tom Leppert and I have the privilege of serving as the mayor of Dallas, Texas. I'm proud to kick off our 14th annual Dallas-Fort Worth Area Partners in Mobility presentation to you, the Texas Transportation Commission.

We're particularly excited about the timing of our appearance this year as this is also an opportunity for us to greet and welcome the two newest members of the Transportation Commission. Chairman Delisi and Commissioner Meadows, welcome. We know that you'll do a terrific job. We are here today to pledge our support to both of your, to the entire commission, your staff, and to renew our commitment to partnership with you collectively and with each one of you individually. This partnership has resulted in a longstanding and successful relationship between the Dallas-Fort Worth area transportation leadership and this commission.

Our Partners in Mobility coalition is represented today by elected officials, city managers, chamber, business and civic leaders and transportation professionals throughout North Texas, each dedicated, like you, to improving our transportation system. We take great pride in this collaboration that is occurring in our region today. I would like for our delegation to please stand and be recognized, if you would. We're here to inundate you. Thank you to each member of the delegation for being part of this 14th annual presentation.

Now, through the combined efforts of our state leadership and this commission, we have been provided new opportunities to address the transportation and infrastructure financing needs that are facing our region. All of us are determined to make the most of these opportunities. We're focused on getting projects funded and then to get to construction. I have personally committed to advance the Trinity Parkway in Dallas, a very important effort in the entire region. Our presenters today will summarize the status of the most significant regional projects.

The challenges associated with building new infrastructure in our metropolitan areas, particularly transportation infrastructure, are indeed daunting. The state of Texas continues to grow. In North Texas we're adding an average of 150,000 residents annually -- 150,000 residents annually. We grew faster between the years of 2000 and 2008 than any period in our prior history, adding over 1.2 million -- 1.2 million people during this period of time. Dallas-Fort Worth is now the fourth largest metropolitan area in all of the country, and despite national economic uncertainty, we continue to see stable growth in our regional economy.

This growth, however, continues to outpace available resources. Traffic congestion on our region's major arteries is growing. Finding solutions to this growth is complicated by the fact that traffic congestion is growing most rapidly in the areas of our region that are not yet served by rail, and while we continue to improve our air quality, the federal standards continue to increase and achieving compliance becomes more and more challenging.

Nearly 6 million North Texans living in the ozone nonattainment counties are exposed to unhealthy air during periods of elevated ground level ozone which, of course, increases respiratory-related illnesses, human suffering, and of course, economic costs. Mobile sources contribute roughly three-quarters of the nitrogen oxide emissions in our region which is the primary pollutant that leads to the formation of ozone.

In order to combat these emissions, NCTCOG has implemented numerous air quality programs, such as the Air Check Texas Program, the Texas Emissions Reduction Plan Partnership Program, the Regional Transportation Council's Clean Fleet vehicle policy, and locally enforced idling restrictions which, of course, are targeted at reducing emissions from key air quality emphasis areas including high-emitting vehicles, diesel engines, and excessive idling.

Now, meeting our mobility challenges is also being hindered by increased costs and the erosion of transportation revenues. With the inflation in the heavy construction industry -- that you mentioned a moment ago -- increasing at a record rate of 10 percent per year, the continued diversion of transportation revenues from Fund 6 to other programs, and the lack of political support for increasing revenues, we have a crisis of not being able to build and maintain our transportation system.

These constraints on improving transportation elevate the importance of staying focused on your five goals for improving the transportation system which we fully endorse. We in North Texas are focused on decreasing congestion, increasing safety, reducing air pollution, enhancing economic activity, and increasing the asset value of the transportation system. If we are going to sustain our region, we need to build innovative financing techniques, build a balanced transportation system, extend the region's passenger rail system, manage freight traffic more efficiently, improve safety, and integrate land use in transportation decisions.

We will continue to work with our federal and state legislative partners to bring our transportation funding needs to the forefront of their legislative agendas. However, meeting this challenge will take more than additional funds. Addressing this challenge will require leadership, innovation and continued emphasis on strong partnership among all of the transportation agencies and communities. These partnerships must be embedded in the principles of better communication, greater transparency, flexibility in approaches and trust based upon an understanding that we are all striving to achieve the same mission of improving the mobility for everyone of our citizens.

The focus of our presentation today will be on our efforts to expedite the funding and construction of our region's transportation system.

Now let me turn our presentation over to Mayor Trevino. Mayor.

MAYOR TREVINO: Tom, thank you very much.

Good morning, commissioners, Madame Chair, Mr. Saenz. I'm Oscar Trevino. I'm the mayor of North Richland Hills and chairman of the Regional Transportation Council which is the MPO committee for the Dallas-Fort Worth region.

I'd like to first congratulate our new chair and our new commissioner, and I want to thank you, and I want to thank you for taking on the tasks that are ahead of you. To the sitting commissioners, thank you for rising to the challenges that you face also.

The MPO policy committee for the Dallas-Fort Worth region wants to take the opportunity this morning to highlight the status of passenger rail funding and the implementation of that in North Texas. The debate as to whether our communities want rail service or if North Texans will ride the rail has long passed. Today we're focusing on securing funds and constructing 400 miles of additional rail in North Texas.

Our light rail system in Dallas has been expanded to 45 miles, carrying 61,000 riders daily. In the US 75 Central Expressway corridor from Plano to downtown Dallas, light rail cars are standing room only during the peak period and carry the equivalent of a four-lane freeway. On the Trinity Railway Express, running between downtown Dallas and downtown Fort Worth, daily ridership has grown to 10,000 individuals. Our commuters are responding to higher fuel prices. Available surface parking, which we are trying to address, has become the primary constraint on serving additional riders in the TRE commuter rail corridor.

Looking forward, rail service is expanding by 150 miles with all three of our transportation authorities working towards additional rail service in multiple corridors in the very near future. The Dallas Area Rapid Transit, the DART, has begun construction on the 28-mile, $1.8 billion Green Line running from Pleasant Grove southeast of downtown, through Fair Park, downtown Dallas, and then northwest serving Irving, Farmers Branch and Carrollton by 2010. This project will relieve traffic on the Interstate Highway 35-E NAFTA Corridor. The DART Orange Line will split off from the Green Line near Love Field and complete the critical link to DFW International Airport by 2013. Also by 2013 will be the extension of the Blue Line to Rowlett.

The Denton County Transportation Authority, DCTA, is bringing regional rail south from Denton, serving Lewisville, with plans to connect with DART in Carrollton by 2010. The rail DCTA line will also provide needed capacity in the heavily congested Interstate Highway 35-E Corridor and it will serve as a vital link for the transit commuters between our northern tier cities and the DART light rail system. This project will be funded in part with revenue from the State Highway 121 toll project.

In the western part of the region, the Fort Worth Transportation Authority, the T, is moving ahead with the completion of the environmental planning process on the 40-mile southwest to northeast regional rail corridor serving the Fort Worth hospital district, downtown and then on to northeast Tarrant County, through North Richland Hills, Haltom City, into Grapevine and DFW International Airport. The Texas Mobility Funds being provided by the Texas Transportation Commission for the project are essential for the completion of this corridor into DFW Airport. As part of your current UTP development process, you have permitted the continued commitment of these funds for this effort which the region greatly appreciates.

A mandate of the RTC is that the three transportation authorities implementing this rail service in North Texas must provide seamless service.

Local governments in North Texas are working to coordinate land use investments with the implementation of rail service. We now have a multitude of transit-oriented developments being built by the private sector throughout the region. I, personally, am particularly proud about the commitment by our Regional Transportation Council to program more than $80 million toward sustainable development initiatives and the level of interest we are seeing in the commercial and residential real estate markets in response to this rail construction.

While we are making tremendous progress on implementing our rail system, we still have a long way to go. We have 250 miles of needed rail network without the available funding. We are striving to get out ahead of anticipated growth. With an additional 3 million people coming to our region in the next 20 years, it's imperative that we have a regional rail system in place that will give commuters options and influence more efficient land use.

Throughout our presentation today, we will discuss funding challenges, not just for rail but for our entire transportation system. Our Regional Transportation Council is working closely with a group of North Texas elected officials and private sector representatives to look at transportation funding strategies. This is being chaired by Councilman Jungus Jordan of the City of Fort Worth, and Vice Chair Linda Koop from the City of Dallas. Through the use of financial planning tools developed by our MPO staff, we have evaluated hundreds of financial options in order to advance revenue packages with our state legislators this summer prior to the 81st legislative session. We're hopeful that this process will lead to a consensus.

Let me now turn the presentation over to my RTC colleague, Commissioner Mike Cantrell. Mike.

MR. CANTRELL: Good morning, Madame Chair, commissioners and Director Saenz. I am Mike Cantrell, commissioner from Dallas County and chairman of the Dallas Regional Mobility Coalition

In North Texas, despite some difficult challenges, we are making the most of funding tools the legislature has provided to finance and build transportation projects. We recognized the impending funding constraints more than a decade ago and have a long history of supporting toll roads in North Texas. The North Texas Tollway Authority operates more than 60 miles of toll roads with more than 1.4 million tag users. NTTA will soon complete improvements to the Oak Lawn, Wycliff, Cedar Springs, and Mockingbird toll plazas at the south end of the Dallas North Tollway which will greatly improve bottlenecks at these locations. The President George Bush Turnpike and the Dallas North Tollway are very successful but are congested and need expansion. Toll roads have become a vital component of our region's transportation system and will continue to play an increasingly important role.

Planning, interagency cooperation and the continued commitment for new toll construction have played a key role in our success. In 1993, the term A fiscal constraint@ became an integral part of our metropolitan planning process. The Regional Transportation Council mandated that all new freeways on rights of way be evaluated for tolling. Since that time, the NTTA, working with TxDOT and our local governments, has forged ahead with construction of numerous facilities including: the President George Bush Turnpike; the Addison Airport Toll Tunnel; several extensions of the Dallas North Tollway; and portions of State Highway 121 in Denton County.

Three additional toll roads are under construction in the region: the Lake Lewisville Toll Bridge, scheduled to open in 2009; State Highway 121 in Collin County, scheduled to be open by 2011; and with your assistance, a portion of the State Highway 161 in Grand Prairie will be open in 2009, with the remaining southern segment to Interstate Highway 20 open by 2012.

We have five new toll roads on the immediate horizon and are working at the local, state and federal levels to get these projects delivered. These toll facilities include: State Highway 121/Southwest Parkway in Fort Worth and Johnson county; State Highway 170 in Tarrant and Denton counties; State Highway 360 in Arlington, Grand Prairie and Mansfield; the Trinity Parkway in Dallas; and Loop 9 in southern Dallas County. In addition, we are moving forward with the President George Bush eastern Extension in Rowlett and Garland, and are extending the Dallas North Tollway to Prosper and Celina. The resulting network of current and planned toll roads is an integral part of our future transportation system.

Our recent experiences in the development of State Highway 121 in Collin, Dallas and Denton counties, and State Highway 161 in Dallas County illustrate that tolling and innovative finance tools provided by the state legislature, and supported by this commission, can play a significant role in addressing our collective funding crisis. Up-front revenues provided by these toll corridors now exceed $3.3 billion. Working with TxDOT, NTTA, our transit authorities and local governments, these funds are being allocated to expedite the construction of managed HOV corridors, regional rail, critical high volume farm to market roads, gas tax freeways, and intersections. These funds are being programmed to projects in the counties where toll road users reside, allowing for the construction of needed projects long before traditional transportation revenue would be available. This initiation will save millions of dollars in inflation costs and provide immediate mobility and air quality benefits.

And I'll now turn the presentation over to my distinguished colleague, Mike Baggett.

MR. BAGGETT: Thank you, Commissioner Cantrell.

Good morning to all of you. My name is Mike Baggett. I am chairman emeritus of Winstead Law Firm. I'm not here on a fee-paying basis, I'm a volunteer, like many of you are, and I'm here today representing the Greater Dallas Chamber.

The challenges brought on by our dramatic growth and limited financial resources require that we seek innovative transportation solutions in our major travel corridors. The companion effort to new toll road construction in North Texas is our managed HOV lane system. Recognizing the constraints of financing, limited right of way and overwhelming traffic growth along many aging radial and loop corridors, we have to be smarter about the design and operation of our freeway system. In response to this challenge, our region is moving forward aggressively with the new implementation of managed HOV lanes in virtually all of the freeway corridors now being reconstructed with added capacity.

Recently, HOV lanes were opened on IH 635, US 75, IH 30, more than doubling our current HOV system. Because we are nonattainment for polluting ozone, these lanes will allow us to move more people in the corridor with fewer vehicles, thereby not only reducing congestion but also improving air quality.

The planning, funding, design, construction and implementation in this managed HOV system requires full and complete cooperation between our MPO, TxDOT, NTTA and our transit authorities.

Funding for the reconstruction of our major freeway corridors is a huge challenge and we commend TxDOT and the commissioners for your efforts to move forward on the use of comprehensive development agreements. In 2006, the Regional Transportation Council adopted business terms for managed lane CDAs. Should, at some point in time, excess revenue be produced on these facilities, the Regional Transportation Council has adopted a managed lane excess toll revenue policy that would distribute revenue back to the county in which the managed lane facility is located and would be used for air quality and substantial development programs to leverage federal transportation funds.

