September 25 Transcript

Texas Department of Transportation Commission Meeting

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

Thursday, September 25, 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
Dee Hernandez, Chief Minute Clerk


MS. DELISI: Good morning. It is 9:05 a.m. and I would like to call the regular September 2008 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 Office of the Secretary of State at 4:28 p.m. on September 17, 2008.

Before we begin today's meeting, please take time to turn all of your cell phones and pagers and other electronic devices on the silent mode.

As is our custom, we'll open with comments from the members and I'll start with Mr. Holmes.

MR. HOLMES: Thank you. Good morning. We're feeling kind of lonely up here so I'm not going to talk long. We look forward to our agenda and your participation. Thanks for attending.

MR. HOUGHTON: Good morning. And yes, we've hearkened back to the old days, Madame Chair, we only had three commissioners, but maybe we'll get this thing done in about 15 minutes. Welcome. Thanks.

MS. DELISI: Good morning, everybody. I just want to make one announcement at the beginning that I know will affect some of you in the audience. Today's agenda item on the billboards, that I know several of you have signed up to testify on, is going to be withdrawn from today's commission meeting, so we'll take no action. However, if you do want to still stay and testify, we'll take comments at that time on the billboard item.

Let me remind everyone that if you -- oh, Commissioner Underwood, would you like to make any comments?

MR. UNDERWOOD: Have we already made comments?

MS. DELISI: Yes, sir, but I'm going to go back to you.

MR. UNDERWOOD: I apologize to our audience. Has anyone discussed and thanked our employees for all the work they've done in Ike?

MS. DELISI: No, sir.

MR. UNDERWOOD: I want to thank all our employees for their hard work during and after Hurricane Ike. I want to especially thank the men and women at Beaumont and Houston. I cannot imagine what it's like to send my spouse and family out of town away from harm's way while I head into danger and whatnot.

TxDOT is a real large family. We're a close family, and it's because of this that I'm honored to be part of TxDOT. I also want to thank our outside crews that staged in Yoakum, Bryan and Dallas. We had crews -- and I'm going to miss somebody, I'm sure -- we had crews from Laredo, San Antonio, Yoakum, Pharr, Corpus Christi, Brownwood, Abilene, Waco, Dallas -- and I know I'm leaving somebody out, but all these men and women were staged, ready to go in as soon as the hurricane passed through.

I'm proud to be part of TxDOT, a very small part of it, I know all my fellow commissioners are. And I want to remind our employees that the danger is not over with now. Now, I know the hurricane has passed but we still need to be safe in what we're doing. We're in the debris clearing up stage of the program now, and we've already lost some very valuable employees this year and I just want everybody to understand, our employees, please be careful. We've actually lost as many employees over the last ten years as the DPS has, and I consider their job very hazardous. So please be careful. Thank you.

MS. DELISI: Thank you, Commissioner.

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

Before we begin with today's official business, we have some very special resignations -- recognitions to make -- Freudian slip.

MR. UNDERWOOD: I was a little late. Is this what happens, Madame Chairman, when you're late?

MS. DELISI: Well, my access card to the building doesn't work anymore; I thought somebody was sending me a message.

(General laughter.)

MS. DELISI: Anyway, we have some special recognitions to make, and I'll ask Amadeo to make those presentations.

MR. SAENZ: Thank you, Madame Chair. I'm going to read a resolution, not a resignation.

It is our tradition to recognize our division directors and district engineers and office directors as they retire and go on to other endeavors in their lives, and today I'm honored to present a resolution to Randy Cox, our director of our Bridge Division. And Randy is a good friend, a tremendous employee; got some stories on Randy that I could probably spend a day or two telling you about, but we can do that at a different time.

But Randy is one of our most dedicated employees that I've know with the department, and when I was district engineer in Pharr when we had the Queen Isabella Causeway Bridge that was hit and we had a collapse, I called Randy Cox at about ten o'clock that night and he was in Pharr the next morning. So that's how dedicated he was. And then as we worked the first few days, I needed his expertise. He traveled that day without any change of clothes, so he stayed there and we had to work up a way to get his clothes cleaned every night, but that's a different story we won't cover today.

