Texas Department of Transportation Commission Meeting
Ric Williamson Hearing Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483
Wednesday, September 24, 2008
Deirdre Delisi, Chair
Ted Houghton, Jr.
Ned S. Holmes
Fred A. Underwood
William Meadows (not present)
Amadeo Saenz, Executive Director
Steve Simmons, Deputy Executive Director
Bob Jackson, General Counsel
Roger Polson, Executive Assistant to the
Deputy Executive Director
MS. DELISI: Good afternoon. It is 1:33 p.m., and I'd like to call
this special meeting of the Texas Transportation Commission to
order. Note for the record that public notice of this meeting,
containing all items on the agenda, was filed with the Secretary of
State at 3:03 p.m. on September 16, 2008.
Before we begin today's meeting, please take a moment to place your pagers, cell phones and other electronic devices in the silent mode.
Today's meeting is the first in a series of meetings we'll be holding to provide an opportunity for the commission to receive briefings from TxDOT staff about important strategic objectives. Meeting in an open forum gives us a chance to deliberate as a commission, gain greater understanding of these weighty subjects, and provide guidance as to the direction the commission would like to see the department take to best deal with these issues.
We will accept public comment that is relevant to any of the posted agenda items but we will not have an open comment period as we do during our regularly scheduled meetings. To comment on an agenda item, we ask you to fill out a yellow speaker's card and identify the agenda item you wish to speak on. You can find these cards at the registration table in the lobby, and we will limit each speaker to three minutes.
Do any of my fellow commissioners have any questions or comments at this time?
MR. HOUGHTON: I'd like for it to be noted that one of our fellow commissioners is not with us today. He is probably on some exotic hunting trip in the northwest.
MS. DELISI: As I recall, was this his idea to have this workshop?
MR. HOUGHTON: Yes, his idea to have this.
MS. DELISI: It is duly noted for the record he is not here.
That being done, Amadeo, I'll turn it over to you to take us through today's agenda.
MR. SAENZ: Thank you, Madame Chair.
We'll begin today with a discussion item, item number 1 deals with the restructuring plan for the department, and I will lead that discussion. I'm going to go down to the podium and do the presentation from there.
Good afternoon, Madame Chairman, commissioners. For the record, I'm Amadeo Saenz, executive director for the department.
The first item on the agenda today is a discussion that deals with our TxDOT restructuring plan. Our restructuring goals are simple: we want to improve efficiency, accountability, transparency and project delivery. I also want to be able to do this with having the least amount of impact to our employees. I'm going to go into a detailed review of the history of our restructuring process, but as an overview, we had a restructuring core team that recommended that we divide the restructuring into two phases.
Phase 1 is the regionalization of our district functions, that is, to consolidate functions replicated in some districts and to develop regional functions that help us deliver projects and improve transparency with regard to TxDOT's financial and project development information. The plan for Phase 1 is about 95 percent complete and it's the focus of today's presentation.
Phase 2 will look at restructuring the divisions and the offices and how they coordinate with the regions and the districts. The core team recommended that we delay that restructuring of the divisions and offices until after we've done Phase 1 so that we could see how those offices would then intermingle or work together. I estimate that we will not be able to do Phase 2 until sometime after the legislative session and we get Phase 1 implemented.
Again, the focus of today's discussion is on Phase 1. To start that discussion, I would like to go through a PowerPoint presentation that you have before you and also it's up on the screen. That will tell you what the regionalization looks like, why we are regionalizing Phase 1, some of the history that we've gone through to get us where we are today, how the regions will work, and what do we need to do to continue to get this implemented.
This slide shows the functional organizational chart for the region. There are two elements that we would like to regionalize: on one side we have the operational support, the other one is the project delivery support. These support functions are sometimes called necessary evils, and that's not really right to say, but these are things that are good; these are things that we have to have. We have them at every district. It is our obligation as good stewards to have a strong, lean, efficient and capable support operation so that we can put as many dollars as possible on the transportation system.
On the left side of your chart, as you view it, is the operations support. These are the functions that are replicated in each of the 25 districts and we'd like to consolidate these functions into a regional environment to reduce overhead costs, minimize redundancies, balance workload over the region, leverage the technology available that we have, and of course, this will allow us to become more efficient. These functions were needed in every district because the districts were self-sustaining and self-sufficient and they need them to be able to function properly. Today we can sustain operational support in a regional environment with fewer FTEs through the use of technology and the different approaches which we believe will lead us to additional cost savings for the department.
And the functions that are on the operational support deal with resource coordination, equipment management in our shops, facility management, our information systems, accounting, sign manufacturing -- this is something we were already doing in part of the state -- our purchasing functions, our warehousing functions and our training functions. We think that as we combine those and we spread that work across a much larger geographical area, we can then have a balanced workload and realize some savings.
On the right side of the chart is what we call the project delivery support group. Many of these functions also exist in the district and certainly where there is availability to be able to consolidate them, and we will reap some benefits and rewards. The main goals of regionalizing these elements are to improve project delivery and enhance transparency. For example, we'll enhance transparency in the areas of project scheduling, MPO coordination and corridor planning. These are functions that exist in every district but we're placing additional emphasis on them to obtain the outcomes desired by the public.
For example, with intentional and systematic project scheduling, we can better manage and monitor projects and the development. If one district gets behind schedule on a project, the region can assist the district by adding resources or eliminating bottlenecks to get the project back on schedule. And we can utilize the existing schedule and project information system in a web-based interface that provides that project information to the public and the public knows exactly where that project is and what the status is, and when that project will be ready.
We will enhance project delivery in the areas of environmental, right of way, consultant management. We've already developed a model for the environmental area that moves the responsibility for projects that fall under what we call the simpler environmental documents, the programmatic categorical exclusions that meet that criteria, down to the region, and that work can be approved at the regional level, thus allowing our people in Austin in the Environmental Division to work only on the more complicated documents. Thus, we're able to process more work more efficiently.
MR. HOUGHTON: Amadeo, excuse me. Right now are you saying that all the environmental work is done in Austin?
MR. SAENZ: Right now, prior to us looking at this environmental restructuring for the programmatic categorical exclusions, all the work was done in every district. Then all that work had to come to the Environmental Division for them to review and approve those documents before the project proceeded.
MR. HOUGHTON: Does that mean you're going to be hiring new people in these districts?
MR. SAENZ: No.
MR. HOUGHTON: Not that I'm against it. The expertise will be there?
MR. SAENZ: Yes. What we'll have is we'll have people at the region that will be the reviewers and processors in helping the districts processing those simpler environmental documents without them having to come all the way to Austin for them to be reviewed. Thus, the Austin people now can concentrate on the environmental assessments and the environmental impact statements which are the more complicated documents. So we'll have more people working on the documents but at different levels. We will still have the checks and the balances in that the Environmental Division will go down and audit the region to make sure that we are following the requirements for the PCEs.
MR. HOUGHTON: One of the things in my tenure on this commission that seems to be a recurring theme from district engineers and our partners around the state is the environmental issues, backlog or reviews. Is this going to be able to streamline the environmental process to move projects ahead sooner?
MR. SAENZ: It will allow us to streamline in that, for example, by being able to do and approve the simpler documents at the region, the people that are in Austin can work and concentrate on the more complicated documents instead of having to pull off of those to process the simpler documents to meet our letting schedule. A majority of our documents are the programmatic categorical exclusions and categorical exclusions and I have people in Austin that are reviewing on the documents. I'm working on an EIS but every month I have to process so many projects that also have environmental requirements, so I've got to pull off the EIS to process that simple CE or PCE, and by the time I've come back, I've lost time on the EIS. This will allow me to concentrate on the complicated documents out of Austin and let the simpler documents be reviewed and approved at the regional level. Thus, most of the monthly projects will never have to come to Austin for review.
MR. HOUGHTON: That's great.
MR. HOLMES: Amadeo, is it your judgment that the districts don't have the competency or personnel to perform the duties required on the simpler environmental documents?
MR. SAENZ: No. I think they have the competencies and the personnel to do that, but every district is doing it and I have more people in one district than the other, and if I can set up a regional concept of a key group of those same people to be the reviewers, I'm able to process for that whole region documents much faster.
MR. HOLMES: But you've simply moved the review from Austin to the region.
MR. SAENZ: Yes. We still would have to have a review and a check-off but it's done by people that are closer to the project, that are more familiar with the area and the types of projects and still have the competency that they know what the requirements are and they're able to approve those. We've delegated the responsibility of approval to a group of people that's much closer to where the work is being done. With the control based on that the Environmental Division will still go back and audit and check to make sure that we're in compliance.
MR. HOUGHTON: I imagine you're going to get into this -- I hope you will -- have you defined the regions?
MR. SAENZ: Yes, we've defined four regions.
MR. HOUGHTON: Are they in here?
MR. SAENZ: I don't think I put them in there but I'll name them. We're going to have a regional office in Houston, a regional office in Fort Worth, a regional office in Lubbock, and a regional office in San Antonio. But by saying that they're the regional offices does not mean that I'm going to move all those people into that office. My goal is to still keep a lot of the people working at the district where they're at, or most of the people working at the district where they're at, but then reporting to this regional coordinator who is managing the much larger area and is able to then spread the work around to ensure that those duties that the region is responsible for are balanced and done in the most efficient way possible. So I'm not moving people but they'll have a much wider area of responsibility for the work that they're doing.
MR. UNDERWOOD: Amadeo, a quick question. Approximately 466 FTEs will be reduced. Is that correct?
MR. SAENZ: Yes, sir. What we looked at, we think that we can save 466 FTEs. Now, that doesn't mean that we're going to have to reduce or lay off 466 people because right now --
MR. UNDERWOOD: That's my question. In other words, these people are not going to lose their job; they may have their job description or whatever they do change. Is that correct?
MR. SAENZ: And in the short term, first of all, no one is going to lose their job because right now we are about 1,100 people below our FTE count within the department. So really, I could hire 700 more people and still be at my FTE goal; I just don't have the right people for the right jobs out there. In looking at the planning and the staffing levels, what we want to do is once those functions are identified to be regionalized, they will then report to this regional coordinator, regional director, and they'll be responsible for the regional duties. They'll still remain in the offices that they work in, but they'll be working on projects that are more than just for that particular district.
The same number of people I have in accounting, for example, in Odessa will still be doing the accounting work in Odessa, and through time and attrition, I'll get them to the right level that we need for the region. But at the beginning I'm going to continue to operate with the people that we have doing that work. I will then use those people there, along with the people in the other districts that are part of the accounting, to balance the workload for the region.
As we go through, there will be opportunities for those people to apply for other jobs in the particular district or if they want to apply for a job in the region, they can, but no one will be displaced as we implement the regional concept.
MR. UNDERWOOD: So what you're saying is they will not lose their job but they will have the opportunity, if they want to, to apply for another job.
MR. SAENZ: Yes, sir.
MR. UNDERWOOD: Thank you.
MR. HOUGHTON: Amadeo, I'm going to continue to focus a little bit on the environmental since that seems to be, again, an issue. It seems to me that Houston and Fort Worth, where you have the regional, would require more high profile, high tech environmental folks than take my region, El Paso, because of the toll road issues, size of projects, corridors, things like that. So will you have, in fact, that kind of heavy lifting available in those two regions?
MR. SAENZ: We will. Now, remember that the environmental work that we're going to be processing at the region will be not the EISs and the EAs that we need for those toll projects, but really all the other environmental documents that we need for the other types of projects. And about 80 or 90 percent of our work is either a categorical exclusion or a programmatic categorical exclusion, and by those it means that these are jobs that are preventive maintenance projects or simple rehab projects.
All of those qualify for those easy type of environmental documents. Those we'll process right there at the district. We have the people that are very familiar with doing that work, that have the expertise to do that work, and we're going to delegate to them the responsibility to, in essence, get that work assigned and get it approved and we'll have the audit capability to go check to see how they're doing.
MR. HOUGHTON: It seems like to me you'd have the more technical work on the EIS in those regions because that's where they're generated.
MR. SAENZ: Right, and then the district is still responsible for the development of that environmental impact statement, the EIS or the EA. What I'm doing is I'm going to be using the Environmental Division to help me process and approve those documents and free them up from having to be tied up with all the other documents that come before the Environmental Division now.
We've already implemented this thing or a hybrid of this thing using the Lubbock District as kind of our regional template, and we're already seeing some of the fruits of our labor that this thing does work. So we're trying it, and of course, as we implement we'll be able to see how good it works and if we need to tweak it, we can tweak it some more.
MR. HOLMES: Amadeo, it seems to me a very logical and sensible process to push some of this work into folks that are closest to the physical location that they're working on. I mean, I understand that and that makes sense to me. But clearly, we're creating another level of bureaucracy. Right now we've got Austin and the districts and you're creating one in between that are the regions, and I think it's going to require careful monitoring to make sure that it actually is more efficient.
MR. SAENZ: Yes, and we will.
MR. HOLMES: Otherwise, it's just another level.
MR. SAENZ: In this case for the environmental, we'll have the division and the region will be doing what the division is doing right now, but the division will only be auditing some of the regional work just to ensure compliance and not necessarily rechecking what the region has already done.
MR. HOUGHTON: It seems like the rechecking is a big issue.
MR. SAENZ: Right. In other words, the district will do the environmental document, the region will assist them and clear that environmental document, and then it processes the job as built. The division will clear environmental documents that are the complicated projects and also do some auditing of the regions, but it's just to ensure that we're complying and not necessarily redoing what the region has done.
MR. HOUGHTON: Can you not push all the environmental out to the regions?