We have three critical projects on the horizon which are included for funding in your draft 2009-2019 UTP. The first of these projects is the North Tarrant Express which includes the expansion of Interstate Highway 35-W, Interstate Highway 820, and State Highway 183 in northeast Tarrant County. This project is vital to improving mobility in this part of our region in which transportation improvements are lagging desperately behind dramatic growth.

The second of these near-term projects is the DFW Connector which includes State Highways 114 and 121, formerly known as the Funnel in Grapevine. Nowhere else in our region do we have the impact of six freeways coming together in proximity to such a strategic location: the northern entrance of DFW International Airport.

The last of these current managed lane projects is in the region's most congested area: the IH 635, IH 35-E and the Loop 12 corridors in northern Dallas County. This system improvement will greatly aid pavement scores, air quality and system reliability. Pavements can be maintained for only so long and project construction that includes rehabilitation is a critical component of our region's ongoing maintenance program.

All three of these corridors are now in the TxDOT CDA procurement process and require funding from multiple partners to become a reality. The region stands ready to work with you and TxDOT staff to get these projects and future managed HOV lane corridor projects built as quickly as possible. Our metropolitan transportation plan calls for a fully integrated, region-wide system of toll roads and managed HOV lanes.

Now let me turn the podium over to Bill Conley, representing the Fort Worth Chamber of Commerce.

MR. CONLEY: Thank you, Mike.

Good morning, commissioners, Madame Chair, Director Saenz. I'm Bill Conley, the president of ATC Logistics and Electronics in Fort Worth. I also recently volunteered and was appointed to the TxDOT TTC I-35 Advisory Committee and honored to be on that, but I'm truly honored to be here this morning on behalf of the Fort Worth Chamber of Commerce. There are two strategic regional transportation initiatives of critical importance to the Fort Worth business community and the entire region that I would like to discuss with you this morning.

A reliable, cost-effective transportation system that provides for timely freight delivery, as well as access for our customers and our employees, is vital to business. Highway congestion affects all traffic but freight shippers and freight consignees are particularly vulnerable as on-time business operations must have a reliable transportation system. With international trade on the rise, delays and costs will continue unless we establish innovative solutions and strategies to implement to improve the overall transportation system.

We are the nation's largest metropolitan area without direct access to a seaport. Hence, we must rely on rail, trucking and aviation to move freight in and freight out of the region. The Dallas-Fort Worth area clearly is in a unique position located on the crossroads of the nation's aviation, rail and interstate highway networks, and those networks contribute greatly to the economic growth and prosperity to these systems. While our region certainly needs more highway infrastructure -- and we're all aware of that -- we also need a strong rail and aviation system. Addressing the freight rail needs is a high priority in North Texas and there's no more pressing need than finding a solution for the train congestion at Tower 55.

Located directly adjacent to Fort Worth, approximately 120 trains intersect daily at this location, making this the one, if not the most, congested rail crossing in the United States. With forecasts for continued growth, both for Wyoming trains en route to Texas generating stations along the Burlington Northern North/South lane, and for intermodal container shipments on the East/West Union Pacific Line, this problem will only get worse. We must find a solution to the Tower 55 rail crossing, not just to move freight efficiently and effectively, providing for future growth, but also to improve the safety, security and air quality at this major rail bottleneck. And I truly invite you to come visit this location if you've not seen it.

In response to this need, the MPO, in partnership with TxDOT, local governments and rail providers, have undertaken a detailed engineering analysis of Tower 55 to develop a preferred alternative and environmental assessment for improvements. Four alternatives are currently under consideration. While none of the options are without challenges and costs, by the fall of 2009 we plan to have a preferred alternative in place. Anticipating this opportunity, we will be working with you and the statewide coalition to fund this and similar improvements in Texas. The use of public-private funding is just one of the mechanisms we are looking at to expedite undoubtedly what will become a very expensive solution.

Solving the Tower 55 dilemma is only one of the challenges we are facing in regards to goods movement in the region. We need bypass routes to move freight thru shipments out of the metropolitan core, we need to build additional rail capacity to handle the anticipated growth, and we need to free up existing rail line capacity for regional passenger rail service. To that goal, the Regional Outer Loop is a 240-mile, multi-modal, toll road/truck/rail bypass facility and utility corridor that is being planned for Dallas-Fort Worth to address these issues.

With trucks making up nearly 30 percent of the traffic on Interstate Highways 20, 35 and 45, finding options for moving a portion of these truck shipments around the perimeter of the metropolitan area is a high priority. As a result, the potential for dedicated truck lanes as part of the outer loop design is being pursued. Clearly, for all of us, moving hazardous commodity shipments for both truck and rail to the perimeter of the region also needs priority.

Loop 9, located in southern Dallas County, is the first segment of the regional outer loop nearing its final stages of the environmental process. The draft EIS for this portion of the corridor has been submitted to TxDOT and to the Federal Highway Administration and it is the segment that is ready for construction.

The regional outer loop is warranted to meet the mobility needs of North Texas. However, and maybe more importantly, connecting the Regional Outer Loop with the Trans-Texas Corridor will ultimately serve both our region and the great state of Texas. Your continued support for these efforts will be needed.

Now, it's with pleasure, I'd like to turn over our presentation to Judge Whitley to focus in on transportation funding issues. Thank you.

JUDGE WHITLEY: Director Saenz, commissioners, Madame Chairwoman, it's a pleasure to be here today. My name is Glen Whitley and I'm the Tarrant County judge, and I'm here this morning to discuss transportation funding issues.

You've heard throughout our presentation that we believe that we're facing a crisis in transportation funding, but we continue to construct new facilities through leadership and innovation. The past three sessions of the Texas Legislature have produced meaningful transportation bills, and our region would like to thank you for your leadership in the process.

As the previous speaker showed the slide of the loop around, I'm reminded of the meeting we had, I guess it may have been two years ago, where you kept waiting for us to talk about the donut so that the bells could ring and everybody could bring in the Krispy Kremes, and we've had a lot of great, I think, meetings, and we have come up with a lot of new and innovative ideas.

We believe that Texas, and particularly our region, is at the forefront of using innovative financing tools to address the transportation needs. Despite our best efforts, though, we're projecting a $108 billion shortfall in funding needed to maintain mobility in our region over the next 25 years. As, again, we've heard earlier, time is our enemy. Just a few short years ago, we were talking about an $85 billion shortfall, and what has happened in just a matter of a couple of years is we've had a 25 percent increase in costs. We have got to begin finding a way to get to the construction stage sooner.

As Mayor Trevino highlighted earlier, we continue to look for additional funding sources, the majority of which focus on local options. Citizens of our region have shown a remarkable commitment to fund transportation improvements, whether through sales tax for transit, additional toll roads, or support of local transportation bond programs. We estimate that nearly 70 percent of the funding being spent on regional transportation improvements today is coming directly from local sources. However, I will tell you, as a local elected official, I can assure you that none of the additional revenue options we're considering will be welcomed by our citizens.

However, we do believe that our citizens will support these options if we can assure them that several critical areas have been addressed. In the past, as we adopted the toll policy, you formulaized the money coming out of the new construction areas, we were able to assure them that we would not lose new construction money if we agreed to more tolls. I believe that the first and most foremost is that we must halt the diversion of collected state transportation revenues for non-transportation purposes. These maneuvers have added up to billions of lost dollars for transportation in the past. Our legislative agenda for the upcoming 81st legislative session will again focus on this key issue.

Second is our lost share of collected transportation revenues at both the state and federal level. We recognize that some sharing of revenue is needed to maintain and connect transportation systems, particularly in support of the rural areas, but the historical return of federal funds to Texas and state funds to our region is making the job of suggesting additional fees and taxes for our residents more difficult. We need the state to stand by the earlier commitments, that you heard referred to by Mr. Baggett, of our three managed lane projects, but we also ask that you develop formulas for the future so that we can count on dollars coming to the region and then we can go out and ask our citizens to help pay for the estimated shortfalls.

The decision to invest locally in our regional transportation system by using sales tax for passenger rail, tolling for many of our roadways, especially at this time of soaring gas prices, we have to ensure our residents that the revenues generated by toll roads in the North Texas area will be spent in the North Texas area.

This is why I and so many others on the Regional Transportation Council are adamant about the immediate return of the up-front toll concession money and the accrued interest -- and I always keep adding and the accrued interest because since that money was sent to Austin in November, even if you use the most conservative estimates, it will have earned, by today, over $40 million. That can help us a lot in our region and it is essential that we get that back.

If we lose any of those funds for other purposes, for whatever the purposes may be, our credibility on the issue is lost. We have said to our citizens that that money will stay in the region; it must stay in the region. If we lose that, even a worse effect will be that we will have lost the opportunity or any hope of gaining their support as we ask them to look at other local options for revenue strategies.

We understand that your staff is developing the 2009-2019 Unified Transportation Program. You've heard from us today about many of the critical projects in our region that we will likely be funding through this UTP process. We appreciate the consideration that you will give toward partnering with us to expedite construction of these projects.

We believe we are having success with administration of the Regional Transportation Council's local funds by our MPO for air quality and for sustainable development projects. Our commitment to our member cities and transportation agencies is that we will help expedite the implementation of these needed transportation improvements by reducing the time needed to build the projects, by avoiding the traditional state and federal review processes. We hope that you will look at our experience in this area as a continued opportunity to expedite not only projects within our region but throughout the state.

As you face sunset review, we stand ready to support TxDOT in this process. One of the overriding comments we are hearing is the need to be more transparent -- you've talked about that today -- not only the decision-making process but also in the funding and in the available funds. This not only applies to TxDOT but to all of us in government service. This is particularly important as we go about the business of seeking additional funds for needed transportation improvements.

In the Dallas-Fort Worth area, we take great pride in our region's ability to come together as partners to solve our transportation problems. Throughout this presentation we have stressed the continued importance of partnerships. Without question, the debate concerning the financing, construction and operation of State Highway 121 and 161 tollways in North Texas has created a competitive environment between TxDOT and NTTA. We've found that we've often placed the MPO staff and members of the Regional Transportation Council in a perceived role of supporting one institution over the other.

The market valuation process -- which was talked about earlier and set out in Senate Bill 792 -- has contributed to frustration and a loss of productivity among all of our agencies. We must recommit ourselves to partnerships, partnerships that are based on communication, transparency, flexibility and trust. I truly believe that we are entering a new era of transparency and partnerships with you, with NTTA and with the region.

At this time I'm going to turn the podium over to Mayor Mike Moncrief to complete our presentation.

MAYOR MONCRIEF: Glen, thank you very much.

Madame Chair, welcome aboard. Certainly you join some distinguished company, and my deepest sympathies that you now have Bill Meadows to deal with, but I can assure you from this point on there will be no lack of humor or activity at this dais.

(General laughter.)

MAYOR MONCRIEF: I am delighted to be here to join our partners, and you heard us refer to ourselves as a partnership. I think if you look around this room, you will see that reflected. You will hear representatives from the west part of the region talking about projects in the eastern part of the region, and vice versa. That's what a partnership is all about. It's not who gets credit for doing what, it's not a matter of spreading the blame, it's a matter of working together to try and find permanent and meaningful solutions.

But it is my pleasure to be here, along with my colleague Jungus Jordan -- who is working feverishly on the rail initiative -- to address you today. I want to, first of all, thank my fellow presenters and the members of the North Texas delegation for taking the time out of their busy schedules to join us today. Everybody has got a busy schedule, yourselves included.

I do think, though, Commissioner Houghton, that your birthday present was appropriate, and I think it should be standard issue for all mayors as well as other elected officials, and I don't think I'd have much disagreement in this room anyway.

But as you know, transportation is one of, if not the most pressing challenge of our time. The five largest metropolitan regions in Texas make up nearly 80 percent of this state's entire economy. I don't think a lot of people think about that. And if we are to maintain Texas' economic strength, then we must preserve mobility and access for the people and goods, both within and between these metropolitan areas.

The Dallas-Fort Worth area currently ranks as the twelfth largest urban economy in the entire world. That's a pretty good size economy. Clearly, the economy health of North Texas is important to our region, to our state, as well as to our nation, and that's why we must continue to use every opportunity to protect and to improve mobility in and around Dallas-Fort Worth Metropolex. Seamless, convenient and efficient means of transportation is a driving force in protecting and improving that regional economy, and I hope that you've seen, as reflected this morning, that we are fully engaged and making every effort to ensure that transportation and mobility remain top priorities of our region.

Part of our plan, as you've heard, is to greatly expand capacity for commuter and light rail, and this is, without question, the future people-mover of our region. The fact is we know, and I think you know as well, we can't build road lanes fast enough to meet the growing needs and demands of the population explosion in this state, and certainly in our region.

We have been, and we will continue to seek ways to fund and to expand the North Texas regional rail system and we greatly appreciate your support for this initiative. Specifically, we thank you for allowing Texas Mobility Funds to be used on transit projects such as access to DFW International Airport. That is a huge tool in our tool kit.