But we have a resolution to present to Randy, and I'm going to go ahead and read it at this time. It says:

"Whereas, the Texas Transportation Commission takes great pride in recognizing William R. "Randy" Cox, Professional Engineer, who has served the Texas Department of Transportation for 27 years, most recently as Bridge Division director;

"And whereas, Randy earned a bachelor of science degree in civil engineering from the University of Texas at Austin in 1981;

"And whereas, in 2002, Randy received the Gibb Gilchrist Award which honors the performance of outstanding TxDOT engineers;

"And whereas, Randy began his career with TxDOT in 1981 as an engineering assistant in the Bridge Division and was named director of the Bridge Construction Section in 1990, later he served as director of the Bridge Construction and Maintenance Branch from 1993 to 1999, before returning to the Bridge Division as director of field operations;

"And whereas, Randy was named Bridge Division director in September of 2004 and has overseen the development of policy standards, manuals and guidelines for design, construction, maintenance of the state bridge system:

"And whereas, as working with the bridge division, Randy also managed the Federal Bridge Inspection Replacement and Rehabilitation Program for approximately 50,000 on-system and off-system bridges in Texas, and his outstanding leadership skills and extensive bridge engineering background successfully guided the department in the aftermath of the I-35 West bridge collapse in Minneapolis, Minnesota on August 1, 2007;

"Now, therefore, be it resolved that the Texas Transportation Commission does hereby extend the sincerest best wishes to William R. "Randy" Cox, Professional Engineer, in recognition for his professional achievements and a career of loyal service on behalf of the State of Texas and its citizens."

Presented today to Randy Cox. Randy, congratulations.


MR. COX: Thank you very much. I'm very honored to be recognized by the commission and by the administration for my 27 years of service, and I want to say that I've thoroughly enjoyed the challenges and opportunities throughout my career. And the last four years as the Bridge Division director, I've worked alongside some of the most talented and dedicated men and women in the Bridge Division, it's been really my honor to do that.

I also want to express my appreciation to the commission and to the administration for your support of the bridge program. The department has made big strides towards reducing the number of deficient bridges because of your leadership, so thank you very much.

(Pause for photographs.)

MR. SAENZ: Our next resolution is more solemn as we recognize an employee who was recently killed while performing his duties for the department, and I'm going to read the resolution.

"Whereas, it is with profound sorrow that the Texas Transportation Commission acknowledges the death of David Hall, Jr., who tragically lost his life on the evening of August 30, 2008 while performing his duties as an employee of the Texas Department of Transportation;

"And whereas, David served the Houston District for seven years and it was well known that he loved his job and he was considered by his coworkers to be a hard worker and a great friend;

"And whereas, David was an avid sports enthusiast who loved playing softball and participated in an annual tournament benefitting the State Employees Charitable Contribution Campaign;

"And whereas, David enjoyed motor sports and was a huge NASCAR fan and for the past 15 years he was involved in Monster Truck Jams, and even collected mini Monster Trucks, as many as 300;

"And whereas, David liked participating in barbecue cook-offs and was a fan of Texas A&M University;

"And whereas, David demonstrated his dedication to the State of Texas and its citizens in the work he performed on a daily basis to help accomplish the goals of this agency;

"And whereas, this incident will forever serve as a reminder of the sacrifices our employees make on behalf of the department;

"And whereas, it is the desire of the Texas Department of Transportation to honor his memory;

"Now, therefore, be it resolved that the Texas Transportation Commission does hereby extend its sincerest sympathy to the relatives of David Hall, Jr., and that this resolution will be sent to the family."

Signed this date of September 2008.

This resolution will be taken back to Houston and presented to the family at an appropriate time. I should note that the employee's wife is also an employee of the department, so his death is felt even more across the state and within the TxDOT family.

Madame Chair, I'll turn the podium over to you.

MS. DELISI: Thank you, Amadeo.

The first business item on today's agenda is the approval of the minutes from the last month's regular meeting on August 28, and special meeting on August 29. Members, the draft minutes are in your briefing materials. Is there a motion to approve the minutes?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

Amadeo, now I'll turn the meeting back over to you to take us through the rest of today's agenda.

MR. SAENZ: Thank you, Madame Chair.