MR. SAENZ: I think in time we will. As we get through there and we develop the expertise level at the regions, we'll be able to do that. We figured that it was better to crawl before we walk.
MR. HOUGHTON: I understand that, but you can, in fact.
MR. SAENZ: Eventually we will be able to do that.
MR. UNDERWOOD: But Amadeo, when you do something like that, I'm just looking at, say, you right-of-way people -- you've got a big project; you're almost winding up this big project. What are you going to do with those right-of-way people?
MR. SAENZ: Well, that's a very good point in that right now every district has right-of-way sections, and sometimes you're busy buying right of way. I'm going to use Lubbock as an example. They were very busy buying right of way for Marsha Sharp. For all practical purposes, we're done buying right of way for Marsha Sharp and we don't have much more right of way to buy in Lubbock for other projects.
We can then use those people to help me buy right of way in Amarillo, help me buy right of way in Brownwood, help me buy right of way in Midland-Odessa. So I now have a bigger area to be able to balance that workload, and that's how we'll be able, instead of having to go up there and gear up and bring more people for buying right of way in those other districts, we have a pool of people that we can send to do that work.
MR. UNDERWOOD: That's the whole point of regionalizing and whatnot, it allows you to get more bang for your buck. Otherwise, you'd have to end up staffing up again in Amarillo or Odessa or Abilene or wherever; now you can use those people throughout that whole area.
MR. SAENZ: Right. I can now use those people over the entire area instead of just that one district.
MR. UNDERWOOD: Or move some of those and now you have to re-staff up here with the right-of-way people; now you use those throughout the whole region.
MR. SAENZ: Yes.
MR. UNDERWOOD: Thank you.
MR. HOUGHTON: What region is El Paso in?
MR. SAENZ: El Paso is in the Houston region.
MR. HOUGHTON: That makes regional sense. Sounds like gerrymandering.
MR. SAENZ: No. It's in Lubbock -- unless you want it somewhere else.
MR. HOUGHTON: No, I'm fine. Thank you.
MR. SAENZ: Now, where was I?
MR. HOUGHTON: After you've been interrupted about 50 times.
MR. SAENZ: That's all right. I like the questions and answers better.
A good question is why are we regionalizing, and many people have asked that question. And the answer to that is twofold: we have expectations, both internally and externally, to make the department better; we, as public servants, need to always be looking at how we can become more efficient, more effective, and try to make things better in the things that we do to better serve Texans. And the way I look at it, regionalization will help us get there.
We did receive some clear expectations externally from the Sunset Commission and early on they talked about regionalization. Even though their report did not make any recommendations, but what Sunset staff told us is we did not know how to do that; only you know how you all could restructure yourself to become more efficient. So we have been in communication with them and keeping them in the loop as to what we're doing.
We received, also, some recommendations when we did our pre-Sunset audits. At the same time, I mentioned, I was named executive director, and every executive director looks at the department and sees how he can make it a little bit different and a little bit better. This was also one of the questions, if you recall, as part of the interview as to what we would do to try to improve the efficiency of the department.
So with that, we looked at that, and to that end, we believe that regionalization will save us about 466 FTEs and save us about $29 million -- and that's just the salary of the employees. I'm not able to measure how much more we will gain in the actual efficiencies but I'm going to make sure we measure that so we can see how much more we save as we implement the process.
MR. HOUGHTON: If you can speed up the process, that's an efficiency that sometimes is measurable, sometimes not. But if you can speed up that process, and just for the record, Amadeo, the sooner you can decentralize environmental out to the regions that understand their environmental needs -- like Houston or Fort Worth-Dallas, the regions that have huge tolling operations and complex projects -- the better, in my opinion.
MR. SAENZ: I'd like to kind of carry you through some of the restructuring history. Like I said, in 2007 we did our pre-Sunset audits. Both Deloitte and Dye Management Group reviewed our operations. They looked at management and operations; they looked at the five categories. Those audits recommended, among other things, that we consider, one), consolidating functions that were replicated in each district; they also said develop methods for sharing best practices; they said modify district central office roles where it makes good business sense; and four), develop processes to better manage project development. We think that regionalization will get us moving in that direction.
In April of 2008, I created a team to study the possible restructuring and I gave them the guidance that you see on this slide. We wanted to identify efficiencies; we wanted to remove barriers that prevent us from being cohesive and agile; we wanted to embrace change; we wanted teams to look at functions and recast TxDOT in a more efficient manner. And of course, they were to make recommendations to the administration.
In July of 2008, the core team recommended a phased approach to restructuring, as I talked about it a little while ago. They recommended Phase 1, to do it now, which is the regionalization of the districts and the functions, and Phase 2 would be after the session or really once we've put Phase 1 in place. So Phase 1 basically looks at the districts and the regions, develop these staffing numbers, develop the duties, develop how they're going to operate, and then move forward.
So on July 18, I went ahead and distributed a memo to our department where I outlined the restructuring plans and I agreed with what the core group had recommended. I also said at that time that I wanted them to go out there. I named four interim regional business directors -- and a couple of them, I think, are here, two of the four: Mary Meyland and Tim Powers. Tim is the North Region in Fort Worth; Mary was doing Houston Region, and then Mario Medina was doing the San Antonio Region. But Mario was named San Antonio District Engineer, so I went ahead and asked Mary to take care of the San Antonio Region at the same time, and Lauren Garduño is doing what I call the West Region.
I gave them specific directions to work with the district engineers and to develop detailed implementation plans, including a staffing plan and to communicate with and involve employees in the process, and that's good. I wanted them to make sure that what we were doing, we were doing in an open environment and let people know what we were doing, and we certainly got some feedback on the plans as they were evolving with that.
In August of 2008, the DEs nominated the district subject matter experts to help these interim regional business directors. These people were charged with developing detailed plans, as outlined here in the slide. They were to look at developing the implementation plan, look at defining the duties between the district and the region, look at what constraints were out there, what were the risks of doing it, what would be the staffing needs. We wanted to make sure they were underpinned by matrices so we could measure what we needed. We wanted to see how the regions would work, and we wanted to make sure that what came out of that report was making the department better than what it was.
We had over 100 people that were very experienced in the department and highly regarded that put together this functional workgroup. They did a tremendous job and started putting these work plans together.
They came up with a plan, and as they were working with our employees and the districts, everything generated from not really what the plan was going to do but what was the staffing plan that was going to happen and what was going to happen to jobs. So in September I put out a memo to all employees that clarified what we were trying to accomplish with respect to the staffing criteria that we were going to use, and that's where we talked about that we were going to use the virtual office concept where people will remain where they're working but they're reporting to a regional director and now have a much larger area of responsibility but they're doing their jobs at the place that they work.
No one would have to compete for their current position; no one would have to apply for their job, because there were rumors out there that all 11,000 people that we had out in the districts were going to have to reapply for their jobs; no one would lose pay. And then as we moved forward, we realized that we were going to have temporary overstaffing due to that we had more people doing the work than what the staffing plans would call for, but we would reach those staffing levels through attrition. So the interim directors developed the revised staffing plans based on this clarification and we've been moving forward.
As I mentioned, because we have initiated what we call a hiring chill, we were over 1,100 vacancies under our department FTE allocation, so this will allow us to be able to work with the staffs that we have out there to make sure that we can reach a balance.
We've also put together some functional workgroups to, in essence, take a look at each one of those functions that we had identified as potential regionalization functions and they developed a work plan and a staffing plan for each one of those. And we also asked the interim directors to go out there and take those staffing plans and to develop what I call the executive summary, or a one-pager that basically identified the plan, what was the benefits of each one of those functions, and prepare those. Right now we have received the work from the workgroups and the IRDs, and the district engineers and division directors. I've asked them to review and comment on that work, and we're going to do that.
The next thing that we're doing is I've asked Deloitte Consulting to then take our reports that have been developed by those workgroups -- because they were developed by different workgroups, they all had a little bit different style in the writing; even though we gave them a template, they all created the report in a little bit different fashion -- we are now getting Deloitte to do a couple of things. Deloitte had been one of the outside firms that had done the original audits, to see how what we're proposing compares to what they recommended in the pre-Sunset audits, and also then to rewrite the draft and professional edit that draft so that they're all consistent and they all are in the same English language, I guess you might say -- or in this case, Deloitte language. And we've asked them to complete that by the 15th. That's kind of where we are today.
What I plan to do now is once I have this, we're going to then post these plans on the internet, on our website, and I've told our employees we're going to let them review and comment on the plan.
I skipped one. The DDOs reviewed them, we've taken those comments from the division directors and office directors, as well as audit and OGC and incorporated them into the reports. Deloitte will rewrite them and then we will post them on the website for our employees to look at. We will then take the comments we receive from the employees and finalize the plan. Of course, the regionalization cannot start until I look at it and I sign off on it, and I also want to be able to bring it before the commission for you all to, in essence, approve us moving forward through a minute order for getting this thing implemented.
All in all, I think this has been a very well-worked-out process. The employees that worked on it have done a tremendous job, and I think when our employees are able to see this finished product -- or it's still a draft because I will let them comment and we probably will have some changes to the plan based on the comments that we have because we have a lot of people that are interested in this -- I think we will have a good plan to implement. And we can implement it -- as I mentioned, no one will lose their job; everyone will continue to work. It will give us an opportunity to evaluate how it's working, to ensure that we are realizing the efficiencies that we estimate we will realize, and then if changes need to be made, we'll make changes to the plan, and then we move forward.
So with that, I'll close and be happy to answer any additional questions or comments, and if there's any direction from the commission. I know you've already given me some, but this is kind of where we're at.
I want to thank Mary and Tim and Lauren and Mario and everyone that worked on this thing. Steve was supposed to present this since he is the chair of the workgroup that was working on this thing, but we had to send him somewhere else so we had to be flexible, so I drew the straw. Any questions?
We think that by the 15th we'll get the Deloitte report, we'll post it on the website, give our employees a chance to comment. We'll take those comments probably by sometime in November, and hopefully by the end of the year we'll be able to come to the commission with a minute order requesting your approval and authority to implement the regional concept.
MR. HOLMES: And from that point how long do you think it takes?
MR. SAENZ: From that point, I think within a year I will have -- well, I think I can implement, based on the virtual offices, almost instantaneously. We'll start hiring the regional service directors and the key staff people will have a chance to apply for those jobs, and get them to start working and put them in place, and I would say within six to eight months we'll be fully implemented.
We still will not be at the staffing levels but we will be fully implementing the process and be able to start seeing what efficiencies we are realizing. And then as we go through time, we'll be able to evaluate what efficiencies we are realizing, and if we need to make some changes to make it better, we can tweak the process.
MS. DELISI: Thank you, Amadeo.
MR. SAENZ: Thank you very much. And now the next person, I guess, will be Ed Serna and James Bass will now present the discussion item that deals with an analysis of our potential policy and operational changes needed to ensure transparency. So Ed, I think you're up.
MR. SERNA: Good afternoon. For the record, my name is Ed Serna; I'm the assistant executive director for support operations. I don't have as fancy a presentation as Amadeo did, and it should be relatively brief, more open to questions and discussions.
I met a couple of times with Commissioners Holmes and Underwood concerning a particular aspect of the transparency project -- and of course, we do realize that transparency is spelled with an E, not two As, but that's my error, or Spellcheck's error -- but the area that I'm focusing on is executing a contract with a firm to bring a team onboard that will conduct a business requirements analysis for us, as well as a systems analysis, to determine not only what systems need to be changed or improved but also what processes and operational functions need to be changed or improved to enhance our transparency and our efficiency and our accountability.
One of the things that I've received very clearly, instructions from -- not instructions from the commissioners but in briefing them, very clearly I understand that we're coordinating our efforts with the Comptroller's Office. The Comptroller's Office has a statewide enterprise resource planning project, ERP, which is basically financial, human resources and payroll. They have a statewide project underway to develop a new ERP. We are coordinating our efforts with them. I've met with her chief technology officer, Comptroller Combs' chief technology officer, Victor Gonzales.
I believe James has met with Victor and his staff as well, as recently as Monday, and I met with Victor by phone from Yellowstone on Friday of week before last. But we're ensuring that our efforts are in coordination with what the Comptroller's Office is doing, and we'll make sure that we continue to work with that office so that we don't kind of run askew or afoul of the statewide effort or duplicate any statewide effort.
Where we're at right now is we've developed -- and I say we, collectively; in your briefing document there's a list of the employees that are working on this from TxDOT -- we've developed a request for proposal to contract with a firm to bring onboard a project manager and then teams to conduct business analysis and systems analysis. Right now that document is being reviewed by a contract advisory group that's made up of the Comptroller's Office, the Auditor's Office, the Legislative Budget Board, the Department of Information Resources, and the Office of Attorney General. All contracts or all potential bids over a million dollars have got to be reviewed by that group, so it's not anything unique to our project. We do believe that this effort will be in excess of a million dollars, but I don't know how much yet, and that's why we're going through this process.
Once we get the comments back from that team, then we'll post the RFP; we'll get the responses back from the vendors. There's an open question on whether we should post for 21 days or 35 days, and the only difference is whether we allow additional time to the respondents to go out and collect information concerning subcontractors to work with them. And it's not that they wouldn't do it under the 21-day scenario, it's just do we give them enough time to do that more than 21 days. But we'll get their responses in. It's a normal structured process that we use at TxDOT. We'll go through that process to select a vendor, get a best and final and negotiate a contract, bring that team onboard, and then get moving.