Today you've also heard about our need to improve the capacity to support freight rail services in North Texas, and we've placed a great deal of emphasis on improving the flow of freight in our region, both through the Tower 55 initiative and the Regional Outer Loop plan.

I want to add one caveat to the Tower 55 issue. This is not only a transportation issue, it's not only an air quality issue, it's not only a mobility issue, it is also a security issue, it is a national security issue. This is something that we are very concerned about, and if an incident were to occur, all rail traffic -- all rail traffic in this portion of the United States would be shut down, north, south, east and west. So this is more than just a local issue, it is more than just a state issue, it is a national security issue.

We seek your continued support for both of these critical projects. Aside from rail, our congested highway system has a great many implications for the future health of our economy. We realize that given our current financial situation, if a major highway is going to be built, it must be tolled, we get that, we understand that. North Texas leaders have been aggressive in the use of innovative finance techniques for toll road construction. We've been supportive of the use of comprehensive development agreements by TxDOT to expedite reconstruction of our extensive gas tax system and managed HOV lanes discussed this morning.

We all know that we are faced with a transportation funding crisis -- that's not new news for any of us -- and the implication of no future capacity improvements is absolutely unacceptable to any of us. We ask you for your continued support for legislative strategies and commission policies to address the issues of inadequate funding, especially with respect to allowing something that is very, very important to us local officials, and that is greater local control and flexibility.

The entire transportation community must stand firm on the need to end diversion of transportation funds to other purposes, as was mentioned earlier. Diversions limit our ability to improve mobility, safety and air quality. It literally handcuffs us from doing so. Furthermore, such diversions confuse, and to say the least, frustrate our residents who know that they're paying for transportation-related taxes and fees but they're not seeing the benefits.

In development of your new UTP, we ask that you monitor the relative levels of need of areas of the state to allocate the appropriate amount of funding to metropolitan areas. Now, we know that this is a delicate balancing act, I understand that -- having been a member of the legislature, I do understand that, my colleagues. At the same time, I remind you that metropolitan areas such as ours are indeed the economic engines of this state. As leaders in the Dallas-Fort Worth area, we have been severely challenged over the past months and years. The growth has been unbelievable and there is no indication it's going to slow down any time soon. We continue to buck all national trends, and we have literally, through the Barnett Shale, in our region received an inoculation of what's taking place on the east and west coasts with the economic impacts.

If we are to find meaningful and lasting solutions to our challenges, then we must use the right tool for the right job and the right agency for the right project. Sometimes we don't do that good a job doing exactly that. Ultimately, the decision as to what is in the best interests for this region should be left to the region. It is our hope that you will continue to allow local officials to have meaningful input into this process and to appreciate their thoughtful recommendations. They're the ones that are closest to the folks that are being affected.

Finally, you have heard today that our commitment to a renewed spirit of partnership is offered. By that I mean a continued partnership with this commission, with our legislators and among our transportation providers, including NTTA. Transportation issues facing our state and our region demand that we work together -- we owe that to this state, all of us do, to work together, not separately. And make no mistake, time is indeed of the essence. We cannot afford to waste one more moment.

So I want to thank you again, Madame Chair, for affording us the time for this presentation today. I certainly wish you the very best of luck and Godspeed in your new position. I can assure you that my colleagues and I understand the challenges of this body, we understand how big this state is and how diverse it is as well. We also know that every time you get in your car and you get on the road, you face the same issues we do. You heard one of the projects identified as the North Tarrant Express. Well, I think express is not quite appropriate, at least as yet, but we are all looking forward to that namesake becoming a reality and not just an identity.

But we certainly stand ready to address any questions that you might have and very much appreciate, again, your time, and I would ask any of my colleagues to also assist me in trying to answer your questions.

MS. DELISI: Thank you. Before we move on to that, I see Representative Linda Harper Brown is in the audience and want to recognize you and offer you the opportunity to speak if you'd like to address. No? Okay.

And one other item before we move on, Addie Smith with Senator Jane Nelson's office is in the crowd and she's got a letter to read. Please come on up.

MS. SMITH: Madame Chair and commissioners, thank you for having me here. I'm Addie Smith from Senator Jane Nelson's office, and I'd like to read you guys a letter into the record from her to you.

A Dear Commissioners, I'm proud to lend my support for the core mission of Partners in Mobility which plays an indispensable role in shaping and advancing our regional mobility priorities. There is truly no issue of greater importance to our region than transportation. It affects our quality of life, our economic development efforts, the quality of our air, our ability to transfer goods and services, and our emergency response systems.

A As chairman of the Senate Committee on Health and Human Services, I'm increasingly concerned about the impact our mobility problems have on citizens' access to healthcare. During its most recent session, the legislature authorized a substantial increase in transportation resources. Last November, Texas voters approved an additional $5 billion in general obligation bonds to meet our growing transportation needs. Additionally, the North Texas delegation agreed to exempt key regional projects from the moratorium on private toll roads, allowing our Regional Transportation Council to negotiate concession fees in exchange for the right to toll new lanes of highway.

A While I was thrilled to support those measures, there is much more to be done. As discussions continue about the best way to fund our immense transportation needs, I urge the commission to recognize that the challenges that we face in the Metroplex area have ramifications across the state. North Texas represents the strength of our state economy so our region's continued growth and development should remain a high priority as transportation dollars are allocated.

A Thank you for allowing my input today. I appreciate your services to the citizens of our state and I look forward to working with you toward our shared goal of improving transportation in Texas. Very truly yours, Senator Jane Nelson.@

Thank you.

MS. DELISI: Thank you.

Commissioners, anyone have any comments or questions of the speakers?

MR. HOUGHTON: I just want to thank you all. That was an outstanding presentation. As usual, you hit it out of the park again from the Metroplex area.

I have a couple of things that pop up. Mayor Leppert, I know that one of your focus projects is the Trinity Parkway, getting that thing done. Real quickly, Michael, is that a plus or a minus revenue generator? You can answer these questions. In our pre-market valuation.

MR. MORRIS: For the record, Michael Morris, transportation director at the MPO.

That particular project I think is still on the fence. It has a very high urban design, context-sensitive design component being its proximity to the park. We anticipate it to be a very positive project, yet to be determined. What's hurting us is the integrated environmental clearance with the hydrology and other elements, so it's difficult for us to get this project to bed. It is one of the highest projects in the region and the region stands ready if it is on the negative side. The Regional Transportation Council has already put gas tax money as a holding place on this particular project, reaching the point where NTTA and TxDOT can sit down and finish the final negotiations.

The Trinity project has to be able to proceed or we cannot make any other radial improvements in Dallas County, including fixing the downtown mix-master. So the Regional Transportation Council stands ready, if necessary, to supplement funding on this particular project. But the direct answer to your question is we still need to go through that evaluation. I know the mayor may want to add some remarks.

MR. HOUGHTON: Well, hopefully we don't have to go through the valuation.

MR. MORRIS: Well, the RTC put in place probably five years ago -- and I think the two words we can't say in this state anymore is protocol and Trans-Texas Corridor, we've got to talk about inner city improvements and new partnerships. The RTC has been handcuffed now with 792 because the plan always was for the agencies to sit down and negotiate the partnership procedures.

MR. HOUGHTON: Right.

MR. MORRIS: And after sitting through 63 meetings of 161, we're eager to be able to put in place all those projects you saw on that map and say: TxDOT, why don't you take these; why doesn't the private sector help us on these; NTTA, you've got six projects here. You know, we try to make this rocket science, this is not rocket science, this is about partnerships, as Judge Whitley said, leadership, innovation tool application, throwing your name badge away and focusing on getting the projects delivered.

I think if we're permitted to forget 792 for a moment and get back to where our legislators expect us to be, to stop fighting about these projects and start getting these projects implemented.

MR. HOUGHTON: Well, I think we can, I think we can do that.

MR. MORRIS: We're ready.

MR. HOUGHTON: Mayor?

MAYOR LEPPERT: Commissioner, first of all, I appreciate your raising that. From not only the City of Dallas, but I tell you for the entire region, I don't think this is a project that can be overstated. There are so many different elements of it that come together and I would just stress two important elements.

One, it truly is a partnership. We've talked about partnerships today. That probably is the poster child of all. We need to work with TxDOT, federal government, federal agencies, local agencies. It really is one where we need to come together and that partnership is so important. We estimate that every month is worth about $10 million to the taxpayers of the city of Dallas, the state of Texas, the United States, so it is important that we work together and we really have the cooperation of every different partner that's involved to try to compress wherever we can the time frames that are involved. We're working very closely with TxDOT, with other groups at the state level to make sure that that happens.

The second piece that I want to emphasize -- again, sometimes we think of it being in the city of Dallas -- it truly is, as Michael said, a regional project. You'll see mayors here from the southern part of the city, they will tell you that all of the transportation needs that they have, 67, 35, they're all dependent, as Michael said, of trying to address that mix-master, those issues, and that Trinity Parkway is really the first step in being able to address all of the traffic situation.

With the challenges that we have on air quality, the challenges that we have on congestion it is -- again, as I started out -- there is no way to overstate this. This is one that has to have the highest priority, we need the cooperation of literally everybody in the state to make it happen. If we do, then everybody in the state is going to be a great benefactor of it.

MR. HOUGHTON: Thank you, Mayor. Michael, stay there.

Mayor Moncrief, I understand the Southwest Parkway is the big project of yours, along with North Tarrant Express. Michael, are these plus or minus revenue?

MR. MORRIS: North Tarrant Express is probably a minus revenue project because it's a tolled managed lane in the middle with gas tax. The Southwest Parkway is two components: again, because of the context-sensitive design, north of Alta Mesa, it is probably on the negative side; south of Alta Mesa, the Southwest Parkway to Cleburne is on the positive side. Which is why your district engineer and I and others are trying to sit the parties down and create a system between the two components, plus match minus, maybe it's a way to get the project expedited.

MR. HOUGHTON: Mayor, is that accurate?

MAYOR MONCRIEF: No, I think he's very much on point. This is a project that we've been working on for 40 years.

MR. HOUGHTON: It's about time.

MAYOR MONCRIEF: That's how long ago this journey began, and I'm bound and determined to make this happen on my watch or at least get it underway. I think that certainly as our city has grown, this region of our city is slowly getting cut off. The arteries have now become capillaries and there is no blood flowing through them, and everyone has learned everyone else's capillary, to be able to try and get from Point A to Point B. So this is a major issue for us.

It also deals with the quality of life of the people who live in our city, especially this portion of our city, and being able to get emergency equipment in there. In the event we have a structure fire, in the event we need to get an ambulance in the area or police response, we can't get them in there with the kind of traffic we have. And that's why it is an absolutely critical priority for this city and we appreciate your partnering up with us.

MR. HOUGHTON: To my point, Michael, mayors, there is a way to get to them faster and it's waiving market valuation, it's getting over this we've got to go through this 63-meeting process, sitting down and getting these things done, and we can get them done through the partnership. As my general counsel says: Ted, it's not a partnership, it's a project development agreement between the entities in the region. So yes, we can get them done sooner than later. And I illustrate the two I say pet projects -- I mean important to your regions because I'm familiar with those two projects.

If I might illustrate another point -- Michael, don't leave -- somebody just said Loop 9 southern part is ready for development. Mayor, is that an accurate statement? Amadeo, Loop 9 on this southern portion is ready from an environmental standpoint?

MR. MORRIS: Commissioner Houghton, the RTC went out with STP funds to clear it, we've turned it over, it's reaching its environmental clearance.

MR. HOUGHTON: Are we close?

MR. MORRIS: Well, we're done. It's queuing up in some elements.

MR. SAENZ: Bill Hale is here and he can give us the status on the environmental on the Loop 9 project, Bill Hale, our district engineer.

MAYOR LEPPERT: While Bill is coming up, to your point a moment ago, Commissioner, that is exactly what we're working on is on the Trinity, to not do the valuation, to be able to go forward with it.

MR. HOUGHTON: But that takes a waiver from both NTTA and it takes a waiver from us.

MAYOR LEPPERT: It does, and we're working very hard on that, working with TxDOT and NTTA to make exactly that happen. Again, the costs that we look at each month, it is a large, large number. It is one that we're working very diligently on and we've got our partners working on it too. I appreciate you raising that.

MR. HOUGHTON: And Mayor Moncrief, with the Southwest Parkway, same thing.

MAYOR MONCRIEF: Same issue, and I think it has to do with how you approach a challenge. You can approach it from the standpoint of wanting to listen to all the reasons why you can't get something done as opposed to saying to staff and to everyone involved, tell us how we can, not why we can't.

MR. HOUGHTON: I think we can help with that. Where are we on Loop 9 on the environmental?

MR. HALE: On Loop 9, we expect the environmental clearance sometime around --

MR. HOUGHTON: Southern portion.

MR. HALE:  -- Southern portion from about 67 over to 175, that are over there, that section should be cleared around December or January this year coming up, and we have it ready for a development letter from the private sector to go ahead and begin moving on that project once we get environmental clearance.

MR. HOUGHTON: Can we get ahead of that environmental to start the process of negotiating that development that when we do get the environmental, we can jump right into the construction phase?