The next item on the agenda is the approval of the airport improvement projects for this month. Aviation Division Director David Fulton will present the minute order.

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

Item 3 is a minute order that contains a request for grant funding approval for eleven airport improvement projects. The total estimated cost of all the requests, as shown in Exhibit A, is approximately $13.5 million: approximately $12 million in federal funds, $65,000 in state funds, and $1.4 million in local funding.

A public hearing was held on August 21 of this year; no comments were received. We would recommend approval of this minute order.

MS. DELISI: Are there any questions?

(No response.)

MS. DELISI: At this time, then, I'd like to call up Pete Huff, who would like to speak for agenda item number 3. Mr. Huff.

MR. HUFF: Good morning, Madame Chairman, commissioners. My name is Pete Huff. I'm a city council member of the City of McKinney. I'm in my third term, seventh year. I've been involved with the airport for maybe 15 years.

Just a little perspective. I believe there's some near $5 million that is in this for the City of McKinney. This is part of a $56 million project to build a major replacement runway. In that funding, we've been working with the Federal Aviation Administration as well as TxDOT, but the FAA has committed $32 million of that, TxDOT $11 million -- this is over several years -- and the City of McKinney 23 percent of it at $13 million, so the local people are certainly stepping up.

We are just completing a $2.4 million project building a new taxiway and a fuel farm with a whole new safety capability. There's a ribbon-cutting on the 16th. Madame Chairman, I know you've been invited; I know Dave Fulton is planning to be there to represent TxDOT.

But just kind of the bottom line of all of this, these kinds of efforts will allow us to have taxable value of airplanes, aircraft, not counting buildings and improvements, of $120 million next year, and that will return $2-1/2 million, for instance, to our school system, approximately $600,000 to the city, a quarter million dollars to the county. So these funds that the feds and the state and the city are putting together are bearing fruit certainly for the local economy and the local infrastructure and schools, and we appreciate your support, and thank you very much.

MS. DELISI: Thank you. Members, you've heard the motion.

MR. UNDERWOOD: I make a motion.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; motion passes.

MR. FULTON: Thank you.

MS. DELISI: Thank you very much.

MR. SAENZ: Thank you, Dave.

The next item, agenda item number 4, deals with Public Transportation, and Eric Gleason will present a minute order.

MR. GLEASON: Thank you, Amadeo. Good morning. For the record, my name is Eric Gleason, TxDOT director of Public Transportation.

Agenda item 4 awards up to $1.3 million of Federal Section 5304 State Planning and Research Program and state matching funds to continue the regional coordinated planning process for public transportation and rescinds and withdraws Minute Order 111397, dated June 26, 2008.

Since the time of the June award, one lead agency has requested that another agency assume the role as fiscal agent for the award. It was discovered that another entity was incorrectly identified in the exhibit and minor name changes for three entities needed to be made. This action today is needed to correct the public record. We recommend your approval of this minute order.

MS. DELISI: Any questions?

MR. HOUGHTON: I have a related question.

MR. GLEASON: Yes, sir.

MR. HOUGHTON: Eric, is there an opportunity -- and maybe, Amadeo, both of you can answer this question -- to look at the allocations that we get from the federal government, roll those up and monetizing those allocations? I think that we looked at this a while back, a couple of years ago.

MR. GLEASON: I'm not sure I understand your question, sir. I'm sorry.

MR. HOUGHTON: Allocations from the Federal Transit Administration.

MR. GLEASON: Funds we receive through the grant programs?

MR. HOUGHTON: Yes, the grant programs, that we go bond those in the private sector and monetize it, and have then the grants, as they come in, pay off those bonds.

MR. GLEASON: Well, the extent to which we receive funds that actually get invested in longer term capital investments.

MR. HOUGHTON: That's what I'm talking about, the capital investments.

MR. GLEASON: Most of our funding we do get actually goes to operating and to purchase of fleet which, typically, those are not the kinds of things you can bond. The extent to which we may receive funds for longer term investments, I'd have to get back to you on that, I'm not familiar with the specific requirements of the FTA programs for that. I do know that the public transportation industry generally, does enter into public-private partnerships on larger scale investments that we typically see in some of the metropolitan areas and things like that.