One of the things that's been emphasized to us, and we understand very clearly, is that in gathering our business requirements we intend to make sure that we look at the needs of our stakeholders outside of the department. So it's not just what the Finance Division needs or what the Technology Division needs or one of the other divisions needs. But rather, in addition to that, we're looking at the needs of our external stakeholders as well. So the MPOs, the RMAs, the legislature, other external entities that have a stake in looking at the information that TxDOT has and making that information available to them.
The biggest -- I'm going to use the word "concern" that I have, or one of the biggest issues that I have has to do with timing of the total project. For example, it took the TxDOT staff a little bit under two weeks to develop the RFP that we've sent off to the contract advisory team. The contract advisory team, we have every confidence, will give that document a thorough examination, but by statute they have up to 30 working days to review that document, so worst-case scenario, we may not get our RFP back from them until October 20.
At that point, if they have recommendations or comments, we'll incorporate those and get it posted, but if they take as long as they can -- and I'm not saying that they will, but if they do -- we won't even have the document out for vendors to respond to until sometime after October 20. Twenty-one days after that for normal vendor response, and then negotiation time, we may not -- I don't have a fixed timeline yet, but it could be that we're not actually starting the project until towards the end of the year or the early part of next calendar year.
I know that there's a great deal of urgency concerning moving this project forward. We, the TxDOT staff that are involved in it, will continue to give it a lot of emphasis, as I'm sure everyone else will, but we definitely will. But that's just something that I want to flag to the commissioners is that concerning the amount of time that a procurement goes through -- just its normal process, could end up having us not start the project till towards the end of the calendar year, the beginning of next calendar year. But I'll continue to brief the commission on this.
I know when I spoke to Commissioner Holmes and Commissioner Underwood, one of the things that they asked is that I at least provide a regular monthly briefing, if there is information, to update the commission on where we're at with this project, not only up to the point of contracting with the firm, but also as we move through the analysis and our work with the Comptroller's Office.
I don't know if you have any questions concerning these aspects of the transparency project and where we're at right now.
MR. UNDERWOOD: I want to make sure, Ed, that when we talk about this that everybody understands this is not a one-time project; this will be an ongoing project -- as far as I'm concerned, forever -- because we're trying to stay transparent.
MR. SERNA: Yes, sir.
MR. UNDERWOOD: And we're working with the Comptroller to the point of trying to decide whether or not to share equipment with them or have our own equipment. Isn't that correct?
MR. SERNA: Yes, sir.
MR. UNDERWOOD: We don't care whichever is going to work; best is what we're interested in. Is that correct?
MR. SERNA: Yes, sir. We don't have a preference and we're not going into it with any preconceived notions other than we need to make sure that TxDOT's interests and needs are met by any system, whether it's one we acquire and run or whether we're using the Comptroller's Office system. And in my conversations with Mr. Gonzales, the Comptroller's CTO, he's indicated the same position from the Comptroller's Office, that their interest in evaluating it is whether if we use the system that they have -- computer, whatever -- that it meet our needs or that working with us, they determine no, this doesn't work; you guys have got to go off on your own.
MR. UNDERWOOD: Because whatever meets our needs also needs to exceed our needs. Because I can envision a lot more as we go along that people are going to want more from this transparency or whatnot.
I just want to remind everyone that we want to make sure that all stakeholders have input in this and have access to it, and where it's user-friendly, so to speak. That to me is critical. And I'm not talking about Dallas and Houston, I'm talking about the smaller communities, whether you be in Childress or whether you be in Del Rio or whatnot, that you're able to access that information. You don't need to have a computer guru to help you get in there and get the information you need for your area and your region.
MR. SERNA: Yes, sir. One of the things that we'll emphasize to whichever firm that we contract with is that the ultimate result be a system that not only meets the department's needs but meets the stakeholders' needs, and that's why when we do what I'm describing as a business requirements analysis, when we ask people what is it that you want in a system, that we not just look to TxDOT employees and TxDOT divisions, but we're going to go out to those local governments, to those metropolitan planning organizations, the regional mobility authorities, et cetera, and we'll continue to refine that as we move forward.
MR. UNDERWOOD: But I'm going to reinforce this now, Ed. I want to make sure to where if you're a small entity or whatnot; you cannot justify a computer system; I would like for this -- and I think you'll agree with me -- that you could use our system and massage information, see how much money you have, see what projects you have, move the projects back around. Because as we get a rescission or whatever, all of a sudden your whole world changes and whatnot -- you have less money, so which is more important -- and allow them to be able to massage that information and come to TxDOT and say we've changed our mind. This is what our project lists are, where we want to go first. We know we have X amount of money, the amount has shrunk or whatnot, and here's what we think is important. And they need to have that ability in a small community to be able to see what's going on, not only see what's being built but have the flexibility to do their planning.
MR. SERNA: Yes, sir, and I heard that loud and clear when I met with you and Commissioner Holmes as one of the, I guess, primary directives or primary goals is that we have a system that our external users can use to do some of their planning. When I say some of their planning, it could be that for a larger organization this is just a component of what they're doing, but for a larger organization, it could be all of their planning with regard to transportation.
MR. UNDERWOOD: I'm just thinking of rural Texas and whatnot. They don't have this big operation over here; they're living like a lot of us, hand to mouth, so to speak, so we really want to be able to make that usable to them. Thank you.
MR. SERNA: Yes, sir, that's clear.
MR. HOLMES: Just a couple of points. There are quite a lot of interested parties, and clearly, the transportation planners around the state, as Commissioner Underwood has noted, need to be able to access the system, but we want the legislators, House and Senate, the Governor's Office, the Lieutenant Governor's Office, the Speaker's Office, and the public in general. And one of the things that we have also requested, Ed and James, to do is to make sure they liaise with some of our MPOs around the state that have capacity and have fairly well-defined needs so that they can give input into the system.
And I'd also like to acknowledge the help that Susan Combs has given. She's been personally involved, as well as through Victor Gonzales, and she's been very supportive of these efforts, and I'd like to acknowledge that -- we're very appreciative of that.
This is a system that is going to take a while to develop, but there is a process, kind of an interim process, that David Casteel and Mary have been working on, to provide some kind of interim relief in efforts of transparency that is a process that is ongoing now. It might well take this system, I don't know, Ed, another year or so to be really developed.
MR. SERNA: Yes, sir, it will.
MR. HOLMES: And so there's this interim step, plus then a more permanent step, but as Fred acknowledges, this is always going to be an ongoing project.
MR. SERNA: Yes, sir. And I've been involved in the efforts of David and Mary with regard to making more information available from our existing systems on the web, and that project, as a matter of fact, has got its own small phases, this initial phase that you've described which is some quick information on projects and we'll continue to work and expand that. And it's almost like we're going to have two tracks, for lack of a better description: one), where we'll take the work of the team that Mary is leading and continue to expand on that and make information from current systems available to the public, and then this other track that looks at not only our systems but our processes and looks at replacing systems. And eventually we'll get to a point where we replace what's basically just a view into TxDOT with this more robust view and interactive system that organizations can actually use for their transportation planning.
So we're going to be kind of running two tracks. We want to continue to improve the efforts that Mary and David had started with what we're describing as either a dashboard or a windshield, or whatever you want to call it, looking at TxDOT and continue to add to that while we're undertaking this other effort as well. And that's why we're kind of relying on bringing a firm in to help us also because of that expertise.
This is a pretty significant undertaking with regard to looking at a department, an organization as large as ours, and saying not only what computer systems do you need to change, what processes do you need to improve. It's best that we get somebody from the outside so that we don't, one), have any misunderstanding on a preconceived notion, and then, second), there's expertise that we simply don't have in this area. TxDOT doesn't implement a whole bunch of financial systems and ERPs very often. I think the last time we implemented a financial system was 20-plus years ago.
MR. HOLMES: I just wanted to make sure that the public understood that there is an initial project to improve transparency, and then there is this much more significant project that is going to take a year or so to accomplish, but there is progress being made currently.
MR. SERNA: Yes, sir. If the commission would like, what I can do is at the next briefing, I could include not only information on where we're at with this larger project but also, in these meetings or in the commission meetings, keep the commission informed on where we're at with that windshield or dashboard project as well, and kind of combine the two into an update. And that will also allow the public the opportunity to get updates as well through this mechanism.
Any other questions, comments, thoughts?
MR. SAENZ: Good job, Ed. Thank you.
Agenda item number 3, James Bass will provide us an update on the status on the implementation of the recommendations to the State Auditor's report on cash finance forecast.
MR. BASS: Thanks, Amadeo. And if I could for just a minute, add to what Mr. Serna said. I certainly agree with everything that he said. We're working hand in hand with the Comptroller's Office, trying to integrate as much of our financial transparency into this statewide effort led by the Comptroller's Office. But from your comments -- the two commissioners that form our subcommittee -- you're highly focused on our planning and programming activities through the MPOs, through the regions of the state. That may or may not be a part of the statewide solution led by the Comptroller's Office. We certainly want to fit as much as we can, but my point is I have a feeling that even if we go as much as we can within the scope of the Comptroller's Office, the automation needs of TxDOT are far greater and far broader than just what may fit into that overall effort.
One other thing, that statewide effort, just to set expectations of the Comptroller's Office, is a multi-year effort before it would be fully implemented, but obviously in between we cannot just sit around and say well, somebody is working on that; we're going to wait till it's done. There are steps that are going on in the interim. A couple of those that I would highlight is dealing with the programming and scheduling and the categories of funding that's available to our districts. Historically, that information was based and housed in the mainframe, and to get access to it you'd have to log onto the mainframe and submit a batch report and get it back, and if you were in 2008, even though the money you had available to you in 2008 was 2008, 2007, 2006 and 2005 dollars, you would have to run four different reports and add them up to see what was available to you.
Through the efforts of the letting management section and the programming and scheduling of Finance Division, as well as our Technology Services Division, they've taken that mainframe data and put it into a point-and-click environment -- on the intranet right now is all we have it on. And what we have right now is we have some of the high-volume users within TxDOT kicking the tires on it, if you will, going through that system. And the initial comments of all have been very positive that if they want to see the money available in a particular year, it's on one screen; they don't have to run four different reports and try and add them up. It's there available to them.
But we've put that out to somewhat of a limited population to start with, like I said, for them to basically kick the tires, tell us what they like, what they don't like. We can improve that, roll it out to a bigger audience, and we hope to continue to expand the audience that has access to that as we continue to work towards that ultimate solution.
Having said that, moving on to agenda item 3 dealing with the State Auditor's Office report, and as you know, they recently completed an audit on the financial forecasting and fund allocation processes of the department, and that report made a number of recommendations, many of which the department has already implemented. My plan, unless directed otherwise, is to briefly describe each of those recommendations, along with our planned action and current status. One thing I would note is that this very commission workshop meeting will help us to address one of the recommendations that was in the audit.
The first recommendation from the State Auditor was to brief the full Texas Transportation Commission on developments that occur and have a significant statewide impact so that members of the commission can be involved in the process for making any corrections and to conduct these briefings during an open meeting of the commission.
In our management response we said we would continue the practice of having discussion items during the commission meetings and that also we intended to expand this practice and have significantly more discussion items and to schedule these items in a way that provides for greater focus, as we're seeing today. This is a recommendation that technically would say is complete but obviously it's an ongoing effort on behalf of the department and the commission.
The second recommendation in the State Auditor's report was to post Texas Transportation Commission briefing documents on its website at the same time it's provided those documents to the commission. The department will post on the web, three days prior to the meetings, the cover sheets that precede the minute orders for the regular monthly meetings, and that document basically summarizes the background and purpose of the minute order and/or the discussion item, and this implementation is scheduled to happen at the October meeting.
The next recommendation was for the department to include a summary of important information in its cash forecast report and to recommend that we clearly describe any what-if scenarios that are included in that report. The department has an executive summary that will be added to the monthly cash forecast, listing and addressing the concerns of the State Auditor's recommendation, and that is on schedule to happen when the September 2008 forecast is released.
There was a recommendation dealing with a couple of our riders and our reporting on those riders in the Appropriations Act. The first one was Rider 20-B which deals with that monthly revenue report that we submit to the Legislative Budget Board and others, and there were some concerns expressed by the State Auditor's Office whether we were in full compliance with that or not. We obviously want to be in full compliance with that reporting requirement in the Appropriations Act, and so we have had meetings earlier this month with the Legislative Budget Board to make sure that we fully understand what their needs and expectations are as part of that rider and that we're reporting it to them in that fashion.
One of the key things in the rider is it says that we shall list our expenditures at the same level as the line item appropriations that we have at TxDOT so that we would have at least 23 different line items on our cash forecast. Some of you may recall a certain Senate Finance chair showing our cash forecast and saying, I think the quote was: "This is nuts." That did not have 23 line items on it, so one of our concerns -- and the State Auditor agreed -- by adding yet more detail, do we kind of lose the main focus.
But what we're going to do, through the discussions with the LBB, is make sure that we're satisfying their needs; that may not be the needs of all of our recipients. We're going to make sure the LBB gets their needs met, however detailed they want them, and then in a more easily understood format, display that same information, just at a higher level to a broader audience. That is ongoing, and we hope to have the LBB's needs fully and completely met and addressed when we release the November 2008 forecast.
The other rider that it dealt with on our reporting was Rider 39 which directs the department to submit a report that includes a reconciliation of the department's expenditures and encumbrances of appropriation in the General Appropriations Act to the 12 categories of the UTP. Our opinion, this is kind of an ongoing misunderstanding of the department's budget and the role that the UTP plays within that. Some had a concern that the legislature passed an Appropriations Act with those 23 line items and that TxDOT took that back across 11th Street and a couple of months later we came out with 12 categories.