MR. HALE: I don't think we go ahead of them.

MR. HOUGHTON: Like we did on the 130 5 and 6. Didn't we do something like that, Amadeo?

MR. SAENZ: 130 5 and 6, we already had the environmental document, as part of 130 it had to be re-evaluated.

MR. HOUGHTON: Okay.

MR. HALE: The problem with getting ahead of it, you end up looking like you've already made your mind up before the environmental assessment was cleared, so you have to get that clear before.

I'm Bill Hale with the Texas Department of Transportation in Dallas.

MR. HOUGHTON: You can stay there too, Michael.

MR. MORRIS: Commissioner Houghton, if I could just add, if you listened to what Mayor Moncrief just said, tell us how we can come up with a way to do it, don't tell us how we come up with a way not to do it. So in that regard, I think you are correct and I think you should challenge us and say, Okay, I understand we have an environmental clearance to do, but in the real world, why we cannot proceed in parallel with the state negotiating the implementation of an agreement and still be doing our due diligence on the environmental document. I think you should challenge us on how that can be done in parallel and not sequentially.

MR. HOUGHTON: I think we'll do just that.

MR. HOLMES: I think he just did.

MR. HOUGHTON: One of the things, Judge Whitley, that keeps coming up over and over again -- and I know why and I'm setting you up on this -- is there is a real concern I'm hearing about these concession payments staying in the region. I think by statute, if I'm not mistaken, they have to stay in the region, plus the interest.

JUDGE WHITLEY: They do and I understand that, and I trust everyone of you, but come January, there's going to be a whole lot of people in this town that I don't know as well as I know you and I don't want my $3.1 billion and interest to still be down here when they get in town. And you know, the very sign is that you have tried to get that money back to us since it came down here in November and it's still down here. And that's a big point to the citizens in our region because they know that money is still down here and they have the same amount of confidence, we just need it before they get in session down here in January.

MR. HOUGHTON: Are you saying you don't trust the folks over in the pink building?

JUDGE WHITLEY: Some of them.

(General laughter.)

JUDGE WHITLEY: At least this year it sounds like when they come to town it's going to be a surplus. If it was a deficit or a shortfall, then we'd be down here screaming even more than what we do anyway.

MR. HOUGHTON: There's certain people that get on the internet and look at our balances and say, TxDOT has got all the money in the world, they've got $5- $6 billion. But they don't understand that there's the $3.2- plus the interest accrual that belongs to the Metroplex region.

JUDGE WHITLEY: That's the other reason why I'd like to see that, that way we could take all the heat off you if you'd just give us that money. In fact, if you want to write a check, we'll take it back with us today.

MR. HOUGHTON: Bob Jackson, can we do that constitutionally?

MR. JACKSON: Not in that way.

(General laughter.)

MR. HOUGHTON: I think we can work with you. I don't know what the constitution or the laws are. I agree with you, I absolutely agree with you. But I keep hearing that recurring theme.

JUDGE WHITLEY: And we keep being assured that that is going to happen, and truly, I understand that everybody does believe that, but things happen, things just happen, and I'd rather that money be up there. And I think there's a lot of things we can do. You know, we talk about partnerships and we know the NTTA is looking at borrowing money and we're looking at getting a very low interest rate on money, and I think there's opportunities where we may be able to get more of a return on our money and them get a little bit better interest rate -- now, this is just me talking, please, there's not been anything on that -- but I'm just sitting here saying if we're going to be partners, it's all the same citizens, whether it be serviced by TxDOT or NTTA or by the RTC, and we're all the same folks.

MR. HOUGHTON: I agree. Thank you very much for indulging me.

MS. HARPER-BROWN: Well, partially in defense. Linda Harper-Brown, state representative. First, I want to thank you all for listening to the delegation this morning, and I know you realize how well represented we are in the North Texas area, not only by the number of people that are here today but in the fact that the local officials, the county officials and the chambers of commerce that are here represent us back home very well too. These are people who are very supportive of transportation and mobility in the state and will do everything to work in partnership with you to try to solve the problems that we have, as does the legislature.

The concern that the county judge has brought forward is due, I think, to some of the comments that some of my colleagues have made. There is always a concern when there is money that is off-book, and this is more or less money that is off-book, that does not flow through the budget process whatsoever, and we all know, just as the diversions began from Fund 6, that whenever there is money sitting somewhere and there may be a need somewhere else, that there is that propensity or that opportunity to try to use those funds elsewhere.

And the North Texas region is very concerned about that, and I have shared that concern with Amadeo through correspondence. He has assured me that money will go to North Texas, but again, that's between now and January. What happens in January -- and statutes can always be changed which is a concern, a great concern. We would like to make sure that that money stays within our region and that it does not at any time become part of the budget process which, I think, is what some people are looking at, not necessarily in this pot of money but with future dollars that might come in off these toll projects, that it run through a budgeting process. If local control is taken away, then once again, the North Texas area would be subsidizing the rest of the state or other areas in the state. We don't want this to become a political problem, we just want to build roads, we just want to create better mobility and to have multi-modal solutions. So whatever you can do to help North Texas on that would be greatly appreciated.

MR. MORRIS: Representative, thank you very much for all of your support in transportation.

Commissioner Houghton, the one thing to add, it's the capture of the revenue. Eighty percent of our projects that the RTC will be selecting, and you'll be endorsing this year, are probably on-system, so we then create like a reverse regional mobility authority because you are our builder of those on-system projects, just like you took the leadership and helped us on 161. Twenty percent of those projects we think are off-system, and those funds should be able to be implemented through local design standards on off-system projects without clogging up the administrative process within the state.

So we've been working with your staff, we have a half dozen ways we think legally it can be transferred, the elected officials are preparing a meeting with the Legislative Budget Board on this particular issue, and they stand ready in changing legislation. So getting them encumbered and transferred and creating a financial partnership between us to make sure we don't have to wait on legislation to do it, I think is in all of our best interests.

MR. HOLMES: Get it encumbered quickly.

The one comment, I look at Tower 55 and I'd be very interested in following the recommended solution because it looks extraordinarily difficult. But I do share your concern about the $3.2 billion staying in the region.

MS. DELISI: Again, let me just reiterate the gratitude of the commission for you guys making such a thoughtful, powerful presentation. I found it, personally, to be very informative, this being my first commission hearing, and learning about these issues, coming up to speed as quickly as possible, I appreciate the thought and the effort that went into this. We look forward to working with you guys, like I said, to get these projects going as quickly as possible. That's a win-win for the region and for the agency, and that's what we're looking for. So thank you very much for coming.

At this time I think we should take a little bit of a break, take about a five-minute break, so we'll reconvene at about 11:23, five minutes.

(Whereupon, a short recess was taken.)

MS. DELISI: If everyone could take a seat, please, so we can continue on with the rest of the agenda.

MR. SAENZ: Thank you, Madame Chairman. Our next item is agenda item number 4. Steve Simmons, deputy executive director will present a minute order on the Trans-Texas Corridor and some guiding policies that we have for your consideration.

MR. SIMMONS: Good morning, Madame Chair, commissioners, Mr. Saenz. For the record, my name is Steve Simmons. I'm the deputy executive director of the Texas Department of Transportation.

Before I get started -- and I was kind of hoping to do it while we still had the Dallas-Fort Worth group here -- this morning I met with a group of masters students from the University of North Texas that was here to learn a little bit about the department, and they're here to observe the commission meeting and we got here a little late so they were down in the basement. But I hope they're still here and I just want to recognize them. We had about 20 of the masters students.

This morning I've been asked to present a minute order on some guiding principles and policies that govern TxDOT. They specifically deal with the development, construction and operation of toll projects on the state highway system and the Trans-Texas Corridor. In reaffirming these basic guidelines, we considered input from members of the Citizens Advisory Committee for the I-35 and I-69 corridors. These committees enhance the public dialogue on transportation, involve more Texans in transportation decisions.

Based on public comments we've received to date and letters we've received from the Texas Conservative Coalition -- which I have copies of and I want to make sure you have -- we understand the need to clearly state the principles that will guide us as we move forward. We look forward to working with the advisory committee to revise and expand these principles and procedures more as we get a little bit further down the road.

As you know, the Trans-Texas Corridor concept began in 2002 when Governor Perry wrote to then Transportation Commissioner John Johnson outlining the governor's broad concept of the 21st Century transportation network for Texas. In the governor's instructions he asked that we develop an implementation plan, a plan to develop this important series of corridors for Texas. In fact, this morning I went back and it was the June 27 of 2002 Transportation Commission meeting that I stood at this same podium and presented the plan called The Crossroads of America, and it was developed and approved by the commission at that time.

It was a plan that was developed in concert with the state's General Land Office, Parks and Wildlife, Commission on Environmental Quality, and the Railroad Commission. We also had valuable assistance from the Environmental Protection Agency and the utility and rail industries. The plan allowed us to put some shape to the vision of the Trans-Texas Corridor, outline some basic criteria for the corridor, and action steps, including public involvement.

As I said, it's been almost six years since that basic document was developed. In that time, Texas has changed, our transportation challenges have become more pronounced, and the composition of our commission has changed. We need to revisit that plan, particularly in light of the principles I'll share with you today. I've asked our Texas Turnpike Authority Division and the Government and Public Affairs Division to head that task.

Some underlying rules have guided that process over the years, principles that mirror the process we use for all transportation projects. Foremost is public involvement. We simply cannot develop a network of projects of this magnitude without listening to Texas.

So setting the stage, we have held more than 500 meetings on the Trans-Texas Corridor. That includes 254 county meetings, 95 public hearings and meetings for the I-69 TTC corridor, 12 town hall meetings for the I-69 TTC, and more than 171 public hearings and meetings for TTC-35. We recently concluded our last round of hearings and meetings on the I-69 TTC and Texans were not bashful about giving us their input. When our public comment period ended April 18, we had received more than 27,000 comments from Texans regarding the TTC corridor alone. By anyone's standards, that is a clear indication that Texans want a voice in planning the future of transportation in Texas, and that is how it should be.

As we traveled across Texas, we heard some consistent comments about private property rights, state ownership of our roadway system, perceptions about tolling, and using existing right of way. A lot of what we heard were issues discussed in the last legislative session and are existing practices, but we can always do better. Formalizing these principles in writing will reiterate to our employees and to all Texans this is the way we must do business.

We listened to what Texans had to say about TTC-35 and I-69 TTC. Based on what we heard, the minute order before you outlines some basic doctrines this agency will use, with your approval, in developing Trans-Texas Corridor projects, toll projects and comprehensive development agreements. Now let me go through these principles in greater detail.

Right of way ownership. All state highway facilities, including the Trans-Texas Corridor, will be completely owned by the State of Texas at all times. Transportation assets in Texas are public property and there has never been any consideration to change that. By law, any agreement with a private entity to develop a project permits us to lease right of way or grant an easement to state property. There is no allowance for anyone other than the State of Texas to own Texas highway land. In developing comprehensive development agreements, we will protect the interests of the State.

Buy-back provision. Under provisions of the law, our agreements may include terms to purchase at any time the interest of a private entity in a CDA, including the facility developed under the CDA at the agreement's termination. Historically, public agencies have retained the right to terminate public works construction contracts at any time it is in the public's interest to do so. Let me be clear, this does not allow us to bail out an investor should his traffic or revenue projections for a facility fall short. That is the risk the private entity takes, and Texas will not be put in a position of being a private company's backstop. We have the option to buy back a facility if and only when those conditions are best for Texas.

Toll rates and toll rate escalations. One of the reoccurring concerns we heard from Texans had to do with toll rates, specifically who set them and how. In those instances when a private entity collects tolls under a comprehensive development agreement, TxDOT must approve the methodology for setting the tolls as well as the methodology for increasing the tolls. As the governing body of this agency, the commission has the authority to determine toll rates on all toll roads developed through a comprehensive development agreement and on the Trans-Texas Corridor, and have exercised that authority on all projects to date. Each comprehensive development agreement has included the initial toll rates that may be charged for the use of the toll project and the methodology for increasing the amount of tolls.

Tolling only added capacity. As you might imagine, Texans had a lot to say about tolling. We found there continues to be a misperception among some that TxDOT plans to toll existing roadways, so let us set the record straight: if you drive on a road that is not tolled today, you will not be tolled to drive on it tomorrow. Here is where there may be some confusion: when there are plans to add new lanes to an existing road, that added capacity may be tolled as a way to pay for the new lanes. It continues to be our intent when new lanes are added that we will not reduce the number of existing toll lanes. Provisions in law require that if we have to reduce the number of existing lanes, we must get county and voter approval before we do that.

And that brings me to our next guideline: competing facilities. In our comprehensive development agreements, we will not limit improvements to existing roadways. The department or any governmental entity can expand, rehabilitate or maintain any roadway that is near or intersects with any roadway under the comprehensive development agreement. What we will do is simply define our agreements so they work for Texans. We will never give up the ability to make needed transportation improvements or expansions that are in the public's interests.