MR. HOUGHTON: So moved on this item.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: None opposed; the motion passes.

MR. GLEASON: Thank you.

MS. DELISI: Thank you.

MR. SAENZ: Thank you, Eric.

Moving on, commission, agenda item number 5 deals with the promulgation of administrative rules. 5(a) deals with final adoption of rules. Debbie Moore, division director for the Human Resource Division will present final rules on Employment Practices. I think this is Debbie's first time presenting before you, so please take it easy.

MS. MOORE: It is. Just for the record, I am Debbie Moore and I'm the interim director for the Human Resources Division, and I'm here concerning the proposed revisions to the Sick Leave Pool Program rules, and as you recall, you approved the proposed amendments at the June 26, 2008 meeting. We had a comment period that ended August 11. We received written comments from 91 individuals during this period, and there were no substantial changes we made from those comments except for two: we added a definition of incapacitated, and we also eliminated a proposed change for those employees who would contribute to the pool would have to use all their paid leave before they got those pool hours back.

I appreciate the opportunity to address the commission concerning these important amendments and I would like to ask you to adopt the proposed rules as written.

MS. DELISI: Any questions?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; congratulations, the motion passes.

MS. MOORE: Thank you.

MR. SAENZ: Thank you, Debbie.

Agenda item number 5(a)(2), Rebecca Davio will present some rules dealing with specialty license plates.

MS. DAVIO: Good morning. My name, for the record, is Rebecca Davio, director of the Vehicle Titles and Registration Division.

I do have before you to request your final adoption of some changes to the Motor Vehicle Registration rules. These do involve special license plate marketing. Again, we're still trying to do some cleanup on our rules, and we also have some rules in here about plate to owner legislation that was passed last session and also about our international registration program for motor carriers. We did not receive any comment on these rules and we request your adoption.

MS. DELISI: Is there a motion?

MR. HOUGHTON: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; motion passes.

MR. SAENZ: Thank you, Rebecca.

Agenda item 5(a)(3) deals with Chapter 25, Traffic Operations, and Carlos Lopez, director of our Traffic Operations Division will present this minute order.

MR. LOPEZ: Always forever trying to be as creative as possible, Commissioner.

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

The minute order before you provides for the final adoption of amendments to existing rules for the Texas Manual on Uniform Traffic Control Devices. State law requires the department to adopt a manual for the installation and maintenance of traffic control devices on public roadways in Texas. This manual is also required to be in substantial compliance with the federal manual published by the Federal Highway Administration. Recently, the FHWA amended the national manual to further define the term "open for public travel" and implement a new standard for minimum sign reflectivity.

The proposed rules were published in the July 11, 2008 edition of the Texas Register and no comments were received. We recommend approval of this minute order.

MS. DELISI: Any questions?

MR. HOLMES: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Carlos will continue to present the next agenda item, agenda item 5(a)(4) dealing with procedures for establishing speed zones.

MR. LOPEZ: Yes. The minute order before you provides for the final adoption of amendments to existing department rules for establishing speed limits. The proposed amendments revise Section 25.21 concerning regional mobility authorities on United States military installations to ensure the rule fully complies with state law. The remaining amendments make technical changes to the rule such as removing references to technical procedures that are contained in the manual, correcting references to sign types that are no longer in use, and correcting existing sign graphics that will show typical signing layouts.

These rules were also published in the July 11, 2008 edition of the Texas Register and no comments were received. We recommend approval of this minute order.

MS. DELISI: Is there a motion or any questions?

MR. HOUGHTON: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. HOUGHTON: I have a question, Carlos.

MS. DELISI: Figured you did.

MR. HOUGHTON: This is a bona fide question. Are you in charge of the signs on the interstates, our signs that talk about warnings and traffic conditions?

MR. LOPEZ: Sure, the electronic signs?


MR. LOPEZ: Yes, sir.

MR. HOUGHTON: How much do those cost?

MR. LOPEZ: About $150,000 installed.

MR. HOUGHTON: Installed.

MR. LOPEZ: Installed.

MR. HOUGHTON: And those are state of the art or are those old technology?