Well, those 12 categories only address two out of our 23 strategies, so our opinion is that the intent of that author of that rider, the actual language does not meet that actual intent. And so if you'll recall, as part of our Legislative Appropriations Request, we are requesting a new rider that takes those expenditures in transportation, construction and contracted maintenance and breaks them down into different informational pieces that we think better addresses the author's intent. However, to make sure we're in full compliance when we're meeting with the LBB, we're asking what their requirements and expectations are in that reporting for that Rider 39, and we will comply with that here in the next month or two.
Moving on, one of the questions and concerns was really the documentation on the approval of the different forecasts or different approvals within the department dealing with funding, and so the State Auditor recommended we develop, adopt and implement a formal documented process for the Finance Division to follow and review in approving amounts used to develop all contract award schedules. This deals with the monthly letting and/or annual letting schedules to make sure that that's reviewed and approved by the CFO and that there's documentation.
On another one coming up on the cash forecast, oftentimes we meet in person and I would provide verbal approval to release the cash forecast, however, verbal approval, there was no documentation. So we're putting a draft policy in place to have that written down and to retain all of those approvals. We have that, we're just now trying to figure out what's the best manual or what's the best place to insert that policy, and if that's not done here in the next week, it will be done in October and placed in a manual.
The next recommendation dealt with the same thing but it was dealing with the cash forecast and the release of that as well. We will make sure that the approval is documented and then retained as we move forward.
Another one dealing with the actual production of the cash forecast is to make sure that there's a process to review manual entries into the cash forecast system that might have a significant effect on the forecast outcomes. We're currently developing a new automation system to produce this cash forecast and it will have more automated process, trying to eliminate as many of these manual entries as we possibly can. In addition, we've already made changes to that current forecast to try and reduce them and also set up a process to make sure that every month those manual entries are reviewed and checked off that someone has reviewed those manual entries and that they appear reasonable.
Another one is to update cash forecast and approval process. Again, this is primarily dealing with documentation. The overall finding of the State Auditor's Office was that the forecast considered all revenues and expenditures of the department and produced reasonable results, however, they felt like some of the documentation was lacking and not where it needed to be, and that's what this recommendation primarily dealt with.
The next one was to complete an annual reconciliation of our cash forecast with the Comptroller's Office annual cash report in a timely manner. We have done a preliminary reconciliation already for Fiscal Year 2008 which ended August 31, however, we won't be able to do a formal one until the Comptroller's annual cash report, their publication comes out for the year and the numbers are final, and that normally happens sometime in December of the year. And so we've done a preliminary reconciliation, we'll do it once we have the final set of numbers from the Comptroller's Office as well.
Their recommendation number 10 was that we continue to work with oversight agencies, such as the commission, the Legislative Budget Board, and the legislative committees to make sure that the report that we produce communicates the information these entities need when making fiscal and organizational decisions. This is one that will be an ongoing, continuous effort and the department will continue to work with all interested parties to make sure their needs are being met.
The next recommendation was going into the operations of the department, consider adjusting districts' work programs when districts' actual expenditures differ initial funding allocations and their work programs. As we've talked over the past few months, this deals with a project initially let and it may be let for $10 million and $10 million is charged against the district's work program. Subsequent to that, there may be change orders throughout the life of the project that increase the cost of that project. We need to make sure that the cost of those change orders gets captured and charged against the district's work program. Some change orders might actually save money to free it up; the majority of them will cost money. We need to make sure that that gets allocated to the districts.
We're doing that somewhat now on a manual basis. Hope to have that fully automated and fully integrated into the system, but we're expecting the implementation on that full automation to be September '09, a year from now. But in the interim, we're still following that process.
The next recommendation was to develop a transparent process that communicates to the districts the reduction in current year funds resulting when a district accelerates projects. Again, as we've discussed in the past few months, at times when a district was able to have projects ready for delivery or for award, if they didn't have current year work programs, that one individual district was allowed to reach out into future years' work programs in order to push those projects forward to deliver them sooner. What was happening from a cash flow standpoint is the reason they were able to do that is because other projects in other areas of the state were running into environmental delay or right-of-way acquisition delay, and that cash flow tie from District X to District Y previously was not happening but now is being managed and controlled. Again, to have it fully integrated into the automated system, we expect the implementation of that to be September of '09
MR. HOUGHTON: James, are we currently facing some of that today with some of the districts that thought they had money in the account, and shazam, they don't have money in the account?
MR. BASS: Yes, we have some, and one of the things that I think to be discussed more fully with our district engineers -- and we have a meeting coming up in October that I've suggested a topic of discussion for this -- but we've talked before about TxDOT and the rest of the world, regular people, I think Chairman Williamson used to say. Well, if a regular person says do you have money for this project, I'm guessing 99.8 percent of the time they're asking do you have cash ready and available today to award this project. In the TxDOT-ese the TxDOT districts are hearing, is there money in the eleven-year UTP for that project, and so sometimes the answer is yes, we have money for that. Well, there's been question given and question answered but there's been no communication between those two because the question answered was different than the one that was posed.
And so we want to make sure that if asked by a commissioner, mayor, county judge, representative, anybody, is there money for this project, the answer should not be yes just because it's included in an eleven-year plan. It should be much shorter term, it's on the current year letting schedule, it's in the four-year STIP so there's money assigned and it looks like it's there. But to be honest, I'm not sure that everyone involved in this process is 100 percent on the same level of understanding, and I think we need to do more to continue that message.
MR. HOUGHTON: So we're not there?
MR. BASS: I don't think we're there yet, to be completely honest, no.
MR. HOUGHTON: That's troubling.
MR. BASS: I don't think every person involved in the process is there yet. I believe the vast majority are, I don't believe it's at 100 percent, and we need to continue to work till we get to 100 percent.
The next recommendation was that when changes are made that affect allocations that are published in the UTP, that legislators whose districts are affected with information be provided that information regarding the changes. And we're certainly set up, through the assistance of the Government and Public Affairs Division, to do that and notify the affected members of the legislature if and when that occurs.
The next series of recommendations dealt with the department's efforts to implement the recommendations related to the funding gap audit that was done by the State Auditor's Office previously. One of those was the development and implementation of a process to implement the recommendations of the 2030 Committee, and the status of that is that once the 2030 Committee makes its recommendations, the commission and agency leadership would determine what, if any, can be implemented and then members of the legislature would be brought into that process and brought up to speed at that time.
The next one dealing with that was documentation and uniform application of the common assumptions to be used in the development of the Texas Metropolitan Mobility Plans and the Texas Urban Mobility Plans. The department has worked with the MPOs and has verified and updated where needed uniform unit costs and brought all costs to constant 2007 dollars, so we feel like that recommendation has been addressed, and we'll continue that as those documents get updated in the future.
The next one was identification and implementation of a mechanism to review the data provided through the TMMPs and TUMPs and other external sources and we have developed a process to review the data provided by the MPOs through the TMMPs and TUMPs to make sure that there is consistency and they are following those general assumptions that have been provided by the department.
The last one was that the SAO recommended the department formally document its intent to cease further implementation of the tax gap analysis that was related to the prior audit recommendation. And Mr. Saenz formally agreed to a recommendation from Mr. Simmons that the department no longer use the tax gap analysis, and so therefore, there's no further action necessary to implement that particular recommendation.
I would be happy to answer any comments you may have on the State Auditor's report or any other issue.
MR. SAENZ: Thank you, James.
Commission, just two additional items on 14(b) that talked about the documentation and uniform application of the common assumptions that are used by the MPOs to develop their TMMP and TUMP, we also have a workgroup working with TxDOT staff, and the group of MPOs are putting together a process to determine the available revenue that they can use to forecast over a period of time so that they're all using the same assumptions as they develop their long range plans. That group will be developing a report and presenting it to TxDOT in the next couple of months.
And then on 14(d) where we talked about the tax gap analysis, what I told the State Auditor's Office is that if we want to bring back the tax gap analysis, we would work with them to identify the criteria and address their concerns as we bring that back, but for right now we're not going to be using it, so we went ahead and set it aside.
Thank you, James.
Agenda item 4, Phil Russell will provide us a status report and potential changes to our pass-through toll program and development of statewide improvement projects. Phil.
MR. RUSSELL: Thank you, Amadeo. Good afternoon, commissioners. Again, I'm Phillip Russell, assistant executive director.
Commissioners, as you all, I think, are aware, the department embarked upon a program, the pass-through toll program, a number of years ago. The notion behind the program is that local entities could front money for a project and the department would pay back over time and we would pay back based upon the traffic that was traveling on that facility. At the time I think everybody had their own opinions about whether something like that would be successful. I think there was plenty of cynicism out there where folks just didn't feel like local groups would front the money on a state highway system project. But the program has been wildly successful. To date, we've executed 15 contracts worth in excess of $1.5 billion of improvements, of total road improvements. Again, I think I've got nothing but compliments about the program, people are genuinely interested in it.
Of course, the program was caught up in some of the cash flow issues from last year, so the program was suspended at the end of '07. Since that time, of course, we've approved the UTP, there's been, again, ongoing interest. I've been approached by many local communities, I'm sure you all have as well, we continue to receive proposals and ideas from different groups. And so it seemed to be an appropriate time to begin discussing maybe opportunities to reinitiate the program.
Mark Marek, the Design Division director, has been responsible for the program over the last couple of years, so I asked Mark to put together a little group, kind of come up with some recommendations that if we did reinitiate the program, what worked, what didn't work and how should we implement a new program.
There are several recommendations that I think you can look at and read through. There's two or three of probably fairly large changes in the program. First off, the program, as it was originally envisioned, was kind of a first-come, first-served basis. It allowed us the flexibility of working with local entities on a one-on-one basis; we either moved forward with the project or we didn't, we deferred it or sent it back to them.
I think what the team is suggesting now is that we have more of a program call, just as we do for other projects. I think this would have the tendency to kind of level the playing field, everyone could submit their project at the same time, there would be measurable criteria that the group has also suggested. The criteria, again, are pretty general, and we could add or subtract of whatever your input would be, but we look at what sort of regional impact would this project have, regional or statewide, is there local support, does it go to some of the core issues of the department of reducing congestion, enhancing safety, improving air quality.
So the idea would be we'd have a program call, we would receive these individual projects, staff would make some recommendation, would score them based upon this criteria, and then ultimately the commission would make the call, and you may have some other factors, just as you do on other programs, of which projects are selected. And again, the team threw out some ideas: is it a hurricane evacuation route -- particularly important this summer; is it anything to do with a BRAC issue; what sort of economic development potential could the project bring; or any other commission goals.
So again, the theory would be let's have a program call, level the playing field, and staff would make some recommendations on selected projects and the commission would ultimately make the call, very similar to the Border Colonias and Enhancement programs.
There are some other ideas -- I won't say conclusions but ideas that the team put forward. For instance, if there was any interest at the commission level, to date, the pass-through program would reimburse essentially all the costs that were required to develop a project, it could be the preliminary planning, right of way, environmental clearance, design, construction. One of the ideas the team had is what happens if we just limit it to just the construction costs and maybe some percentage, and I think the idea they threw out was just 75 percent of the construction costs.
Now, I think on the positive side, that has the ability to provide a bit more transparency and a little more accountability. Construction costs, low bid, it's really easy to figure out what those costs are, and I think it would help on some of our accounting on our side. It would also tend to spread out a limited amount of funds to infuse in more projects. Of course, the downside is you're clearly asking the locals to front more money, money that they wouldn't be reimbursed for. Those up-front design costs and environmental costs can sometimes be quite large.
So again, just something that could be considered. We could leave the program as it is, all costs could be reimbursed, or you all could give us some input to limit to a certain element, and again, the idea was construction.
There was also some discussion about perhaps it would be limited to just governmental entities that would be in the program. As it is now, the pass-through program could be either a governmental entity or it could be the private sector. That has led to some confusion. When we get a proposal from the private sector, is it the pass-through program or is it something on our CDA, comprehensive development agreement program, and those two areas get very similar. Most of the projects to date that we've seen are from entities, but we have received one or two proposals from private sector groups willing to build state infrastructure, so in a way, we wouldn't have those projects if we'd limited the program just to government entities, local entities rather than the private sector as well.
Funding, of course, will be a major issue on this. You'll hear more discussion today about some of the potential bonding programs. I know the legislature will be looking at different potential funding scenarios in the next session. But historically, this program has been funded out of your Category 12 Commission Strategic Priority money. As you remember, on the approved UTP there's only $40 million in each of the next eleven years for that program, so it doesn't give you much money to deal with.
And we've kicked around as much as maybe $20- or $25 million of that very limited amount could be put on this one-time pass-through program. $25 million is a lot of money, but when you look at payments on some of these large projects, it's really not. We could eat that $25 million a year payment up in a single project. We have some very large projects that have been proposed or suggested out there. Now, we have some smaller ones too. I was looking back over the list on the 15 contracts that we've executed, some of the yearly payments may be as low as $1 million or $2 million, but some can be quite hefty as well.
And that kind of leads to the other concern I have. Again, I think we should, if you all deem appropriate, reinitiate this program, even for a one-time program call. It's not going to be the robust program that we would like, but I do worry that if we do that, we have to manage expectations. I worry a little bit that we get an onslaught of 30 proposals or 40 proposals coming in and we go down through the list and we can only go down two and you have 28 people that are pretty unhappy and two that are a little joyous. So I want to be careful that we can manage expectations, but overall, I think it's been a very good program, we've received a lot of positive feedback, and I think now is the time to start discussing how to reinitiate the program.