Existing roadway alignment and right of way. During our public meetings and hearings, Texans were very concerned about us protecting private property rights in the selection of routes for the Trans-Texas Corridor. They want us to consider building upon existing roadways. Texans were very clear about this and we have built that into our guiding principles. In recognition of the legislature's commitment to protect the property rights of Texans, the minute order outlines that the department shall consider the use of existing facilities as part of our analysis of possible project locations. We will fully explore the benefits of these roadways to meet the purpose and needs of future toll projects and Trans-Texas Corridor projects.

Now, in considering existing facilities, we will, as always, work to minimize impacts on adjacent property and its owners. If an existing facility needs to be expanded, we will use the appropriate amount of right of way to build what is needed when it is needed and where it best suits the state's needs. Let me make sure that this is plainly understood. We will continue to follow federal and state environmental law, as well as our own policies, and in following those mandates, we will make every practical effort to preserve private property in planning and designing facilities that are part of the Trans-Texas Corridor and toll projects.

As you know, Chairman Williamson was passionate about improving Texas transportation. He believed that when Texans know how the business of transportation is conducted, they will help us make good decisions for Texas. The citizens advisory committees are evidence of that. As I said before, we will continue working with the committee members throughout this process, and their input is important.

This minute order lays out the directives we will use to develop the future of transportation so that Texans can move forward in making the right decisions. I'll be happy to answer any questions at this time.

MS. DELISI: Does anyone have any questions, discussion?

(No response.)

MS. DELISI: Okay, the letter from the Concerned Coalition will be entered into the record, as well as a letter I received from Glenn Hegar, that we can enter into the record on this as well, urging adoption of the minute order.

So with that, is there a motion?

MR. UNDERWOOD: So moved.

MS. DELISI: Second?

MR. HOUGHTON: Second.

MS. DELISI: All those in favor, say aye.

(A chorus of ayes.)

MS. DELISI: Any opposed?

(No response.)

MS. DELISI: Motion is adopted.

MR. SAENZ: Thank you, Steve.

MS. DELISI: Let me back up a second. Based on the letters that we received from the Concerned Coalition, as well as from Senator Hegar urging adoption of the minute order and taking into consideration the public comments made during the 69 Corridor hearings, they have asked us to ask staff to move as quickly as possible to apply these principles to the proposed TTC-69. So I would like to direct staff to get working on that as quickly as possible to apply the principles as well as the public comment.

MR. SAENZ: Yes, ma'am. As you know, those projects are under development, and now that the minute order is final, we'll proceed with applying the principles to the projects.

MS. DELISI: Thank you.

MR. SAENZ: Moving on to agenda item number 5, agenda item 5(a) will be presented by Mark Tomlinson. Mark is our new Turnpike Authority Division director, and I think this is his first presentation. Correct, Mark?

MR. TOMLINSON: Yes, sir.

MR. SAENZ: So take it easy on him. His agenda item, agenda item 5(a), is a minute order for final approval of a toll equity request from the Alamo RMA in San Antonio.

MR. TOMLINSON: Thank you, Mr. Saenz. Good morning, commissioners. My name is Mark Tomlinson. I'm director of the Texas Turnpike Authority Division.

The minute order before you grants final approval of financial assistance to the Alamo RMA for $19.8 million to be used to fund the construction, preliminary engineering, right of way acquisition, and related project development costs on the 281 North project. Of that total amount $18.8 million is for right of way and about a $1 million is for preliminary engineering. Essentially, this money will be used to accelerate project completion development of the 281 North project.

Staff feels this project will benefit the state and the traveling public and improve the efficiency of the state's transportation system by enhancing mobility and safety within this corridor. So given that, the staff recommends your approval of this minute order, and I'd be glad to answer any questions you may have.

MS. DELISI: At this time I'd like to call Terry Brechtel to speak on the motion.

MS. BRECHTEL: Madame Chair, I'm here to answer any questions that the commissioners may have.

MS. DELISI: Does anybody have any questions?

MR. HOUGHTON: I do. I see where it's $18 million for right of way and $1 million for engineering. I saw that you awarded a contract -- did you award a contract on this just recently, or select a contractor?

MS. BRECHTEL: We have selected a design-builder for this project; it's a fixed price of $330 million. We do have our GEC, HNTB; we have ongoing costs associated with our GEC; and then we have right of way acquisition that we need to begin immediately on this corridor.

MR. HOUGHTON: So the engineering cost is for your GEC?

MS. BRECHTEL: Yes, sir.

MR. HOUGHTON: And the design-build is a fully loaded contract, they're going to design-build?

MS. BRECHTEL: Yes, they are. It's a fixed price contract and it's fully loaded for design and construction oversight and building the corridor.

MR. HOUGHTON: And Mark, we haven't determined whether this is a loan or a grant or whatever?

MR. TOMLINSON: It's my understanding -- and I'll stand corrected if I need to -- that it is intended to be a grant.

MR. HOUGHTON: How much money have we granted Alamo RMA to date, or loaned -- loan or grant?

MR. TOMLINSON: $8-1/2 million.

MR. HOUGHTON: Total, since the inception of the Alamo RMA? Okay.

MR. HOLMES: Amadeo, isn't this consistent with what we approved you to go forward with?

MR. SAENZ: Yes, sir. You approved two months ago preliminary approval for us to move forward with a toll equity request for the $18.8 for the right of way acquisition that's needed for the 281 project and the $1 million which is for the engineering that's associated with the right of way acquisition and to complete the preliminary engineering for the project. This is just bringing it back. The process is a two-step process; we have to bring back the final terms.

MR. HOLMES: Is it inconsistent in any way with what we had approved two months ago?

MR. SAENZ: No, sir.

MR. HOLMES: And it keeps the project moving, Terry?

MS. BRECHTEL: That's correct, Commissioner. With award of our CDA builder, we need to move forward on this right of way acquisition. As you know, cost of land is going up quickly on that corridor.

MR. SAENZ: And with respect to, I guess, Commissioner Houghton's question, the money would come from the allocation of the San Antonio MPO. They have gone through and taken action for allocating portions of this money for that project, so we would reduce that from their allocation.

MR. HOUGHTON: They're aware of that?

MR. SAENZ: Yes, sir.

MR. HOUGHTON: Okay.

MR. SAENZ: And then, of course, the other thing that's built into this thing here, it's considered a grant because they're acquiring the right of way, but should the Alamo RMA not move forward with the project, then they would have to, in essence, pay that back and, of course, the land would come back at the value that was paid for it as well as the product that's developed by the RMA for the project.

MR. HOUGHTON: Have you completed the financing of the project?

MS. BRECHTEL: We are completing it as we speak. We're working on the final elements of the financing.

MR. HOUGHTON: Are you short as to the overall financing?

MS. BRECHTEL: We are closing our gap working with our consultants on our traffic and revenue reports.

MR. HOUGHTON: And who monitors the cost of the engineers that you're hiring: us or you?

MS. BRECHTEL: We do. Our GEC? Yes, we monitor them.

MR. HOUGHTON: Under what type of format: our format or your format?

MS. BRECHTEL: Well, we comply with all the regulations that the department has relative to expenditures and the FAR overhead rate.

MR. HOUGHTON: Is that our numbers, do we approve those?

MR. SAENZ: I think in the agreement that we've had on the $8-1/2 million, we have worked with the RMA and agreed on scope and agreed on the fee structure, if I remember correctly?

MS. BRECHTEL: With the GEC?

MR. SAENZ: With the GEC.

MS. BRECHTEL: You approve the reimbursement that we send to you and we set our FAR rates with our GEC and we look at the TxDOT rates to make sure that we're completely in alignment with what TxDOT is doing. That's the first question I ask.

MR. HOUGHTON: And they are in alignment?

MS. BRECHTEL: Yes, sir.

MR. SAENZ: And we do review all of their billings so that we can reimburse them because it is a reimbursement account.

MR. HOLMES: Ready for a motion?

MS. DELISI: Yes, we're ready for a motion.

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor, say aye.

(A chorus of ayes.)

MS. DELISI: Any opposed?

(No response.)

MS. DELISI: All right.

MR. SAENZ: Agenda item 5(b) is a minute order to designate State Highway 161 as a toll project.

MR. TOMLINSON: Yes, sir. This minute order authorizes the designation of the tolled mainlanes on State Highway 161 from State Highway 183 south to Interstate 20, through the cities of Irving and Grand Prairie, as a tolled project on the state highway system and as a controlled access facility for the purpose of development, maintenance and operation. We feel development of this project will facilitate the flow of traffic and promote the public safety and welfare. This project can be completed sooner through the innovative financial methods such as toll lanes.

So given that, the staff recommends approval of this minute, and again, would stand for questions.

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor, say aye.

(A chorus of ayes.)

MS. DELISI: Any opposed?

(No response.)

MS. DELISI: It passes.

MR. TOMLINSON: Thank you.

MR. SAENZ: Agenda item number 5(c), Phil Russell will present a minute order for Travis and Williamson counties for the approval of an agreement with the CTRMA on the development of some toll projects in this region.

MR. RUSSELL: An inauspicious moment when I have to lower the podium after Mark Tomlinson speaks, but I'll just say he was a rookie after Mr. Simmons was up here and he didn't know the button was there.

(General laughter.)

MR. RUSSELL: Good morning again. For the record, I'm Phillip Russell and I'm the assistant executive director for Innovative Project Development.

Commissioners, as you know, some of the funding reductions statewide have impacted projects. Here specifically in the Austin area, there are a number of projects that were impacted, but specifically six projects that the Austin District had been working on for a number of years. After that impact, the district began working closely with the CTRMA, the Central Texas Regional Mobility Authority, and have worked out a partnership whereby those projects continue to move forward.

Under this minute order, the partnership that you would be approving would allow us to assign those existing consultant contracts to the CTRMA so that they could continue that work on those six particular projects. The details of the agreement would show that if these projects are built by the Central Texas Regional Mobility Authority, then they would absorb any of these ongoing engineering costs. If, for whatever reason, they did not build those projects, then the department would reimburse the CTRMA for those costs and we would, in effect, get the work product from those engineering contracts, whatever the detailed plan work or anything else would come to us.

So commissioners, I'd be happy to address any comments you might have, and staff would recommend approval of this agreement.

MS. DELISI: We do have someone to speak on it. Does anyone have any questions for Phil?

MR. HOUGHTON: I'll wait.

MS. DELISI: I'd like to call Mike Heiligenstein to speak on it.

MR. HEILIGENSTEIN: I'm here to respond to any questions, but I do want to correct something I did say earlier. I didn't mean that there were too many lawyers in the room at the market valuation, too many consultants. My lawyer friends have pointed that out to me here just recently -- or ex-friends.

(General laughter.)

MR. HEILIGENSTEIN: We're happy to present this to you. We think it does move all of the TIP projects, the Transportation Improvement Projects approved by the MPO, plus MoPac managed lane projects forward. Remember, it's only to do this up to final design; we cannot go past final design without, again, agreements on some type of market valuation, whatever we end up with there. We have to have further agreements to move forward on that. But this allows us to move forward on some very strategic issues and items related to those five plus one projects -- the TIP plus one, as we now call them.

Again, these are all MPO priority projects and this will allow them to move forward, as opposed to right now, because of the rescissions and so forth, they're sort of dead in the water. And we're going to do short term financing, we have three bids on the table now, three proposals on the term sheets on the table for up to $65 million to continue these projects. We think there's about $25- in engineering; the rest will be other items such as possible utility work, some strategic right of way work, and a few other items, but we think that that could be a two-year note, given some of the environmental work.

That's really the main issues. The department maintains a significant level of control throughout this process. We have negotiated that with Director Saenz and his folks. As I mentioned, only work up to final design. We are looking at the exact contracts that the department has already approved. We would assume the funding of those contracts; there would be department review of invoices and work authorizations and approval of those work authorizations.

MR. HOUGHTON: I want to ask Phil a question. What's the anticipated cost on this?

MR. RUSSELL: Of the construction or the consultant?

MR. HOUGHTON: The consultant.

MR. RUSSELL: Best I remember, those six consultant contracts is a shade north of $27 million.

MR. HOUGHTON: And do we have terms, have we reached terms on these toll projects yet?

MR. RUSSELL: Business terms? No, sir.

MR. HOUGHTON: We have not.

MR. RUSSELL: We have suspended that market valuation. I think 290, Mike, is the furthest along?

MR. HEILIGENSTEIN: Yes.

MR. RUSSELL: 290 East is the one that's furthest along.

MR. HOUGHTON: We have no terms yet?

MR. RUSSELL: Not on all six, no, sir.

MR. HOUGHTON: Madame Chair and staff and fellow commissioners, I think it's a great idea if they want to go expend their dollars and take a risk, but for us to say we're going to backstop if they go King's X, we don't like this, we haven't even gotten to terms yet and we have to do that even if we both waive market valuation. So I think if they so choose to take on the engineering and want to go do that, it's at their risk, period, at this time. That's my feeling.

MS. DELISI: Mike.