MR. LOPEZ: As we're replacing these signs, they're becoming LED type signs which is more state of the art, they're more visible, can usually be made a little smaller too. But yes, as we replace them, we're going to the state of the art.

MR. HOUGHTON: We're going to the LED technology?

MR. LOPEZ: That's correct, sir.

MR. HOUGHTON: And what do they cost, do you know?

MR. LOPEZ: That's still running around $150- to $175- on the LEDs.

MR. HOUGHTON: And you have timing on putting new signs in?

MR. LOPEZ: They last quite a while. We've had some signs up, for example, in the Fort Worth District, for a good ten years. After a while, they just become to be more maintenance intensive, and when it's time for rehab, we'll upgrade them. And of course, we always have new locations for these signs also. In fact, we have about 530 statewide now.

MR. HOLMES: Are the messages controlled locally or centrally?

MR. LOPEZ: They're controlled at the district office and we're also working on getting control from Austin for any sign in the state. There's still some technology things we're going to have to work through, but would obviously something we'd want to have that capability for some just unforeseen type of emergency, but yes, they are controlled mainly from the district offices. And at night when there's an amber alert, somebody can get on their laptop and actually change the sign from their house to get those messages put up, because we do have those come up quite often.

MR. HOUGHTON: From your house?

MR. LOPEZ: From your house. A laptop can tie into the system and change those signs, the operator there in the district office. We do those for Amber and Silver alerts.

MR. HOLMES: I thought the signs were very helpful in the run at Hurricane Ike in the Houston and Beaumont areas.

MR. LOPEZ: Well, thank you for saying that. We work real closely with the SOC on that, and I continue to be amazed at how much influence those signs have. I mean, when we had a big old backup in Columbus on some of the reentry, we put those signs up in San Antonio that said like incredible traffic delays or massive traffic delays, people pay attention and take alternate routes. So they're a very powerful tool.

MR. HOUGHTON: We had signs in El Paso that said, Avoid Houston, Hurricane Ike -- and I did.

MR. HOLMES: I didn't, actually.

MR. LOPEZ: We did. We had anything on I-10, Odessa had their signs up too.

MR. HOUGHTON: We did, in El Paso on I-10 it said, Avoid Houston.

MR. LOPEZ: Take you a while to get there but you avoided it.

(General laughter.)

MS. DELISI: Thanks, Carlos.

MR. LOPEZ: Thank you, appreciate it.

MR. SAENZ: Thank you, Carlos.

Agenda item 5(a)(5) deals with the management of crash data information, and Carol Rawson, deputy division director, will present this agenda item. Carol.

MS. RAWSON: Good morning. I'm Carol Rawson, deputy director of the Traffic Operations Division, and I'm the creative safety person so that will help you with that.

MR. HOUGHTON: So I need to take my stuff up with you.

MS. RAWSON: There we go.

The minute order before you proposes final adoption of new sections for the department's existing crash records rules. On October 1, 2007, the collection and analysis of crash records transferred from the Texas Department of Public Safety to TxDOT. The Department of Public Safety had existing rules concerning crash investigations. The department is re-adopting these rules to define and further standardize the collection of crash information.

These new sections: define the external manuals used to classify motor vehicle crashes; define when a fatality will be considered to result from a crash; establish an annual date when the crash records database will be officially closed; establish when a driver must self-report a crash and define what form must be used to self-report a crash; define when an officer must investigate a crash; define the time period during which an officer must submit a report on a crash to the department; define the form that must be used by an officer to report a crash and what information will be collected on that form, and note that incomplete and inaccurate crash report forms will be returned to the originating law enforcement agency.

The proposed rules were published in July 11, 2008 edition of the Texas Register and no comments were received. We recommend approval of this minute order.

MR. HOUGHTON: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Carol.

Agenda item 5(b) deals with the proposed Texas Administrative Code rules, and Bob Jackson will present rules for Chapter 1, Management.

MR. JACKSON: Bob Jackson, general counsel.

The commission has previously adopted rules that are informational and describe the structure of the department. Those rules refer to Automobile Theft Prevention Authority. The legislature renamed the authority the Automobile Burglary and Theft Prevention Authority. The rules also had the authority within the Vehicle Titles and Registration Division; it is now an independent office of the department.