Mr. Saenz, any other thoughts or add-ons?
MR. SAENZ: A couple of things, Phil, that come to mind is one), on the portion where you say that the private sector does it through the CDA program, not all pass-through toll projects have a toll element, so we couldn't do the CDA program for those projects so we would still have to have a process for pass-through tolling to do those types.
MR. RUSSELL: You're right, and in fact, the majority of the pass-through programs don't have tolls. In fact, that name is almost a little bit of a misnomer. It probably should be pass-through finance, not pass-through tolls, you're exactly right.
MR. SAENZ: The other is I believe in one of the bills that was passed last session, we have a requirement for FY '09 and FY '10 to do a certain amount of expenditures in pass-through toll projects. I think for Fiscal Year 2009, because we had a project that we processed through in '09, we met that requirement, and I think we have a requirement of about $260 million for Fiscal Year 2010.
MR. RUSSELL: That is exactly right. There's some limitation on there of if you don't receive approved proposals or something, then it doesn't apply, but the reality is I would anticipate we'll receive plenty of proposals coming in. And it's kind of a bar that keeps changing, it's an average over the previous agreements, so that number keeps getting higher and higher with each year.
MR. SAENZ: That portion of the law sunset in 2010, so I think once we get past 2010, unless something happens next legislative session, we don't have that bar.
MR. RUSSELL: September 1 of '09 is what I show.
MR. HOUGHTON: Phil, the number of applications are going to be commensurate to the criteria that we levy on this program. My personal belief is that you have to have communities who have to have skin in the game.
MR. RUSSELL: Yes, sir.
MR. HOUGHTON: I think the external leveraging -- I see all your things here, transportation reinvestment zones are good, a TIF is good, tax increment finance districts are good, and whatever it may be, and not necessarily 75-25 but I think there should be skin in the game. The paradigm and everything has changed in transportation finance and funding, and I think we have to be flexible and change with that.
MR. RUSSELL: Yes, sir. And you've touched upon it, but there are two ways to get skin in the game: number one is 75 percent of construction and the locals put the local skin in; the other thing is just on the criteria that you pointed out as well, and external leveraging, if it's a 10 percent or 15 percent weighting factor, then that focuses attention on that as well.
MR. HOUGHTON: I can sit here and say that every project could qualify as safety, regardless of what guess-who says. Every project could be a safety project; we can justify that to the nth degree, even air quality, we can do that. But I think every project has got to have skin in the game, whether it's right-of-way dedication or engineering or a combination of everything.
MR. RUSSELL: Fair enough. Yes, sir.
MR. UNDERWOOD: The money stopped, is that correct, and we stopped doing it for a while?
MR. RUSSELL: Cash flow issues, yes, sir.
MR. UNDERWOOD: How many projects did not get completed?
MR. RUSSELL: We had 15 that had been signed, we had another -- and I may have these reversed, Mark, you may have to help me -- we had a billion and a half dollars of additional requests or proposals, either proposals that had come in and received the first commission approval -- it's a two-step process -- or proposals that came in and as we discussed and cussed them, they either went back or they were withdrawn. But I would say there was about a billion and a half dollars of proposals that had not made it through the two-step commission approval process.
MR. UNDERWOOD: But once they're approved, once they start the construction, were those finished?
MR. RUSSELL: They are underway now. The first payment that we're due to make, I think, is in '09. So those 15 that we signed the contract, those are moving forward.
MR. UNDERWOOD: Do we have the money to pay for those is going to be my question.
MR. RUSSELL: Yes, sir. Mr. Bass had put those numbers in on his UTP, the $28.2 billion UTP, that's all factored in on his eleven-year plan.
MR. UNDERWOOD: Thank you, Phil.
MR. SAENZ: Yes, sir, Phil. I think you mentioned that the estimate for those projects is about $1.3 billion?
MR. RUSSELL: It's about $1.6 billion on those 15 that are executed, with about another $1.3- or $1.6- that were in some level of discussion.
MR. HOLMES: Phil, I strongly support Ted's view that the locals ought to have some skin in the game, and whether it is from right of way, the professional documentation of the project, however they get there, whether it's through tolls or the powers in Senate Bill 1266 -- in fact, I would encourage them to use as many of those powers as they can.
MR. HOUGHTON: And one of the other financing methods -- or skin in the game, Ned, is if the MPO wishes to commit Category 2 money or the other categories, their money, their allocation to a pass-through project, I consider that skin in the game because it comes off another project if they think that project is that valuable to them.
MR. RUSSELL: And Commissioner, you're right, we've clearly had a couple of those scenarios where individual MPOs said, Okay, I understand that you've suspended the program, there's insufficient Category 12 dollars, but what if we put our own dollars, our MPO's Category 2 as the payment mechanism. It's kind of paying themselves, so it does create a little more opportunity out there.
MR. HOUGHTON: Well, they're going to shift dollars, they're going to say this is so important to us, we're willing to put our Category 2 over here to that. And maybe that's their 25 percent contribution or 30 percent contribution, or it could be, don't know.
MR. RUSSELL: Sure enough. I think that's a good point. I really hadn't thought of it that way, but I think that's a fair argument, those are their local-controlled dollars.
MR. HOUGHTON: If they're wanting to take it off another project and put it on this one, then so be it, that's their choice at the MPO level.
MR. UNDERWOOD: Phil, what drives somebody to use the pass-through program?
MR. HOUGHTON: Building a Marsha Sharp or something like that.
MR. UNDERWOOD: No, that's a different deal. Is it a drive because of an industry, because of a need, or is it congestion?
MR. RUSSELL: I think the answer to that on the 15 I've seen is yes, it could be any of those things.
MR. SAENZ: I think, Commissioner, what we were seeing in the projects that have been submitted so far is we went through the planning process and probably those projects were priorities for the area but they did not get selected, and so the locals say we're willing to put our money up front -- because they're going to be built over some time period, we're willing to put our money up front and take the chance that traffic will come when we build it and then that's the way we get paid back.
MR. UNDERWOOD: But are they doing it because of a business or because of a congestion need?
MR. SAENZ: It's a little bit of both. Some of them were economic development, they wanted a relief route around a community, that was safety, that was economic opportunity that opened up a new area for them for the city to grow out to, and congestion because they didn't want the trucks to go through the city. So it was really a combination of all of them.
MR. UNDERWOOD: And it was funded out of Category 12 money.
MR. SAENZ: At that time we were funding them out of Category 12.
MR. UNDERWOOD: I like the way you said at that time.
MR. SAENZ: At that time, because we had money in Category 12.
MR. UNDERWOOD: Okay.
MR. RUSSELL: And the only reason, Commissioner Underwood, I've kind of focused on Category 12 is that really is the only money source, other than Category 2 dollars, but it's the only money source here that we could use to kind of partner up. But all things could change, whether it's our bonding program or whether it's the legislative session.
But Commissioner Underwood, to get back to your question over why they would do it. My observation is, of sitting through a lot of these commission meetings over the last ten years, is we had delegations coming in here and many times it would be just as you said, hey, we've got this chance to lure this industry or we have this group here, but congestion is a problem, they can't get their goods in and out, and commission, if you'd just build this thing for us, then all sins are forgiven and we'd have all this traffic on it. And maybe the commission would grant that or not.
Of course, as we sent those dollars out in '04 out to the locals, then you all have kept a smaller and smaller amount of funds here. So to me, this is a great program for the locals to say, you know, we need this project to lure this business or to keep the business we have, and we're willing to put our money where our mouth is, we think it's going to have at a minimum 10,000 vehicles a day or at a maximum 30,000 vehicles a day, and they're reimbursed based on that traffic. So it's kind of another way to put leverage in there that if traffic doesn't materialize like they anticipated, then they're on for the additional cost.
At the same time, we do limit how much exposure we have in any one year with that maximum payment, and I think that helps James with his cash flow projections.
MR. UNDERWOOD: Right. And Madame Chair, the reason why I asked that question is I think it's going to be in upcoming legislation and whatnot, as they look at our budget and whatever, Category 12 money, where is the importance of it, do we need it, should we have a Category 13 for the pass-through if it's going to be that important. Because for right now, if we did not have Category 12, we wouldn't be able to do this to help those communities is my point.
MR. RUSSELL: No, sir.
MR. HOUGHTON: At the time, I was on the commission when we made that shift, and I say the old days, you used to have delegations come in here on bended knee and ask for projects.
MR. UNDERWOOD: And they've been here for like this is my tenth time.
MR. HOUGHTON: Yes, my tenth time here.
MR. UNDERWOOD: I've got a room at the Holiday Inn every year coming in here asking for this.
MR. HOUGHTON: And we used $250 million to leverage a billion and a half. That's a big swing.
MR. UNDERWOOD: I agree with you, but that only happened because of Category 12 money is my point.
MR. HOUGHTON: One of the things that we need to talk to our friends in the industry is to taking these restrictions off of these transportation reinvestment zones to streamline those, especially as it relates to counties, especially as it relates to having the zones go away after the bonds are defeased where they could go on in perpetuity because transportation isn't going away, folks. That funding is always going to be needed there, so it needs to be streamlined. We need to work with our partners in transportation on streamlining that, creating more revenue sources.
MR. UNDERWOOD: And I like the idea of the pass-through is that now you're going to have some criteria, because before, if I remember correctly, the pass-through was just first-come, first-served almost.
MR. RUSSELL: Yes, sir.
MR. UNDERWOOD: Now we'll have a criteria.
MR. RUSSELL: Program call with criteria.
MR. SAENZ: We're recommending that we have a program call so that everybody submits their projects, we have an evaluation criteria to evaluate them and rank them, and make a selection based on that.
MR. HOUGHTON: Is Carlos Lopez going to be in charge of the program call and the criteria?
MR. SAENZ: No, sir. Phil is.
MR. HOUGHTON: I would hope not.
MR. RUSSELL: Carlos would do a fine job, I'm sure.
If under this initial one-time injection, any thoughts on how much of your very limited Category 12 money might be reasonable?
MS. DELISI: How much is there, again, left?
MR. RUSSELL: Forty total.
MR. HOUGHTON: But $40- gets you what, $400 million, roughly?
MR. SAENZ: Forty could get you anywhere from $400- to $800 million.
MR. HOUGHTON: So you have a big swing. The $40 million gets you about between $400- and $800 million in projects. I think it's worthwhile, but I sure would like to see the leveraging issues that Ned was talking about and the skin in the game. It's got to be there with it, it's just not all of our money.
MR. RUSSELL: Just looking, again, on those previous 15 contracts, it looks like the average of all 15 between what the minimum and the maximum amount, each project would require $5-, $6-, $7-, $8 million per year in payback out over 10 or 20 years. So if you had $25 million, you might get five projects -- you might just get one, but you might get five or six or seven projects.
And I look at leveraging, Commissioner Houghton, but I also look at it from the locals' viewpoint of projects, and if it's a smaller community and they could get three, four or five projects for their region.
MR. HOUGHTON: That's up to them.
MR. SAENZ: What we use as a criteria, we use criteria of paying in no less than ten years and no more than twenty years, but those are still flexible, that's what we used before. That's why I said between $400- and $800-. And of course, if you look at the criteria that says 75 percent is what we're covering, 74 percent, 75 percent of the construction and that means that the cost of design, the cost of utility adjustments, the cost of right of way and their 25 percent is an additional amount of project cost.
MR. HOUGHTON: On top of that.
MR. SAENZ: On top of that, yes, sir.
MR. RUSSELL: More impact to them allows us to stretch those limited dollars a little further. I mean, there's an infinite number of push-and-pulls of how to move this program along.
MR. HOUGHTON: When we started talking about this just a minute ago, transportation reinvestment zones and the pass-through, some people's backs went straight up in the back of the room.
MR. RUSSELL: Certainly not.
(General talking and laughter.)
MR. SAENZ: Thank you, Phil.
Agenda item number 5, John Barton will present the next three items, but this first item will be a presentation and discussion dealing with our Proposition 14 Bond Program.
MR. BARTON: Good afternoon, commissioners. For the record, my name is John Barton; I'm the assistant executive director for Engineering Operations for the department. And Commissioner Holmes, it's good to see you here today. I hope you fared well in the storm, or at least as well as I did, so after the meeting we'll have to talk.
As Mr. Saenz said, I'm here this afternoon to share with you a discussion about the Proposition 14 Bond Program, and as you know, you took action recently that authorized the department to move forward with the issuance of an additional $2.9 billion in Proposition 14 Bonds, and those are the bonds that are backed by our state highway funds.
You also asked at that time for the staff to prepare a scenario or analysis of how these bond proceeds could be used to advance much needed transportation projects around the state, so this afternoon what I'd like to do is just kind of discuss with you the issues that we believe, as staff, are there for your consideration and to open a dialogue with the commission about the path forward you'd like for us to take in terms of the Proposition 14 Bond Program. I hope you've had a chance to briefly review the white paper that was prepared regarding this matter, but I just wanted to point out a few issues.
Obviously, there are many competing interests for the limited resources available to us for transportation here in the state of Texas, and many people across the state, our MPOs and other partners, as well as the consultant and construction industry, are eager and anxious to see which projects we'll move forward with under the Proposition 14 Bond Program.
As we shared with you, this particular program, based on our analysis, would allow us to advance construction on several projects around the state and increase our letting program for Fiscal Year 2009 from the $2.5 billion we can sustain under our normal tax program, to approximately $4.2 billion if we move forward with all projects that we feel like could be made available.