MR. HEILIGENSTEIN: If I could respond to that, Commissioner. The work that we're talking about would get us to the point where we'd understand what those terms are. The only one we've gotten that far along is 290, and we were that close to having the market valuation done before we suspended that. 290 East is the one that's far enough long to know what the terms are. I mean, we have traffic and revenue issues now -- that would be one area, some of the very preliminary engineering. We're not sure what we have out there in some cases; all of these are in some phase of the environmental process. I agree with you, we can't go to final design on this with this agreement, but it would get us the information that would give us the terms and conditions that you're asking about.

MS. DELISI: Commissioner Holmes, you have questions?

MR. HOLMES: Phil, the consulting contracts in question, were they existing contracts that we had already entered and were progressing?

MR. RUSSELL: Yes, sir.

MR. HOLMES: Are there prospective contracts that would be subject to this agreement that we have not entered that Mike and his group might execute that we would then be responsible for?

MR. RUSSELL: No, sir, I don't think so, Commissioner Holmes. I think what we're talking about are those six existing contracts.

MR. HOLMES: And so these are contracts that TxDOT entered, commenced work on. Have we funded part of that?

MR. RUSSELL: Yes, sir.

MR. HOLMES: And then we suspended it.

MR. RUSSELL: Yes, sir.

MR. HOLMES: And so this would simply be completing the balance of the contracts that we were already underway on.

MR. RUSSELL: Yes, sir.

MR. HOLMES: Out of the $27 million, is that the remaining portion to be funded?

MR. RUSSELL: Yes, sir.

MR. HOLMES: And do you have an idea -- give me a rough idea of how much has already been funded.

MR. RUSSELL: I'll take a wild stab, Commissioner, it's always a gamble, but maybe $15 million. That's really a wild stab at it. There are six different projects; some of those were pretty close to being fully funded, some of those were barely initiated, but $15 million, a wild guess. I'll be happy to give you the exact number.

MR. HOLMES: And who's been negotiating this with Mike: Amadeo, you?

MR. RUSSELL: All of us. Bob Daigh has been our point man but Amadeo has been very closely involved as well.

MR. HOLMES: And Amadeo, what was your thought process in giving them a put but we don't have a call?

MR. SAENZ: We were working on these projects, we were performing this work to get the projects to a level that we could determine what the environmental issues were, what was the scope of the project that was going to be built so that we could cost out the project. All of that was being developed by the department. Because of our curtailing and our funding shortfall, we suspended that work, so that projects, in essence, stopped.

Talking to the RMA, they said that they could continue to do that work, we could assign the contracts, they would borrow the money to go out there and do the work so that we could get those answers so that we can determine what the market value is, and then once it's determined who develops the project, then if they continue to develop the project, then there's no cost to the department. But if through the market valuation process we move forward with the project, then we would reimburse them for those costs, we put in the controls that we would approve the scope of the work that needed to be done, we would approve the fee structure of the work that needed to be done, and then we would review the work product, with the idea that no matter who does the work, that work product is important and is going to be needed no matter who develops the project.

This was very similar to the protocol agreement that had been negotiated with the North Texas Tollway Authority and the RTC when we had a process for identifying future projects, that someone would take the lead and develop a project and carry it forward, and then whoever took the final design and responsibility of the project, would reimburse the other party. So it's following pretty much the same model.

MR. HOLMES: I think it's the same model -- I see Gary back there -- that Gary and Art Storey did in Houston.

MR. SAENZ: I think they were using something very similar.

MR. HOLMES: Just as a curiosity, is the put back to TxDOT, Mike, an integral part of the financing? I mean, do you need that in order to borrow the money?

MR. HEILIGENSTEIN: Not necessarily, but remember in this agreement there is no reimbursement by TxDOT if you haven't approved the work. If you haven't approved the work, then there's no reimbursement. The front-end of this is what's important to the financial institutions. They want to know they're dealing with the agency that actually is going to manage and work and develop the projects. They've asked us what level of development rights do you have, and at this point we have very little. It's sort of like the contractual arrangements we're looking at in place of 792 or whatever. We need this for the financial portion of this. Remember, this is not the permanent financing that will supply the $1.5 billion, this is just to keep these things moving in a very strategic manner so we don't lose a year's worth of inflation on these.

MR. HOLMES: Well, clearly we want to keep them moving, and the whole issue is, I think -- I don't want to speak for Commissioner Houghton since he's sitting here -- whether there is a put back to TxDOT on cost. It's not that anybody wants to delay the progress of the projects.

MR. HEILIGENSTEIN: Right, I understand, yes. TxDOT, I would think, if they've been with us this whole time and approved these projects and they stay in the MPO as priority projects for the MPO and they're designated as their projects, if something happened to us and we had to step back from this, I would think that TxDOT would want to buy that product or just assume that product, and that's how we would pay back the loan.

MR. HOUGHTON: I'm not so sure we would because I'm not sure that everyone on this commission understands or has seen the covenants by the MPO on those projects which, to some people, are poison pills. So currently they may not be able to be developed as toll projects or financeable, we don't know that because we haven't had anybody look at it. So I consider it a put back to us until we fully vet that out and through the terms and conditions, and we haven't even done that. So if you want to expend your dollars on that project, I think that's fine and dandy if you so choose to do that, but I don't think the commissioners here -- I don't want to speak for my fellow commissioners -- have looked at the terms and conditions and in the financing mechanisms, can those projects be financed as they stand today.

So expending another $15 million, this is exactly what we talked about with the Dallas-Fort Worth people on market valuation: are we spending dollars we don't need to be spending, or guaranteeing dollars we don't need to be guaranteeing?

MR. HOLMES: Are there poison pills currently existing in these projects?

MR. RUSSELL: Mr. Holmes, I think clearly there are conditions -- at least the last conditions I saw in the MPO plans -- that would probably create some challenges. Whether they're poison pills or not, I'm not sure. I'm sure there are financial experts that could ascertain that, but there are clearly conditions that we would have to or the CTRMA would have to overcome to be able to have a successful financing.

Mike, do you remember any of those specific conditions that came out on those? I'm struggling to think. I read through those but I'm trying to think of a specific issue.

MR. HEILIGENSTEIN: I know exactly what the commissioner is talking about, and I want to remind the commission that the MPOs have been given considerable authority in these areas over the last several years by the department and the commission and they are acting on that authority that was granted by the department. In the case of this Transportation Improvement Plan for Central Texas, they have included some what they consider -- I'm not sure I consider them poison pills, I think that's a little strong.

MR. HOUGHTON: Those aren't my words, those were echoed to me by somebody on that MPO.

MR. HEILIGENSTEIN: Whoever's words they are, I'm not sure I'd agree with that assessment. Senator Watson has appointed a finance subcommittee that we've worked with in depth. We've gotten inside the numbers with that group, and I think that they actually showed some flexibility right before the vote when they said that there's the opportunity for several of these roads to probably come together as a system if they're within proximity of each other.

I think what they don't want to have happen is work on one side of town, one part of town, one area, and then some area of town escape and be able to do nontolled facilities on the backs of tolls that are being assessed on one other area of town. I think that's a common concern throughout the state, and what we're saying is and we're working with the MPO on is we're going to show them the strongest possible system, strongest possible mechanism to fund these facilities.

We have chosen J.P. Morgan as our partner, financial partner -- they are here today -- but I feel very strongly that we're going to be able to fund all these roads. I really, in fact, look forward to the Monday meeting, but I think the RMA is ready to fund these facilities as soon as they're ready to go. We have a lot of environmental work yet to do.

MR. HOUGHTON: Well, I'll restate, we just talked about market valuation, and this is the kind of piecemeal effect that we've been seeing going on. Until we have a comprehensive agreement with our sister agency, the CTRMA and other RMAs, I personally am not willing to expend another nickel in these areas until it can be proven we can get across these goal lines. And I think as fiduciary that's what we're challenged to do. I mean, the commission has their vote and I have mine.

MR. HEILIGENSTEIN: I want to make sure I understand. I mean, I think the $15 million that Phil was talking about is money that's already been spent -- there's some number. Anything north of that, we are going out, we are at risk for, we are spending the dollars on. We're at risk because if you don't approve -- in this agreement, if you don't approve those work authorizations, we can't come back to you and ask for a reimbursement. We're at risk there. I mean, that's what this says.

MR. HOLMES: The concern that I have -- first of all, it seems to me perfectly reasonable that you would have a backstop on the uncompleted portions of contracts that we had already entered, and I accept that. The concern is that there might be some provisions included and conditions included that either make the financing much more difficult or impossible and that those would not have otherwise been agreed by TxDOT, and those conditions are imposed by your MPO unilaterally. And so that's really the issue that I am confronting. If we agree with your terms and conditions, then I don't have a problem with it, but if we don't, then I think you need to change them.

MR. HEILIGENSTEIN: I will certainly visit with the senator on that.

MR. HOLMES: Otherwise, it's good money after bad. Right?

MR. HEILIGENSTEIN: Well, Commissioner, I think we can fund them as the covenants now exist. Remember, none of these projects are 121, they're all underwater. We're going to have to come to the table with deeply subordinated debt on every one of these projects. Right now we've analyzed them, J.P. has analyzed them on a project-by-project basis, and we think that over time they will be able to stand on their own, but we're going to have to go to deeply subordinated debt to do this.

Remember, 183 is a project that we have finished and it's up and running. We're using 183 as our backstop for these projects right now. That's the only reason these banks are saying they'll lend us any money. My concern is I don't know what changes can be made to this agreement, I really think that we've been through a lot of that with staff, they've taken direction and been very clear to us what they expected in return. But these projects have been on hold now for several months and will continue to be on hold.

MR. HOUGHTON: Well, again, we don't even have terms and conditions with the RMA, and to send this money or guarantee the put back to us is unacceptable, and this is what we talked about with the Dallas folks prior to is: Stop, let's get to a comprehensive plan and get this thing moving forward where we know everything we need to know and get on the same side of the table instead of the opposite side of the table. And we have spent tens of millions of dollars and I'm trying to figure out for what.

MR. HOLMES: What if we change one piece of it, instead of it's a put of the contracts back, that TxDOT has the right to take them back?

MR. HOUGHTON: If we choose.

MR. HOLMES: If we choose.

MR. HEILIGENSTEIN: You mean the plans that are being developed?

MR. HOLMES: Yes.

MR. HOUGHTON: We are not mandated to.

MR. HEILIGENSTEIN: Well, in this case I do have to refer to my attorney.

MR. HOLMES: I think he's sitting behind you.

MR. SAENZ: Commissioners, I just want to make sure that the work that needs to be done is environmental work that needs to be done whether the project is developed as a toll project or not a toll project. These projects are all on the state highway system so we are responsible for doing those projects no matter how that will be developed. That work product will never be lost and it will be needed no matter what methodology is used to develop those projects.

MR. HOUGHTON: Amadeo, they're requesting of us to do this but with the put back to us that we guarantee it. If they so choose and they want to expend their dollars, I think that's fine.

MR. SAENZ: Yes, but those were projects that were identified as priorities by the local planning organization, CAMPO, they have them in their TIP. To be able to move those projects through the project development process, environmental documents need to be prepared, preliminary engineering studies need to be done so that we can determine the final scope and the environmental ramifications of those projects, and that money was being spent by TxDOT.

MR. HOUGHTON: Does Austin District have the money?

MR. SAENZ: Austin District was using their engineering budget to do that work. Now, because we reduced the engineering work budget that we had, those projects were put on hold. What the RMA has said is we're willing to go borrow the money and continue doing that work so that those projects are not slowed down, and if we go through and they develop them as toll roads and they're going to develop them, then they don't ask for reimbursement. But if we were going through a market valuation process, they don't take the primacy and we take it, then we would purchase the work product by paying for the work that we had previously approved for them to do. That's the whole scope of this whole agreement.

MR. HOLMES: We all want it to go forward. Right? But was there an answer to the question?

MR. HEILIGENSTEIN: No, there wasn't. Frankly, I don't know the financial institutions would view that because, again, we're backstopping this with 183A revenue and the covenant on 183A is that it is part of a system. 183A does allow us to do this. And again, I think the MPO is very serious about these projects. I don't think they intended any of the covenants to be a poison pill. I mean, they want these done. They wouldn't have gone through the bloodshed that they went through not to see these projects to fruition. And if we can work it out to where that's a voluntary purchase -- I don't know why TxDOT or anybody would want to spend another $25 million on a new set of plans that would work, so perhaps there's a way around that provision.

MR. HOLMES: That's why I asked the question earlier is the put back to TxDOT a condition of the underwriting for the loan to complete the plans.

MR. HOUGHTON: You just said that it was backstopped by 183.

MR. HEILIGENSTEIN: That's right, that's the only credit we have.

MR. HOUGHTON: There should be a condition back to us.

MR. HOLMES: Amadeo, would we build these projects if we were given the projects back?

MR. SAENZ: Yes, sir. Those projects are on the state highway system. For example, 290 connects to the State Highway 130 project, connects it back into Austin -- that's a very important project. The 183 project and the 71 project are projects that have been in our books for many, many years, we've been developing them a little bit at a time.

MR. HOUGHTON: As toll roads?

MR. SAENZ: We were developing them as non-toll roads until we were able to have toll road authority. So those projects were identified and have been identified in the region's long range plan for many, many years. The toll road is a new option of being able to finance these projects to make it a complete package. But those projects are priority projects for the region for addressing transportation needs.