This minute order proposes amendments to the rules to update the references to the authority. Recommend approval of the minute order.

MR. HOUGHTON: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; motion passes.

MR. SAENZ: Bob will also present proposed rules with some changes to amend some reference to the Administrative Procedures Act.

MR. JACKSON: State law authorizes the public to petition an agency to amend or adopt new rules. The commission has previously adopted rules setting up a procedure for how the public can do that. The rules refer to an act that has been re-codified and renamed, and this minute order updates the reference to that act. Recommend adoption of this minute order.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Bob.

Agenda item 5(b)(3), Rebecca Davio will present the minute order dealing with Vehicle Titles and Registration.

MS. DAVIO: Good morning -- it's been so long. My name is Rebecca Davio; I'm the director of the Vehicle Titles and Registration Division. We have for you proposed amendments that relate to our rules regarding titles and registration today.

There's an item related to neighborhood electric vehicles in both the title and the registration section. Just for your clarification, neighborhood electric vehicles is part of the spectrum of vehicles that includes golf carts and all terrain vehicles and utility type vehicles that have seen a real increase in usage lately with the increased price of gas, and this is just to develop some rules regarding titling of those vehicles and registration of those vehicles.

Another part of this rule also relates to the issuance period for license plates and we are proposing to extend that to seven years for all license plates. That's going to have a positive revenue effect of approximately $6 million a year. And then there's some additional rules that relate to our specialty license plate program, again, to clean up the rules.

MR. HOUGHTON: Do I get to keep my specialty plates for seven years?

MS. DAVIO: Yes, sir.

MR. HOUGHTON: The positive effect is based upon your cost, we're not manufacturing them as much. Right?

MS. DAVIO: Yes, sir. Currently our rules allow for a no-fee replacement beginning at year four, so four, five and six, currently you can get no-fee replacement plates, and so that's where the savings will come from is not having to produce those plates at no cost.

MR. HOUGHTON: Have we gotten to the point where we're going to have the specialty plate auction? Has Bob Jackson allowed you to do that yet?

MS. DAVIO: No, sir, he has not.

MR. HOUGHTON: Because I know Commissioner Holmes is ready to do that UT big plate.

MS. DAVIO: There may be legislation offered -- we hear that there may be legislation offered next session.

MR. HOUGHTON: Great, I'm all for it.

MS. DAVIO: I'll be sure to let you know when that happens.

MR. HOUGHTON: It's going to go on his electric golf cart.

MS. DAVIO: Okay, you're ready.

MR. HOLMES: It's all souped up.

(General laughter.)

MS. DELISI: Any other questions?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; motion passes.

MS. DAVIO: Thank you very much.

MR. SAENZ: Agenda item 5(b)(4), as the chairman has stated, will be deferred for this month because we're still working on some proposed rules, but we do have some people that have signed up to speak.

MS. DELISI: All right. I'll call up Richard Rothfelder [phonetic].

MR. ROTHFELDER: Good morning, Madame Chair, commissioners.

MS. DELISI: Good morning.

MR. ROTHFELDER: My name is Richard Rothfelder. I'm an outside attorney from Houston, Texas, but I'm appearing today at the request of one of my clients, CBS Outdoor, and David Posy, the general counsel of CBS Outdoor, submitted a letter, dated September 23, to Gus Cannon and asked that that be distributed to the commissioners. I don't know if the commissioners have that; I brought extra copies. And I simply wanted to summarize, in the three minutes that I have, those half a dozen or so points that Mr. Posy mentioned in his letter.

Have the commissioners seen this correspondence? Could I tender it?

And given the time restraints, I'm not going to go through the points, I'm just going to hit a couple of highlights for example. I think perhaps the most important proposed rule change that especially is timely, in light of Hurricane Ike, is the revisions to Section 21.143, the rules regarding when signs can be repaired because of storm damage and other causes.

The proposed rule contemplates that the poles on a multi-pole wood structure cannot be replaced. The practical result is if a wood sign in Houston, Texas had more than one pole and one of those poles cracked because of the hurricane, it has to be removed. That's a radical difference from the current rule which allows the replacement of less than one-half of the poles on a multi-pole sign within a 12-month period, and allows any sort of repair of a billboard as long as the cost of those repairs is less than 60 percent of the value of the sign.