There are many roads and bridges that need to be addressed in the state; we obviously have safety issues throughout our network that many people would be interested in having issues addressed on; we have congestion in our urban areas that needs to be looked at; and we need to move forward with projects that were previously delayed because of the cash flow issues that we've faced over the past 18 months or so. So based on all these particular interests and issues, staff has kind of prepared an analysis for you, and I hope that you have a sheet there that kind of shows -- it's a table that looks like this; I believe it was in your packet -- kind of shows what we think are some of the priorities that might be the most important to address as an option, just a point of discussion to start from.
And under the Proposition 14 Program -- this shows several items; it was a document we put together for our Legislative Appropriations Request -- under Proposition 14 in this Fiscal Year 2009, we believe that staff, based on our analysis, think it would be appropriate to use some of the money to advance the engineering and right of way needed for many of the mobility projects that are available to us around the state that more than likely will be those types of projects that will be supported by the Proposition 12 Bond Program that we'll talk about in a little bit as the next item on the agenda.
We also have some projects that are currently under construction being funded through the Fund 6 Program, but because of cash flow requiring us to borrow money on a short term basis to pay off payments at the end of each month -- and it's a tune of about $200 million -- so rather than having short term borrowing on that commercial paper, we felt like it might be better to do a funding conversion on about $200 million worth of existing projects to free up that commercial paper debt that we have to contend with on a regular basis -- which leads to the bulk of the program which is a little over $1.7 billion for projects here in the state of Texas and those that the people of Texas are eager to hear about.
I also attached kind of an analysis -- a table that looks like this; I think it's red and black in your handout, hopefully -- of how we would move forward with the program. But hearing from the commission and others over the last several months, we realized that many people have an interest of moving forward with those projects that were delayed in November of 2007 when the cash flow issues became so apparent to us that we needed to slow down our program in Fiscal Year 2008.
So this particular scenario that I'll be laying out for you for discussion today would advance all of those remaining projects that were delayed in November of 2007. There was approximately $1.1 billion worth of projects that were delayed. We've been able to move forward with approximately $400 million of those, even though we had the cash flow problems in 2008, for a couple of reasons. One, the projects we were letting came in under our engineers' estimates. The cost increases that we had been experiencing over the past several years are still there but they weren't rising as rapidly as we had anticipated in our estimates, so we were able to award several projects and the cost of those projects came in less than we had anticipated, so what we saved we were able to use to forward some of those delayed projects.
We also streamlined our internal operations, scrubbed our budgets, and were able to save some money there. And then thirdly, we were able to work with our MPOs and districts to identify some priority projects and change some priorities to allow some of these mobility projects that were initially delayed to move forward.
So having said all that, we have about $700 million of those original $1.1 billion worth of projects that had been delayed, and as a discussion scenario, we've said we could use Proposition 14 to move forward with all of those projects, and honor those commitments, if you will, that people had expected back in 2008.
We also, as you know, under the statutes are required to do $600 million worth of safety-related projects under this bond program as we issue the remaining $2.9 billion of debt, so this shows that we would do $600 million worth of safety projects. It will be required for us to identify projects and then do a safety analysis on them to make sure that they qualify. We have staff looking at some projects that we think probably make good sense to fit into that particular area. But $600 million out of the $1.7 billion of project funding would have to go to safety-related projects.
We also have worked with our partners in the DFW area to advance some projects using some of the toll revenue funds from State Highway 121, and those are projects we had committed to do out of tax revenues, but they've advanced them to make sure they kept on schedule using those toll revenues, and this proposal suggests that we would replace that funding out of Proposition 14.
MR. HOUGHTON: What project is that?
MR. BARTON: There were two projects: one was right-of-way acquisition for the interchange of I-30 with the eastern extension of 190 which is the George Bush Turnpike, and the other is a project on Loop 12 that is coming up for construction later this year.
MR. HOUGHTON: So we would pay back the RTC.
MR. BARTON: Yes, sir. Well, we would fund other projects.
MR. HOUGHTON: Well, that's my point.
MR. BARTON: Yes, sir, and again, that's just a suggestion for discussion.
MR. HOUGHTON: It's a suggestion?
MR. BARTON: That's right, staff's recommendation for a discussion item, but obviously you're going to have to give us direction on whether or not this type of approach is what you would like us to do with the Proposition 14 Bond Program.
MR. HOUGHTON: Are we committed to it, are we committed to that $180 million?
MR. BARTON: Yes, sir.
MR. HOUGHTON: Do we have a minute order?
MR. BARTON: It could either be done through the tax program, Category 2 funding over time, or we could give it back to them now under Proposition 14. It's not additional money to them, it's just honoring that commitment they're going to get now rather than waiting till the tax revenues are available.
MR. HOLMES: But didn't we agree with the RTC if they would advance the money that we would replace it?
MR. BARTON: Yes, sir.
MR. HOLMES: And so you're simply saying replace it lump sum now rather than spreading it out.
MR. BARTON: That's correct.
MR. UNDERWOOD: But, John, I've got a question with this budgeting and whatnot. Maybe I don't understand it. Did we allocate anything to replace the maintenance money that we've moved?
MR. BARTON: The proposal that's in front of you has a remainder of about $584 million that could be spent on other projects. In this particular scenario that's been laid out, that could be used for, as it says here, other mobility projects. But clearly, we have deferred funding for maintenance through our UTP discussions we've had with the commission earlier this year and the decisions we've made on how we're going to advance mobility projects in the state. So it certainly is a potential area, and as I said, we do have a lot of roads that need to be rehabbed, maintained, and bridges that need to be replaced.
MR. UNDERWOOD: You say rehab and it scares me because that's just completely redoing the road, that's not maintaining it, though.
MR. BARTON: Right.
MR. UNDERWOOD: And my point is that if we don't maintain roads, we're going to do a lot more rehabbing.
MR. BARTON: It's the old pay me now or pay me later commercial.
MR. UNDERWOOD: Right. Because I just remember when we said we were going to pull the money out of maintenance, we were going to replace it when we got future funds or whatnot.
MR. BARTON: That's correct.
MS. DELISI: Well, how much would maintenance and safety overlap?
MR. BARTON: A lot of those projects do have interrelated activities in them, Chairwoman, and it's difficult to say without knowing specifically the project. Some safety projects are installing median barriers, don't really do much to maintain the roadway; others are to widen the roadway and resurface them, and they do. So there is a substantial amount of overlap.
MR. HOUGHTON: Do we have the criteria what qualifies for a safety project?
MR. BARTON: The way we evaluate the safety projects and whether a project can be classified as safety is we do a safety index analysis on it. We take the crash data for the roadway, we evaluate it in terms of what we would be doing under the project to address what's causing those crashes, and then there's a formula that we run it through, and if it says that the benefit of doing the project in terms of safety is high enough, it rates above a one in terms of safety improvements, and then it is a safety project.
MR. UNDERWOOD: I just remember saying when we got future funds we would replace the maintenance money, and that's what I was trying to remember.
MR. BARTON: Yes, sir, and I think the commission has made that clear, and there are a lot of opportunities, either through Proposition 14. It's clear legislative leadership has given us indications that they are going to do all they can in their power to reduce some of the current diversions -- is the term we use -- of our tax dollars to other programs, and if that money comes back, perhaps that would be the place to start funding maintenance again. But there are a lot of opportunities that we need to think about.
MR. UNDERWOOD: John, I don't want to hurt your feelings, but I do not want to hold my breath on that one.
MR. BARTON: You're not hurting my feelings; you may hurt somebody else's.
MR. UNDERWOOD: Okay. I mean, I hope the legislature does do that.
MR. HOUGHTON: The delayed projects in '10 and '11, have we identified those projects?
MR. BARTON: Yes, sir, and I do have a list of the projects that are currently ready to go, have all the right of way acquired, all the design work done and are ready to go to letting today. That's the list that's in this package of information to you. The projects that we say are available for 2010 and '11 are only that way because we changed the definition of project readiness. They were in that initial 2008 project list, that $1.1 billion worth of delayed projects, but in 2008 our way of advancing projects were: get environmental clearance, get the design done, get as much of the right of way bought as you can, as much of the utilities moved as you can. But if the utilities and right of way aren't completely finished, we can go ahead and let the project and have the contractor work around our limited right of way and some of the utilities that are in the way. So that's the way we advanced them in 2008.
When we had to slow down the program, we said since we're slowing it down, let's don't put anything on the project list until they have 100 percent of that done. So I guess what I'm saying is the 2010 and '11 project list that we do have available -- Commissioner, that was the question you asked -- and many of those projects probably could move forward to contract in 2009 if that's the direction we want to go.
MR. HOUGHTON: The other question I have is the makeup to the districts, the MPOs, have they got behind in these projects?
MR. BARTON: Yes, sir. In terms of which MPOs and regions were kind of ahead and behind? That's something that we do consider of extreme importance. The delayed list were just those projects that were delayed.
MR. HOUGHTON: So what's up for grabs is the $584 million.
MR. BARTON: But of the $584 million, staff's recommendation would be either to address maintenance or perhaps do part of that in maintenance and advance mobility projects in regions of the state that are behind -- using those terms -- Fort Worth, El Paso, Austin. And we have project lists that we could generate that we could show the commission here are projects in the Fort Worth area, the Austin area, and the El Paso area that could be advanced with this $584 million if that's the direction you'd like us to move.
So I think what we're here today to do is say this is one scenario, it's only one, there are other possibilities, and we'd like for some discussion to occur so that you could give us some kind of direction, knowing that you can't take action, but just give us direction on what you would like for us to produce so that we can come forward with a plan that you can take action on.
MR. HOUGHTON: Well, I have a couple of folks that continually call me wanting to know when their projects that have been delayed, and one is a specific state senator here in the Austin region that we delayed their projects at this MPO. He continues to ask me when we're going to repatriate those dollars.
MR. BARTON: Yes, sir.
MR. HOUGHTON: There have apparently been commitments to the Fort Worth area that we need to live up to, and obviously the El Paso area that we have all talked about at prior commission meetings.
MR. BARTON: Yes, sir.
MR. HOUGHTON: So with that said.
MR. HOLMES: John, it might be useful to see what the delayed projects are in '10 and '11.
MR. BARTON: Okay, I have that list available and I can get it for you right now.
MR. HOLMES: And then the next piece of information -- and I know that we've talked about this before but refresh our memory and recollection -- the kind of ahead and behind areas, projects that we have committed that weren't necessarily delayed because we just haven't gotten to them yet, projects that were committed by previous commissions and also the ahead and behind list. And some of that critical maintenance piece too.
MR. BARTON: Okay.
MR. HOUGHTON: I'd sure like to talk about the maintenance issue, safety projects. The Chair has talked about the overlap here of safety and maintenance, and it seems to me there is some overlap, just don't know what.
MR. BARTON: Yes, sir, absolutely.
MR. UNDERWOOD: And I would like to see you be creative in that because to me it's important that we do replace those maintenance dollars, as many as we can, because I worry about the rural areas getting their food and fiber to market, and I feel like a lot of that money came from their areas when we took money out of maintenance.
MR. BARTON: Okay.
MS. DELISI: I know you told me these numbers in the past but remind me, how much are we behind on the maintenance budget from where staff would like us to be?
MR. BARTON: We would like to be funding maintenance to sustain the levels that we've been asked to sustain: continue to improve the condition of our roadways to achieve 90 percent of our roads in good or better condition, 80 percent of our bridges in good or better condition. Combining our roads and bridges, we feel like we could certainly afford and need about an additional $750 million per year, increasing with the cost of inflation, over the life of the program. Under the UTP discussions we've had, starting in 2011 we'll be funding at about $1.1 billion per year for maintenance. We need to be around $1.8- to $2 billion for maintenance to continue to improve our system like we have been in the past.
MR. HOUGHTON: Well, it's just going to get to a point, John and fellow commissioners, that the tax dollars are going to be the only thing left -- are only going to support maintenance. It's getting to an inevitable point unless you come up with other revenue sources, we're squeezing this dadgum turnip so hard in trying to find innovative and creative ways to meet the needs that we're hitting a brick wall. We keep running into it and at some point we've got to fund it or say folks, all the tax dollars generated go nothing to maintenance, to maintain what you want to do and to keep the state moving.
MR. UNDERWOOD: But you're basing your maintenance off of the existing roads, not any new roads.
MR. BARTON: That's correct.
MR. HOUGHTON: Do you know this, John, or did Bass leave? You just said you'd like to be at what level of maintenance?
MR. BARTON: About $2 billion per year.
MR. HOUGHTON: What do we generate from tax on an annual basis?
MR. SAENZ: From state tax about $2.5-.
MR. HOUGHTON: So we're almost sucking down the entire state tax and we're going to get there sooner than later because the system is aging, bridges and all the things that you've talked about, we are there. We could dedicate our entire state tax to maintaining this system and have nothing for new mobility.
MR. UNDERWOOD: I understand that, but my point is that it's going to get worse even faster than you think because we have new roads coming on that have to be maintained.
MR. HOUGHTON: I'm not disagreeing with you, but we're squeezing the turnip now so hard that our friends across the street and in D.C., we're going to have to have a new way of raising money and it's a wonder why we continue to push toll roads -- well, the wonder is we don't have the money to build new roads, tax roads.
MR. BARTON: Yes, sir. Well, staff appreciates the comments today, and I think Mr. Saenz and I both understand the direction you'd like for us to head in, and we will provide to you a list of the remaining mobility projects that were delayed, as well as some recommendations on how to fund some of those safety and maintenance needs, as well as projects from those other areas of the state where we have been behind, so to speak.