MR. HOUGHTON: And the priority should be with the district to fund that, use their allocation as priority projects.

MR. SAENZ: The problem is that the district does not have the budget available to be able to move those projects forward.

MR. HOUGHTON: Well, we've done that all over the state.

MR. SAENZ: It's an action item.

MS. DELISI: All right. You've heard the discussion. Do I hear a motion on the proposal by staff?

MR. UNDERWOOD: So moved.

MS. DELISI: Is there a second? I'll second it. All those in favor, say aye.

(Ayes: Delisi, Holmes, Underwood, Meadows)

MS. DELISI: Opposed?

MR. HOUGHTON: No.

MS. DELISI: Four ayes, one nay. Okay, let's move on.

MR. RUSSELL: Thank you, commissioners.

MR. SAENZ: Thank you, Phil.

Agenda item number 6, Dave Fulton, director of our Aviation Division, will present a minute order with some airport improvement projects.

MR. FULTON: Thank you, Amadeo. For the record, my name is David Fulton, director of TxDOT Aviation Division.

This minute order contains a request for grant funding approval for eight airport improvement projects. The total estimated cost of all requests, as shown in Exhibit A, is approximately $3.5 million: approximately $1.4 million federal, $150,000 in state funding, and $1.9 million in local funding.

Public hearings were held on April 14 and April 29 of this year. No comments were received. We would recommend approval of this minute order.

MS. DELISI: Any questions, comments? Is there a motion?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed.

MR. FULTON: Thank you.

MR. SAENZ: Thank you, Dave.

Agenda item number 7, 7(a) deals with public transportation. Eric Gleason will present a minute order dealing with the New Freedom Program public transportation funding.

MR. GLEASON: Good afternoon. For the record, my name is Eric Gleason, TxDOT director of Public Transportation.

This minute order awards $2,410,117 in federal funds under the Federal Transit Administration's Section 5317 New Freedom Program and transportation development credits in the amount of $22,800 for new transportation services or new transportation alternatives to provide services that go beyond the requirements of the Americans with Disabilities Act for individuals with disabilities. As shown in Exhibit A, approximately $1,139,000 is awarded to small urban areas and approximately $1,270,000 to nonurbanized or rural areas of the state.

On October 4, 2007, the department published a notice of request for proposals for New Freedom projects. Proposals were received for both operating and capital assistance. Proposals were evaluated based on the following criteria: project planning and coordination, particularly in this case with members of the community with disabilities, demonstration of need, benefits of the project, and service sustainability.

The award of transportation development credits is consistent with the commission's intent to make development credits available to support fleet replacement, fleet expansion and capital projects supporting the coordination of services. The 5317 program was envisioned as one of those programs consistent with this intent.

Two small urban area proposals were received and are recommended for award: the Brownsville Urban System and the City of Laredo. A total of six nonurbanized area proposals were received of which five are recommended for award. Remaining program balances will be rolled over for the fiscal year '09 call for projects scheduled for this coming summer. These recommendations are shown in Exhibit A. We recommend your approval of this minute order.

MS. DELISI: Any questions? Is there a motion?

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed.

MR. SAENZ: Agenda item 7(b), also Eric will present another minute order dealing with the federal 5310 program on Elderly Individuals and Individuals with Disabilities public transportation programs.

MR. GLEASON: Thank you.

This minute order awards approximately $7,545,000 of federal funds under the FTA Elderly Individuals and Individuals with Disabilities Program, Section 5310, and approximately $1 million in transportation development credits for various public transportation capital projects, and rescinds and withdraws Minute Order 111289, dated March 27, 2008.

Projects recommended for funding are listed in Exhibit A. Exhibit A includes two projects mistakenly omitted from the March minute order and adjustments to three other project award amounts to reflect the most current information on those projects.

Over 160 providers operate services for elderly individuals and individuals with disabilities in Texas. In 2007 these services carried over 1.4 million riders and traveled over 7.3 million miles. Ninety-one of these providers are included in this award. We recommend your approval of this minute order.

MR. HOUGHTON: So moved.

MS. DELISI: Second?

MR. HOLMES: May I ask a quick question?

MS. DELISI: Sure.

MR. HOLMES: Thank you, Commissioner.

Eric, do you allocate these based on population or population of -- how do you allocate it?

MR. GLEASON: The formula for the allocation is in the Administrative Code, and it's allocated to each of the 25 department districts across the state based on their share of this population. And then each of the 25 districts goes through a planning process with stakeholders to make decisions about how best to spend those funds.

MR. HOLMES: Is it allocated on the basis of the total population or the elderly population or the population in need?

MR. GLEASON: Elderly individuals and individuals with disability, each district's share of the statewide population.

MR. HOLMES: And how do they compile that data?

MR. GLEASON: It's census data, based on the most recent census data.

MR. HOLMES: Thank you.

MS. DELISI: All right, backing up, is there a motion?

MR. HOUGHTON: So moved.

MS. DELISI: Second?

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: No opposed.

MR. SAENZ: Thank you, Eric.

MR. GLEASON: Thank you.

MR. SAENZ: Agenda item number 8(a), Steve Simmons will present an update on the development of the department's Internal Compliance Program.

MR. SIMMONS: Again for the record, my name is Steve Simmons, and I'm the deputy executive director of the department. I'm bringing agenda item 8(a) to you in my capacity as the department's internal compliance officer.

At the November 2007 Transportation Commission meeting, Minute Order 111124 was passed that directed the department to formally develop an Internal Compliance Program, or ICP, with the mission to exercise due diligence to prevent and detect criminal conduct and otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law. The minute order also required a semiannual report to the commission. This agenda item is intended to serve as that required report.

To get started developing an ICP, the department needed to appoint an internal compliance officer. As I mentioned, Executive Director Saenz has appointed me to this position. In this capacity, I am responsible for the oversight of the various aspects of the ICP, and at the development state, ensure that the program is being designed and implemented appropriately for TxDOT's needs. I will also communicate with the executive director and the commission regarding information on the development and operation of the ICP with an emphasis on those instances of non-compliance that require executive action or have department-wide impact. Finally, the compliance officer shall be knowledgeable about the content and operation of the compliance and ethics program and shall promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.

The first action to develop the ICP was to establish working group committees to identify and assess risks associated with a specific topic and develop control measures and plans to respond to these risks. These groups will identify employee training needs and consequences of non-compliance. The ultimate goal will be to establish a clear and enforceable standard of conduct for all department employees.

The working groups that were created are: Regulatory, Environmental, Records Retention and Open Records, Ethics and Employee Conduct, Commission Activities, Contracts, and Grant Management. These working groups will develop recommendations to be considered by the Internal Compliance Program's oversight committee, and the members of the oversight committee are: myself; Ed Serna, our assistant executive director for Support Operations; John Barton, our assistant executive director for Engineering Operations; James Bass, our chief financial officer; Bob Jackson, our general counsel; Owen Whitworth, director of our Audit Office; Bryan Wood, our district engineer in Bryan; Richard Skopik, our district engineer in Waco; Scott Burford, director of our General Services Division; and Carlos Lopez, the director of our Traffic Operations Division. The oversight committee will proceed with the implementation of approved recommendations and make policy decisions regarding the direction and content of the program.

The next action that has been taken in the development of the ICP was the adoption of Minute Order 111163 at the December 13, 2007 commission meeting. This minute order adopted an ethics policy to comply with amendments made by the legislature to the Government Code Section 572.051. The department has also required each division and office to complete a survey identifying each department function and program and the applicable laws and policies associated with it.

We're in the process of creating a department ethics hotline to report suspected ethical concerns or potential illegal activity. Bids were opened yesterday and the contract requires a vendor to provide services in multiple languages and various forms of communication, including regular mail, toll free telephone hotline, and the internet. All contacts may remain anonymous if the caller so chooses, and the vendor will use a TxDOT pre-approved script in discussion with the callers. The contract will also include specifics regarding reporting and retention procedures and the vendor communication format will not replace but rather enhance TxDOT's current grievance reporting methods.

We are currently developing an employee code of conduct that will be a compilation of summaries of major policy affecting employee behavior and consequences of unacceptable behavior. The code of conduct will include ethical standards, rules of contact with entities and individuals involved in comprehensive development agreements, records and information, workplace conduct, employee time and timekeeping, outside employment and financial interests. I should note that we have standards currently in place for all of these issues, however, they are not consolidated in one document and maintained by a single office.

We're also beginning the development of internet and intranet sites to include brief discussions of what the ICP is and our goals, the ethics policy, the TxDOT code of conduct, and links to various TxDOT manuals, training opportunities and the ethics hotline, as we're working to ensure employee performance evaluations adequately address compliance and ethics issues. Also in the works is the development of a system to track implementation of issues that arise out of audit reports and recommendations.

In a minute I will be presenting a minute order to develop annual training for the commission, commission assistants, and members of the department administration on laws, policies, and internal compliance.

And finally, we are still evaluating options on the organizational structure of this Internal Compliance Program to see where it will fit and to ensure its success.

And that's the report, and I'd be happy to answer any questions at this time.

MS. DELISI: Any questions?

MR. HOUGHTON: I have a couple of questions.

MS. DELISI: Go ahead.

MR. HOUGHTON: The conflict, the ethics issues, Steve, we're granting tens of millions of dollars to sister agencies, partnerships, et al., how does this apply to these agencies, our ICP rules?

MR. SIMMONS: I'll ask Bob Jackson to come up.

MR. JACKSON: Bob Jackson, general counsel.

As of yet, it does not. When we started developing this program, it was suggested -- and it's still a target -- to encourage our partners to have some sort of an ICP. There are different ways you can do that and we haven't looked at that in detail. You can strongly encourage it in some ways such as if you want toll equity or some sort of financial assistance, then here's some minimum requirements.

MR. HOUGHTON: Well, I mean, we're kind of behind the curve on this deal. We've been granting these to all these RMAs.

MR. JACKSON: We wanted to first have our own ICP before requiring other entities to have one, but yes, I think we're getting close.

MR. HOUGHTON: So how do we do that? Do we tie it to their grant, do we make it retroactive to those grants? Can you do that?

MR. JACKSON: No, you cannot do that. There's a whole lot of ways we can do that. We can look at it. Just to give you some examples, we can amend our toll equity rules to say that to be eligible for any money for a toll road you need a compliance program with these minimum standards.

MR. HOUGHTON: Conflicts of interest, et cetera, et cetera. Right?

MR. JACKSON: Yes.

MR. HOUGHTON: Can we not do that? Can we instruct staff to do that, Madame Chair?

MR. JACKSON: Yes.

MS. DELISI: I think that's a great idea. So staff, you'll work on applying the same standards to our partners as we go forward.

MR. JACKSON: Okay.

MS. DELISI: Any other comments, questions? Is there a motion?

MR. SIMMONS: If I might add.

MS. DELISI: Oh, I'm sorry.

MR. SIMMONS: I think this Internal Compliance Program is built exactly to address those issues that you just brought up, things that there are holes in our oversight or whatever, and I think this is a good thing for the department to develop.

MR. HOUGHTON: Yes, we've got tens of millions of dollars, hundreds of millions potentially sloshing around out there, and where's the controls as to ethics and conflicts.

MR. SIMMONS: Yes, sir.

MS. DELISI: Sorry. There's no minute order here.

MR. SIMMONS: No, ma'am. It's just a report.

MR. SAENZ: Thank you, Steve.

Agenda item 8(b) is a minute order that as part of our Internal Compliance Program we get authority to develop a training program.

MR. SIMMONS: You have before you a minute order that provides for the department to develop a training program for the commission, commission assistants, and the department executive director, deputy executive director, and assistant executive directors.

Section 201.059 of the Texas Transportation Code, and other various sections of the Texas Government Code, require one time training for commissioners. Pursuant to your direction in developing an Internal Compliance Program to prevent violations of law from occurring, to mitigate the consequence of those violations that do occur, and to provide an ethical workforce educated in the laws and policies that govern the organization, we felt it was important to continue developing some training programs. An important function of an effective internal compliance program is training at all levels within the organization. Although we currently comply with the above-cited laws, it would be beneficial to provide additional training opportunities to include not only the information required by law but training regarding internal compliance.

If you remember, the United States Sentencing Commission, and independent agency in the Judicial Branch of the Federal Government, has issued guidelines for an effective compliance and ethics program, and TxDOT's Internal Compliance Program will comply with these guidelines. Those U.S. Sentencing Commission guidelines require that an organization's governing authority be knowledgeable about the content and operation of the compliance and ethics program.

Therefore, the minute order requires that the department develop a training program, again, for the commission, commission assistants, and the department executive director and his staff, to include but not be limited to the Open Meetings Act, Open Records, administrative law, the department's budget, audits, ethics law and policies, department internal compliance, and investments, and I recommend approval of this minute order.

MS. DELISI: Any questions, comments?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: Any opposed?

(No response.)

MS. DELISI: Motion passes.

MR. SIMMONS: Thank you.

MR. SAENZ: Thank you, Steve.

Moving on, agenda item number 9(a) deals with Administrative Rules. 9(a) deals with proposed adoption, that is, the rules to be published in the Texas Register for pubic comment. Rick Collins will present rules on Chapter 15 dealing with New Product Evaluations. Rick. I think this is also your first presentation before the commission.

MR. COLLINS: Well, I tried to get out of that last week, but it is, it's my first appearance before you, and good afternoon. For the record, my name is Rick Collins, director of the Research and Technology Implementation Office.

This minute order proposes amendments to the rules in the Texas Administrative Code concerning new product evaluation. Some of the provisions of the rules are unnecessarily specific and in need of revision. These revisions will provide the department with the flexibility needed to more efficiently evaluate products that are beneficial for transportation needs. If you approve, the proposed amendments would be published in the Texas Register in order to receive public comments. We recommend your approval.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: Any opposed?

(No response.)

MS. DELISI: Motion passes.

MR. COLLINS: Thank you.

MR. SAENZ: Thank you, Rick. Good job.

Agenda item 9(b) deals with final adoption. 9(b)(1) is final adoption of Chapter 9 rules dealing with Contract Management, and Scott Burford will present this agenda item.

MR. BURFORD: Good afternoon. For the record, my name is Scott Burford and I'm the director of the General Services Division.

This minute order proposes final adoption to amendments to Subsection 9.3 of the State Purchasing and General Services Act. Recent legislation transferred state purchasing duties from the Texas Building and Procurement Commission to the Comptroller of Public Accounts. The comptroller adopted new protest rules with amended provisions that differ than the department's rules. We are amending our rules to make them consistent with the comptroller's rules, as required by law.

The amendments include an update to agency titles and statutory references to reflect the transfer of state purchasing responsibilities to the comptroller. Changes to the definitions, the deadline for filing a protest or an appeal, and document retention requirements were made to make the rules consistent with the rules adopted by the comptroller. Various minor grammatical amendments have also been made to clarify the existing provisions for this section.

The proposed amendments were published in the Texas Register for comments. No comments were received. Staff makes recommendation for final approval of the rules. Any questions?

MS. DELISI: Is there a motion?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: None opposed. Motion passes.

MR. SAENZ: Thank you, Scott.

Agenda item 9(b)(2) also deals with Chapter 9, Contract Management, but these deal with Section 938, Contracting for Architectural Engineering and Surveying, and Mark Marek, division director for Design Division, will present.

MR. MAREK: Thank you, sir. For the record, my name is Mark Marek. I'm the director of the Design Division for TxDOT.

This minute order proposes final adoption of amendments to Chapter 9 concerning Contract Management, Chapter 2252 Government Code, Subchapter Z was amended by Senate Bill 924 of the 80th Texas Legislative Session related to rules and policies adopted by state agencies regarding engineering or architectural errors and omissions. These recently passed legislative amendments do not provide for a claims process with respect to errors and omissions.

The existing Rule 9.38 describes a claims process for errors and omissions recovery. Since the recently passed legislation did not provide for a claims process, the existing language in the rule related to claims process can be deleted. Standard contract language is sufficient for errors and omissions recovery.

No comments were received on this proposed rule change. Staff recommends final adoption by approval of this minute order.

MR. HOUGHTON: So moved.

MS. DELISI: Second?

MR. HOLMES: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. The motion passes.

MR. SAENZ:  Thank you, Mark.

Agenda item 9(b)(3) deals with Chapter 25, Traffic Operations, and Carlos Lopez, division director for the Traffic Operations Division will present this agenda item.

MR. LOPEZ: Thank you, Amadeo.

Good afternoon, commissioners. My name is Carlos Lopez and I'm director of the Traffic Operations Division.

The minute order before you provides for the final adoption of amendments to existing rules for the Logo and Tourist-Oriented Directional Sign Programs. The amendments implement House Bill 3441 of the last session and clarify other existing provisions in the rules. The proposed rules were published in the March 14, 2008, edition of the Texas Register.

The City of Houston commented that the amendments would interfere with the city's ability to regulate off-premise signing within their jurisdiction. These signs are not considered off-premise signing and are only allowed on state highway right of way. They are classified as motorist service signing and are recognized as official traffic control devices. In addition, tourist-oriented directional signs are not allowed in cities with a population of 5,000 or more which would preclude their placement in the city of Houston. The proposed amendments will not impact the ability of Houston to regulate off-premise signing such as outdoor advertising billboards.

We recommend approval of this minute order.

MS. DELISI: Any questions?

MR. HOLMES: Carlos, when you clarified with the City of Houston, did they agree or disagree, or what happened?

MR. LOPEZ: Our method of clarifying is to come to you to see if you agree with our rationale. If you pass this minute order, we will provide this response back to them.

MR. HOLMES: And so that was a way of saying no?

MR. LOPEZ: Well, I have not myself talked to them about that. I know during the session this had come up with the folks from the City of Houston thinking that this might apply to this, but we assured them that this was only related to the Logo Program. I think there was just some confusion, Commissioner, that this applied to billboards, and this is strictly a logo type of rule.

MR. SAENZ: Carlos, the City of Houston did not provide any comments to the rules?

MR. LOPEZ: That were the comments they did provide, and our response is that this is not a billboard issue, this is strictly for our Logo Program, for the blue-and-white signs on the road.

MS. DELISI: Is there a motion?

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. The motion passes.

MR. SAENZ: Thank you, Carlos.

MR. LOPEZ: Thank you, commissioners.

MR. SAENZ: Agenda item number 10, James Bass will make a presentation on a minute order making some corrections to the minute order passed by the commission last month on the project selection process for the 2009 Statewide Preservation and Safety Program and the Statewide Mobility and Supplemental Transportation Program.

MR. BASS: Good afternoon. Again, for the record, I'm James Bass, CFO at TxDOT.

This minute order would correct an error on the exhibit of a minute order from last month which dealt with the project selection process. The information for Category 8, the safety category, the description was incorrect. Again, your approval of this minute order will make that correction, and staff recommends your approval.

MR. HOUGHTON: So moved.

MS. DELISI: Second?

MR. HOLMES: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. Motion passes.

MR. SAENZ: Thank you. James will continue. Agenda item 11(a) deals with preliminary approval of a State Infrastructure Bank loan to Hopkins County.

MR. BASS: Item 11(a)(1) seeks preliminary approval of a loan to Hopkins County in an amount of just over $868,000 to pay for utility relocation costs along State Highway 11 and to acquire right of way along State Highway 154. Staff recommends your approval so that we may begin negotiations with the county.

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. Motion passes.

MR. SAENZ: Agenda item 11(a)(2) deals with also preliminary approval for a State Infrastructure Bank loan for Montgomery County. James.

MR. BASS: This item seeks preliminary approval of a loan to Montgomery County in an amount of $550,000 to pay for a toll feasibility study for the Montgomery County Parkway project. Staff recommends your approval so we may begin negotiations with the county.

MR. HOLMES: Is this a project that was included in 792?

MR. BASS: It would extend from the intersection of the Hardy Toll Road and Riley Fozzle Road northeast to State Highway 242.

MR. SAENZ: This project was included in 792 as a project that was granted for development to the Montgomery County Toll Road Authority.

MR. HOLMES: And maybe I made an incorrect assumption, but I thought that in the process of 792, granting that to Montgomery County, that Montgomery County was going to go forward with it.

MR. SAENZ: Yes, Montgomery County is moving forward with the development of that parkway, the toll road. They are requesting a loan from us to do some of the preliminary engineering. That project will not be required to go through market valuation as their project, but our State Infrastructure loan program does allow us to lend money to entities for developing transportation projects.

MR. HOLMES: Okay.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. Motion passes.

MR. SAENZ: Agenda item 11(b)(1) deals with final approval of a State Infrastructure Bank loan to Hidalgo County. James.

MR. BASS: Item 11(b)(1) seeks final approval of a loan to Hidalgo County in an amount of just over $911,000, with a 20 percent contingency, to pay preconstruction costs for the expansion of four roads in the county. Interest will accrue from the date funds are transferred from the SIB at a rate of 4 percent, with payments being made over a period of no more than ten years. Staff recommends your approval.

MS. DELISI: Is there a motion?

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. Motion passes.

MR. SAENZ: Thank you. Agenda item 11(b)(2) deals with final approval for a SIB loan also to Horizon City in El Paso County.

MR. BASS: This item seeks your final approval of a loan to Horizon City in the amount of $200,000 to pay for reconstruction costs of the Ashford Street project. Interest will accrue from the date funds are transferred from the SIB at a rate of 3.7 percent, with payments being made over a period of no more than six years. I would point out, as this is considered a small loan, less than $250,000, this is the one and only time that this item comes before the commission, and staff recommends your approval.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. Motion passes.

MR. SAENZ: Thank you, James.

Moving on, agenda item number 12, Toribio Garza, our deputy division director for the Maintenance Division, will present a minute order for Bell County requesting authority to move forward with a request for proposals for a property exchange on a facility.

MR. GARZA: Thank you, Mr. Saenz, commissioners. For the record, my name is Toribio Garza. I'm the deputy director for the Maintenance Division.

This minute order authorizes the department to issue an RFP, then select, rank and negotiate a development and exchange agreement with the top ranked firm for the construction of buildings and other facility support structures on state-owned property in exchange for existing property. The property to be exchanged is our 7.9-acre facility valued at $900,000. It's located at 2102 Martin Luther King Blvd. in Killeen in Bell County. The exchange will allow the construction of two equipment storage buildings and other facility support structures at both the new Waco and the new Belton-area office/maintenance section facilities.

The construction of these improvements shall not exceed the value of the existing property. If the cost is more, the entity could donate the difference or the scope of the construction will be reduced. If the cost is less, then the difference shall be paid at closing in cash to us. The total cost for us to appraise, to advertise and to print is a little over $13,000.

Staff recommends approval of this minute order.

MS. DELISI: Is there a motion?

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed.

MR. SAENZ: Good job, Toribio.

Agenda item number 13 deals with contracts. 13(a)(1) deals with the award or rejection of Highway Maintenance and Department Building Construction contracts. Thomas Bohuslav will present.

MR. BOHUSLAV: Good afternoon, commissioners. My name is Thomas Bohuslav, director of the Construction Division.

Item 13(a)(1) is for consideration of award or rejection of Highway Maintenance and Department Building Construction contracts let on May 8 and 9 this year. We had 32 projects; average number of bids per project were 4.2.

We have one project we recommend for rejection. There were seven bidders on a project in Harris County, project number 4003. It was 9 percent under. I know it is under but we have a problem with a material requirement there, we specified the wrong type of material, it's a material issue, significant issue in the project and it is not fair to all the bidders to award it as it is. We need to go back and fix that and go back and re-let the project.

And with that, staff recommends award of all the projects with the exception noted. Any questions?

MS. DELISI: No questions. Is there a motion?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. Motion passes.

MR. SAENZ: Thomas will present now agenda item 13(a)(2) dealing with Highway and Transportation Enhancement Building Construction projects.

MR. BOHUSLAV: This item is for the award or rejection of Highway and Transportation Enhancement Building Construction contracts let on May 8 and 9. We had 44 projects; an average number of bidders of six bidders per project, or 6.2 bidders per project -- and that's pretty significant, that's much higher than where we've been.

We have one project we recommend for rejection. It's in Eastland County; it's project number 3002. We had five bidders on this project but it's 38 percent over. It's a rehab project on IH 20 there and there's concrete pavement on the job and it came in about 55 percent higher than what we had experienced about two years ago. We want to go back and redesign and rescope the project and see if we can't bring the cost down.

Staff recommends award with the exception noted.

MS. DELISI: Is there a motion? I'm sorry. Do you have a question, motion?

MR. HOLMES: It was a motion.

MS. DELISI: Okay. Is there a second?

MR. UNDERWOOD: Second.

MS. DELISI: All those in favor?

(A chorus of ayes.)

MS. DELISI: None opposed. Motion passes.

MR. SAENZ: Thank you, Thomas.

Agenda item 14 deals with our routine minute orders that deal with donations to the department, eminent domain proceedings, highway designations, load zoning and posting, right away dispositions and donations, speed zoning, and for this month we've got a transportation enhancement project. We have reviewed the minute orders and we do not see where any of the commissioners have any conflict, at least in what our research has. Staff would recommend approval of these minute orders. We would be happy to answer any questions on any particular minute order you may have.

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed. The motion passes.

MR. SAENZ: Yes, ma'am. That concludes our agenda items. There is no need for an executive session.

MS. DELISI: Okay. This concludes our discussions.

MR. HOUGHTON: Move to adjourn.

MS. DELISI: Move to adjourn. Thank you very much.

MR. UNDERWOOD: Second.

MS. DELISI: Please note for the record that it is 12:48 and this meeting stands adjourned.

(Whereupon, at 12:48 p.m., the meeting was concluded.)




C E R T I F I C A T E


MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: May 29, 2008
I do hereby certify that the foregoing pages, numbers 1 through 169 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum/Nancy King before the Texas Department of Transportation.

6/03/2008
(Transcriber) (Date)

On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731

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