MR. UNDERWOOD: Think real careful about how to maintain what we have. Let's take care of the girl that brung us to the dance, so to speak.
MR. BARTON: Yes, sir. And I'd just ask you to bear with us because you do realize Carlos Lopez will be doing the safety analysis for us, so when you asked about creativity, that needs to be considered.
MR. HOUGHTON: That and creativity are not synonymous.
MR. BARTON: Carlos is still back there.
MR. HOUGHTON: Did you go to the UT School of Design?
MR. BARTON: The University.
MR. SAENZ: Thank you, John. Moving on to agenda item 6, John will now present the discussion on some recommendations from staff on the use of the Proposition 12 Bonds that the legislature will take up this next legislative session.
MR. BARTON: Thank you, Amadeo. Again for the record, my name is John Barton. You know, we talked briefly just a minute ago about Proposition 12 and how we might be using some of the Proposition 14 Bond Program money to be prepared for Proposition 12.
As you know, the voters here in Texas approved a constitutional amendment in 2007 which would allow the transportation commission to issue up to $5 billion of debt that is backed by the general revenue fund for highway improvement projects around the state, and we believe, based on input that we've received from legislative leadership recently and the letter that was sent to Chairwoman Delisi, that it's very likely that the legislature will take up this issue for consideration early on in the upcoming session and perhaps would give us an enabling authority even before September of 2009 if they passed it with a large enough margin. But nonetheless, we certainly can anticipate that in September of 2009 some form of enabling legislation will take effect and we'll be able to move forward with the Proposition 12 Bond Program.
The staff felt like it was important for us to consider possibilities for how this funding could be used and to start thinking about and strategizing for the use of this particular program of funding. Again, there are several competing interests around the state -- I won't mention them all again -- but we do have road and bridge issues, safety issues and congestion issues, as well as commitments that have already been made around the state that we think we need to be considering as we move forward.
We also believe that it's critically important, based on input that we received from the commission, as well as members of the public and the legislature, that whatever we do, we need to be completely transparent in which projects are being selected and funded, how they are being financed and delivered, that we need to have that information readily available, easily accessible to the public, and that the project selection and prioritization process be completely widespread and well known throughout the state to our local elected officials and decision-makers, and that the entire process of how we allocate and manage the program be transparent to everyone on a per-project and regional basis.
So what we'd like to do today is request that you provide guidance to the staff on how we would move forward with rating these competing interests or issues for potential projects under the Proposition 12 Program. We think that it's going to be important for us to visit with the legislature and members of the legislature before they convene about what they believe might be part of the enabling legislation and how they would like to see this particular program used to develop projects and deliver transportation projects for the citizens here in the state of Texas.
A couple of attachments are provided to you just for your consideration and understanding of the issues that are at hand. We asked the Texas Transportation Institute to kind of do an analysis of congestion here in the state of Texas because we do know that that is a huge issue facing our state and that many of the members of the legislature, as well as the public, have shared concerns about congestion in the state of Texas with us time and time again.
And I think it's interesting to note that we have congestion where it makes sense that congestion would exist. Ninety percent of the state's congestion exists within our metropolitan areas of more than 200,000 in population, and about 4 percent of that is in rural areas and the remaining 6 percent are in those smaller metropolitan areas that are over 50,000 and less than 200,000. And Tim Lomax, Dr. Lomax and others with TTI, did this analysis for us. And so what that indicates is that any money that we put into a system to address congestion should be spent in basically a 90-10 percent ratio between the metropolitan areas of our state and the other remaining areas of our state.
I have also attached a little brief paper on the maintenance needs here in Texas -- and Commissioner Underwood, you just mentioned that -- but it is just a synopsis of our analysis that was done by the Texas Transportation Institute as well as the Texas Pavement Preservation Center which is part of the University of Texas on what our maintenance needs are and how the decisions we've made in the past may affect our ability to maintain our system in the future.
So having shared all that, I guess what we would like to do is get the commission to share with us your ideas on which areas or issues are the most important. Is it maintenance of our existing system; is it the replacement of deficient bridges, knowing that bridge safety is a critical issue for us as well as the nation; is it addressing congestion in the state, both in our urban and rural areas; is it connecting our urban centers with transportation systems that encourage freight and commerce movement; or is it giving the majority of this type of funding to the commission for consideration through pass-through toll programs or through commission discretion activities to address those very important economic development issues that exist around our state.
And then to get direction from you on how we should proceed. Do you think we should be visiting with legislative leadership and members of the legislature, through our MPOs and other bodies to identify what those people believe are the highest priorities for Proposition 12, and prepare for the beginning of the legislative session for this program? Yes. Well, that's a little broader statement than I was expecting.
MS. DELISI: I think now, more than ever, the need to work with the legislative leadership on this is critical. That letter that they sent to me, the big three sent to me three weeks ago, four weeks ago, came exactly two weeks before -- three weeks before Hurricane Ike hit the coast, so we may be looking at -- we, the state, the legislature may be looking at a different financial reality now than when they sent that letter. And we can have the discussions about how we'd like to spend $5 billion, but ultimately they still have to appropriate it and they are going to have a say in how we spend it. Just hearing the estimates of the damage and what has to be done to recover is a staggering number and it's going to have an impact on us and our appropriation.
So I think more than ever we need to start the discussions with the leadership now so that there are managed expectations going forward because I think the letter set up one set of expectations but I think maybe the financial reality is a little bit different today than it was a month ago.
MR. BARTON: We'll be happy to do that. And you've said something that reminded me that I think it's important for people to note that staff does recommend that this program, as well as the Proposition 14 Program, be total project cost programs so that the engineering and right-of-way costs are coming out of the program and that's an issue that many of us have been confused about for many years. Someone, somewhere with some black box full of money always bought the right of way and paid for the engineering, and so people expected that a $5 billion program would deliver $5 billion worth of construction contracts, but that's not the case.
MR. HOUGHTON: I've experienced that lately, John.
MR. BARTON: You have, sir.
MR. HOUGHTON: Yes, I have, haven't I?
MR. BARTON: Yes, you have. And so I think it's important that this program, as well as Proposition 14, and staff recommendation to the commission is that they be total project cost programs so that all the engineering and all of the right of way are funded through the programs which means that a $5 billion program will only deliver about $3.75 billion worth of construction contracts. About 25 percent of these project costs typically go to pay for the preliminary engineering and design, the right of way, and then the engineering inspection.
MR. HOUGHTON: Well, I'd like to weigh in first because I've been thinking about this and talking to a few folks around here, and it seems to me this is Texas Mobility Fund Part 2 because we have $6.4- authorized on the Mobility Fund and we allocated every bit of it, and now we're going to add another $5-, we're going to suck all this down and we're not in much better shape.
One of the things that we've been exploring, and some of your people here, Amadeo, as you well know, is maximizing the SIB and leveraging up the SIB. It wouldn't be a bad thought, in my opinion, to dedicate all of these resources, all of these dollars to the SIB and leverage it up because the money comes back to the SIB. It would be leveraged projects, and it's not restricted under Fund 6 rules, you could use it on light rail projects, as an MPO sees fit, a unirail project, a port project, a container project.
MR. BARTON: I think Proposition 14 --
MR. HOUGHTON: No 12.
MR. BARTON: -- 12 can be used for all the types of projects you just listed. I'd have to look into that but I'm not sure that it could be. James Bass is shaking his head. I'm glad that our chief financial officer hasn't abandoned me completely. Do you want to come on up here, James?
MR. SAENZ: It may have some restrictions.
MR. HOUGHTON: What kind of restrictions, James?
MR. BASS: Highway improvements.
MR. HOUGHTON: That's all? Okay, then highway improvements. But my point is we leverage the SIB up and leverage projects up from $5 billion to $20 billion and that money is paid back to the SIB and it's a revolver, it keeps on and it keeps on, where we just don't have to continue to go back to the well. We're going to have to go back to the well anyway, but we ought to have something that perpetuates itself.
MR. BARTON: Yes, sir. Any other comment or direction?
MR. HOLMES: Yes. I'd like to kind of explore Commissioner Houghton's suggestion about putting the money in the SIB. It might be interesting to look deeper into how we could leverage that, if there are additional ways than simply lending it out and returning it, and maybe we need to refine the criteria by which we judge projects that are then granted SIB loans. And so I think it would be nice to have a little more detail and thinking and amplification on what that might potentially produce.
MR. BARTON: Yes, sir.
MR. HOLMES: And if they're leveraged projects as well, not just return the money but some type of leveraged project, that might give it a little more horsepower.
MR. HOUGHTON: And John, what brought me to part of this conclusion is when you look at the numbers here of the percent of metro serious congestion, serious, 74 percent of it is in three regions: Dallas, Fort Worth, Houston.
MR. BARTON: Yes, sir.
MR. HOUGHTON: And those folks believe in leveraged projects, and there has been some work done in the SIB with our friends at Merrill Lynch on how to restrict the SIB, the criteria for leveraged projects, pay backs, so you have a perpetual source of revenue that's being paid back and you've established a fund for future use. And this may sound heresy to my friends in El Paso and other places, but I think you have to dedicate those funds where you have the serious congestion and use other monies to take care of the non. El Paso is at 2 percent and when you look at a percentage of the serious, it's a negative 2 percent, it's the other way. I mean, a chicken in every pot doesn't make sense in this case. I think you need to look at leveraged projects. Those folks in those regions believe in them, and if we can get Bass to change the constitution on just highway projects, then we can do other projects with it.
MR. HOLMES: Just as a note on congestion, I think the speed on 290 in the Houston area, and 59 in the Houston area was running at four miles an hour.
MR. BARTON: I believe I read an article about that this morning in the newspaper, and I understand the request from the commission for us to do an analysis of how an infrastructure bank or a credit bank could be set up, and I do believe that with my able-bodied assistants -- and James Bass would be able to do that for you, and Mr. Saenz, I'm sure, will be giving him direction to do so. Credit enhancements, rather than just a pure loan program, are the types of things you're asking us to look at.
MR. HOUGHTON: Right, and some of that work has already been done. Right, James. Thank you.
MR. BARTON: We'll put together a report for you in that regard.
Anything else on Proposition 12? I think we've got clear direction, Mr. Saenz, on where they'd like us to move forward with Proposition 12 and how to prepare for the upcoming legislative session. We appreciate your comments and direction.
MR. SAENZ: Thank you, John. And of course, we'll start working with our legislators and kind of rolling out, because the language in the legislation, as well as the direction that they go, will really determine how we roll out this program, but we need to have all the options available so we can discuss it with them.
Agenda item number 7 is a discussion item on proposed revisions to the funding distribution formulas that we use for the metropolitan areas and the urbanized areas. The last time that we did this was in 2001, and then that group put together kind of the distribution formulas for distributing money among the eight metropolitan areas and among the 17 urbanized areas, and so we brought them back because they said they wanted to come back after four or five years to review the formulas to see how the money would be distributed or reallocated among themselves once an allocation was determined. So John is going to give us a little status report on what that group has come up with and the path forward. John.
MR. BARTON: Thank you, Mr. Saenz.
Again, I'll direct your attention to your handouts. As Mr. Saenz said, earlier in this decade the commission directed the department and our staff to work with our metropolitan planning organizations around the state to come up with a way of distributing the funds available to us through Categories 2 and 3 -- those are the major Metropolitan Mobility Funds and the Urban Mobility Funds.
And the workgroups that were put together consisted primarily of metropolitan planning organization representatives as well as TxDOT district staff, and they came up with funding formulas that had been used since 2003 to allocate the distributions of Categories 2 and 3 funding to the metropolitan and urban areas of our state.
As Mr. Saenz also shared with you, at that time, once those formulas were developed and enacted in 2003, the workgroups recommended that they reconvene about once every five years to reevaluate the criteria, the weighting, and determine whether or not the funding formulas were still performing the way they would like for them too. So this past summer in the months of June, July and August, we reconvened those workgroups. Some of the original members were still in their positions and participated in these workgroups, many faces had changed, and the roles and responsibilities within the metropolitan planning organizations and districts, so we had some new people there.
But through the assistance of the Texas Transportation Institute, we conducted these meetings with the metro areas as a separate group to consider the funding formula for Category 2, and then the urban areas, those populations between 50,000 and 200,000, for Category 3, and they reevaluated the funding formulas and, in general, said that the funding formulas and their criteria are still good and still appropriate, but both of them felt like they needed to tweak some of the numbers slightly, change some of the definitions a little bit, and then add in a criterion for congestion, how much congestion do we have within these urbanized areas, because, quite frankly, these mobility funds are intended to address congestion. In the metro areas, even to get access to these funds -- have to do a mobility analysis and report back to the commission how they are performing in terms of addressing congestion within their metropolitan area.
So the workgroups convened and they went through an analysis of it, and I just wanted to share with you briefly the changes that they came up with. There are really two.
In terms of the geographic boundaries that are considered within the metropolitan areas, the original formula allowed MPOS to take credit or to consider all the area within their planning boundaries, and in some cases that's the areas that include an entire county rather than just the metropolitan area. So in layman's terms, it would be that they would be allowed to use the whole county rather than just the city limits that creates the urbanized area that the MPO is defined by.
The group talked about that and they said really we need to consider that it's just in the urbanized area boundary that we should be using because those are the only places that these funds are really eligible to be used in the first place. So they changed the definition of the geographic boundaries that are considered in the development of the formula themselves in determining how many lane miles you have, how much congestion you have, how much your population is, and so forth.
They also, as I said, added a congestion factor and they used the 2006 congestion levels -- because that's the latest available to use from the Texas Transportation Institute -- to evaluate how much congestion is occurring in each area relative to one another and use that as a criterion to add to the formula.
So as a result of that, there are a couple of tables that I think are in your packet. One is for Category 2, looks like this; the other is for Category 3, it's a very similar chart. And it kind of lays out what the original formula factors were and their weights, as well as the proposed formula and the weights that the workgroups have come up with for those.
There's not a lot of significant changes. The table below each one of the formula tables lists the metropolitan planning areas that are included within those workgroups and what their original percentage of the total piece of the category funding was versus what it is today and what their relative change was. And so if you'll look at the Category 2 funding area, you'll notice that in the original formula, Dallas-Fort Worth combined got about 36 percent of the funds, while Houston got about 29-1/2 percent.
Under the new formula they're more equal, and that's because their urbanized boundary issues as well as congestion issues played a little bit of difference there. And when you think about that, DFW Metroplex in comparison to the Greater Houston area are pretty equal metropolitan areas, so that makes sense why they would weight out that way.
On the urbanized areas sheet there's similar analysis done for the previous formula versus the proposed formula and how the funding distribution changes occurred, and there aren't any that are significantly different although some of the MPOs obviously are getting a little more of the total pie versus some that are getting a little less percentage-wise of the total pie.
The final recommendation was reached through consensus of the group. There wasn't a vote, if you will, taken, it was just what should the weighting factors be and everyone in the room ultimately agreed through consensus that this is how we should move forward. And so they are recommending that these distribution formulas for Categories 2 and 3 be changed to these new formulas and be used to distribute any new money that comes into the equation for Categories 2 and 3.
I think that last point is an important one. It's not their recommendation or staff's recommendation that we change how any of the money that has already been planned for and promised, if you will, committed to a region be defined. It's as new monies become available as we update our Unified Transportation Program, as new federal bills are passed, how those funds would be distributed, not go back and start from today forward changing the distributions.
MR. HOUGHTON: When would they kick in?
MR. BARTON: Next year for funds that would be normally available in the eleventh year of the program, so it would be taking next year's planned anticipated funding for 2019, unless there's a gas tax increase or there's a new bond program that we use to distribute these funds or that sort of thing. So any new money that's being brought to the table, it would be used effectively immediately.
MR. HOUGHTON: So would Prop 12 apply?
MR. BARTON: Prop 12 would apply under the new formulas, yes, sir.
MR. HOUGHTON: Unless.
MR. BARTON: Unless you choose to do it under a completely leveraged program like you were talking about, unless you did not distribute them to the metropolitan areas.
MR. HOLMES: John, I've always found it unusual that we had five stated goals, one of which was congestion, but it was not part of the formula.
MR. BARTON: Well, you must have shared that with enough people that they listened.
MR. HOLMES: Well, whoever would listen, yes.
MR. BARTON: Well, I think it is important, and clearly, one of the most pressing transportation issues facing our state is congestion in our urbanized areas, whether it's here in Austin or the Dallas-Fort Worth region, San Antonio, El Paso. Congestion is the issue that most people are concerned with as they travel our state.
MR. HOUGHTON: I think there may be some in the Dallas-Fort Worth and Houston areas that will take exception to you calling them equal.
MR. BARTON: I'm sure that there are. I'm not wise enough to have stayed away from that, but I'm sure that you're right.
I think Mr. Saenz had something that he wanted to add.
MR. SAENZ: John, I think one of the things that we're going to have to look at, because we do now have congestion as one of the matrix that we're measuring, we need to come up with a good mechanism to measure the impact on congestion and improvement because we certainly want to see that the plans that are put together do have a positive impact on congestion because otherwise you're going to be rewarding money to areas that are not addressing the congestion issues. And I would probably suggest that the group maybe needs to go back and work on that.
MR. BARTON: That's a great point, and that's one of the comments that the group discussed over and over again is the intent of this funding was to address congestion and if you do a really poor job at it, you're going to get more money. And so it's one of those things where I think we do need to have an evaluation metric that we can consider as the projects are identified and included in their transportation plans, and then evaluate whether or not they're effectively addressing that because there are many ways to address congestion besides adding lane miles necessarily and we need to make sure that this money is being spent in a way that is affecting improved mobility and reduced congestion.
MR. HOLMES: Presumably that could be done in conjunction with the MPOs.
MR. BARTON: Absolutely.
MR. HOLMES: They should be able to give some estimate of the impact on congestion by each project that they propose.
MR. BARTON: You're right, Commissioner. They could evaluate projects as they're proposed for their anticipated impacts, and then they certainly can monitor their traffic growth as well as their congestion values. And they have those modeling tools and real-time measurement tools available to them in most metropolitan areas already.
MR. HOLMES: So in some of these areas, particularly the Valley, Austin, Metroplex and Houston, you have some pretty fast-growing populations, and so they're a little bit chasing their tail in that they can improve but if the population grows to a point that it may be difficult to register, so they're going to have to take into account population growth as well.
MR. BARTON: Yes, sir. And the Texas Transportation Institute does a congestion evaluation of the state each year, and again, Dr. Lomax is just a world-renowned expert in that area, and he's been very, very helpful and I'm sure will continue to be available to us to assist us in that.
MR. HOUGHTON: How do you formalize this, or does this get formalized?
MR. BARTON: I think what we wanted to do today was share the basis of it with you to see if there were any concerns you had in how it was being developed and the format it was in. And if it does appear that you're comfortable with this, then we'll have to consider whether or not a minute order is necessary. That's a question that perhaps Mr. Jackson will answer for us.
MR. HOUGHTON: The other question is the reaction by the MPOs.
MR. BARTON: Well, you know, during the workgroup meetings we had consensus and there are some MPO representatives that are here today and they may choose to speak, if given the opportunity. But I don't want to speak for anyone, but I will say that I was at the Category 3 workgroup meeting and it certainly was a lively discussion, but at the end of the day when the formula was reached a consensus on, everyone left the room with agreement that that was the best thing for the state. I think the same thing held true for the Category 2 workgroup, although I was not there when they left the room.
MR. SAENZ: Commissioners, what we did the last time was the workgroup reports were then presented to the commission and the commission accepted the reports. I think what we'd like to do is take this workgroup report, run it back by the MPOs and get some feedback from the MPOs to see what kind of additional reaction we get.
MR. HOUGHTON: You want more reaction?
MR. SAENZ: A little bit more.
MR. HOUGHTON: Are you a glutton for punishment?
MR. SAENZ: We're going to send it all to John.
MR. BARTON: I need punishment, I suppose.
MR. HOUGHTON: Where are the MPOs? Are the MPOs here? Which one? Houston? You've got to be happy. You're picking my pocket by 12 percent. I'm a team player but, man not that much of a team player.
MR. JOHNSON: Good afternoon, Madame Chair, members of the commission. For the record, my name is Ashby Johnson; I'm the deputy director of the Houston-Galveston Area Council.
Yes, are happy with the outcome of the Category 2, and I want to second John's characterization of what happened in the workgroup. There was some lively discussion but we did come to a consensus about what happened, and there were some folks that were not happy with the outcome but we felt that the process was fair. So that's where we left it.
MR. HOUGHTON: Let me ask you a question, I'm going to put you right on the spot. I got $5 billion that could potentially leverage into $20 billion and you guys in Houston build lots of toll roads and leverage projects. Would you like to have 34 percent of 5 or 34 percent of 20?
MR. JOHNSON: Well, I'd like to get as much as I possibly can.
MR. HOUGHTON: There you go. You've got great politicians down at the MPO. I'm glad you're happy, and I am surprised, like Commissioner Holmes was, that we never did include congestion in part of the criteria.
MR. HOLMES: It actually was in the early '80s.
MR. HOUGHTON: What happened?
MR. HOLMES: Lanier left the commission.
MR. JOHNSON: Thank you, Madame Chair.
MR. CANTALUPO: Good afternoon. My name is Joe Cantalupo and I'm the executive director of CAMPO, the Capital Area MPO, and we're one of the MPOs that lost a little bit of ground under the formula, but I've got to say I'm very happy with the way it turned out. I think the evening of the boundaries, the use of current data, says a lot for the MPOs as a group. We wanted a formula that people could understand.
MR. HOUGHTON: Let me ask you that question. You just said boundaries. Did your boundaries shrink?
MR. CANTALUPO: It didn't shrink but what the group decided to do was use the officially designated -- what Mr. Barton referred to as the urbanized boundary as opposed to using our planning boundary, and for CAMPO, we planned for Williamson, Travis and Hays, all three counties, all parts of all three counties, but our urbanized boundary, the officially designated boundary, is a little bit less. And so we lost the population that goes into the formula that's represented by the areas of those counties outside the urbanized boundaries -- if that made any sense.
So I think the formula we have now is more easily understood by all of the MPOs and the folks looking at the formula for how we distribute it. We've also made the decision to use the most up-to-date, most recent data, so although we lose a little bit of ground -- and I'm with Ashby, we're after all we can get -- the fact of the matter is I think we've come up with something that is very, very fair, and maybe more importantly, very consistent from MPO to MPO, and that is worth maybe a little bit of ground maybe we gave up.
MR. HOUGHTON: Thank you for sharing that, and you have a great advocate as chair of your MPO, who is constantly on me. But he is a great advocate for this region and for transportation.
MR. CANTALUPO: Yes. Thanks.
MR. HOUGHTON: Anybody else here from MPOs?
MR. BARTON: I don't see anyone from the San Antonio area MPO nor from any other MPO.
MR. HOUGHTON: So that means by their absence they agree.
MR. BARTON: That's an assumption I'll allow you to make.
MR. HOUGHTON: And who said Aggies weren't smart?
MR. BARTON: That's all I had for my report, Amadeo, and for the discussion. But as Amadeo said, we'll take this information now, get the working report back to the MPOs, get some additional feedback. We have a little bit more work to do with the MPOs in terms of how we monitor congestion and report that out, we'll work with them on that, and then bring forward the report for the commission.
MR. HOUGHTON: When will we formalize it, John?
MR. BARTON: I think that realistically we could have it for you by your November meeting.
MR. HOUGHTON: The sooner, the better.
MR. BARTON: The sooner, the better. Probably wouldn't want to take it up in Dallas just because of while we're out of town.
MR. HOUGHTON: The reduction, the Dallas cut? Did, in fact, the Dallas urban region reduce like the CAMPO region? You're talking about the planning region and the urbanized region.
MR. BARTON: Yes, sir.
MR. SAENZ: We're using the urbanized area boundary for the calculations instead of using the entire planning boundary, so a lot of areas, their planning boundary was very big so that skewed the formula because the money was only being spent in the urbanized area. So really we're now using the area where the money will be applied to which makes it more fair.
MR. BARTON: Thank you.
MR. SAENZ: Thank you, John.
Commissioners, that was the end of the discussion items that we had today. Our next workshop is scheduled for November. We're going to be out of town in October so we don't have one scheduled. We'll be going to you all for agenda topics in the next few days. I've already talked to the commission aides to get to you for agenda topics for November, and any feedback that you can give us on how we structure this meeting will be helpful.
MR. HOUGHTON: John, did you leave? In the LAR request, one of the things that we talked about is in the exceptional items -- what were the exceptional items, $15 billion or so?
MR. BARTON: That's correct, approximately.
MR. HOUGHTON: Did we include the backup yet to the delegation across the street as to what projects those numbers are attached to, or vice versa?
MR. BARTON: I believe that we had the entire project list available.
MR. HOUGHTON: Like this project list that I have?
MR. BARTON: Yes, sir, they have that. That's just the mobility projects. We're going to give them the entire package which is the bridge and rehab and maintenance and everything else, but they've asked me to divide it up into pieces. In other words, if you get this much, which would be the first cut, and if you got all of it, what would it be, and by district or region. So I'm having to work with that information.
MR. HOUGHTON: Do all members of the legislature have this?
MR. BARTON: No, sir.
MR. HOUGHTON: When will that be available, Madame Chair, or are we going to do that?
MS. DELISI: Well, I guess they'll have access to it, technically, but they don't have it in their hands, so I guess what we can do is once the numbers are finalized, just practically send it to every member of the legislature.
MR. HOUGHTON: I sure think it would be in everyone's best interest to do such, personally.
MR. BARTON: We are diligently working on that and we will be ready to do that whenever that time comes. Clearly, there's been interest in which projects does this mean we will get.
MS. DELISI: When will this agency be brought up by the LBB workgroup?
MR. SAENZ: The 3rd of October.
MS. DELISI: The 3rd of October?
MR. SAENZ: Yes.
MS. DELISI: So that information is going to be ready by then?
MR. BARTON: I suppose it will be now.
MS. DELISI: Okay, great.
MR. BARTON: There's a few days remaining between now and October 3 and I'll be working on it through the weekend, but we'll get it done.
MS. DELISI: All right, great.
MR. BARTON: Thank you.
MS. DELISI: If there's no other business to come before the commission, I will entertain a motion to adjourn.
MR. HOLMES: So moved.
MR. HOUGHTON: Second.
MS. DELISI: All in favor?
(A chorus of ayes.)
MS. DELISI: No opposed; the motion passes. Please note for the record that it is 4:05 p.m. and this meeting stands adjourned.
(Whereupon, at 4:05 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: September 24, 2008
I do hereby certify that the foregoing pages, numbers 1 through 119, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Nancy King before the Texas Department of Transportation.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731
back to top