From a legal standpoint, I think it's important, too, to recognize the concept of non-conforming, grandfathered uses. The takings clauses of the Texas and United States constitutions contemplate that an owner of a grandfathered structure, including a billboard, can operate, maintain and make minor repairs on his use and on his structure. By contrast, when the rules prohibit the replacement of one of, say, six wooden poles on a sign, that is robbing the owner of the opportunity to continue his grandfathered, non-conforming use, and he's effectively denied the value of that structure. That's the most important provision that I wanted to mention.

I may have an opportunity to get into the next provision and that is the timing of decisions on whether to grant or deny a permit. Currently the rules do not contain any provision at all imposing a deadline on TxDOT to either grant or deny the permit, it's open-ended. There are cases across the country that say that due process requires governmental entities that are reviewing any sort of sign or other building regulation to make a decision one way or the other within a reasonable period of time.

It's especially important, I think, in the area of outdoor advertising because you're exercising a right of freedom of speech, and if the government -- in this case, TxDOT's permit office -- doesn't have any sort of guideline when they have to make that decision one way or the other, they effectively exercise a pocket veto on the opportunity to exercise that speech without making a decision subject to appeal on either the grant or the denial of that permit. So my client, CBS, would encourage the commissioners to adopt a rule in this process that imposes a reasonable period of time on TxDOT to make the decision one way or the other on the grant, say 30-60-90 days.

The last point that I'll have time to make before my three minutes are up are the permit and license fees. I understand that the proposed minute order that is before the commission has decided to defer that issue. I would encourage the commissioners, if and when it ever comes up, to study that issue carefully. There have been cases decided in the state of Texas on the issue of the constitutional amount that can be charged for permit and license fees, and in essence, it has to be revenue-neutral. The amount recovered from the permit and license fees cannot be any more than is reasonably necessary to cover the cost of operating the program. In this particular case, I recognize that fees haven't been raised since 1991, but I understand that the studies, the audits haven't been undertaken yet to carefully compare the anticipated revenue with the anticipated cost. Rather than simply doubling the fees -- which is what is contemplated in the original proposed rules -- we encourage the commission, the department to carefully study those issues and make a balanced and constitutional approach to those issues.

There's about five other suggestions that I had or that David Posy, the general counsel of CBS, had in the letter that's in front of you. I'd ask the commissioners to please review that, and I appreciate your attention this morning.

MS. DELISI: Does anyone have any questions for the witness?

MR. HOUGHTON: I have a general question. Do you belong to an association?

MR. ROTHFELDER: Well, CBS Outdoor. Again, I'm an outside, independent attorney, and I'm appearing this morning on behalf of CBS Outdoor, one of my many billboard company clients, and CBS Outdoor is a member of the Outdoor Advertising Association.

MR. HOUGHTON: Has the Outdoor Advertising Association taken a stand on these things?

MS. DELISI: They're coming up next.

MR. HOUGHTON: Are they? Okay, I'll wait.

MS. DELISI: Thank you.

MR. ROTHFELDER: Thank you.

MS. DELISI: On that note, I'll call up Lee Vela.

MR. VELA: Good morning, Madame Chair, commissioners. My name is Lee Vela and I'm president of the Outdoor Advertising Association of Texas, and our members operate about more than 80 percent of the outdoor advertising structures in Texas.

The association expresses their appreciation for taking the opportunity to look at these rules and the task of rewriting them, and I know they've been pulled today but the process will continue. Since the last substantive review of these rules has been nearly ten years ago, we welcome the review, and certainly we, like other industries, have gone through a lot of changes in that period of time.

After we had done our analysis, we did find that there are many substantive changes to the current rules which we're concerned about, and Mr. Rothfelder mentioned some. And I'm not going to go into a lot of details right now because we look forward to working with the staff whenever this comes up again and trying to work out some of our concerns.

But I will tell you that there is an opportunity, I think, for the commission, in this process, to look at, as we have seen in the last number of years, the unfettered building of billboards along state rural roads. It's probably not in the best interest of anyone, and that's why we have, for the past several legislative sessions, advocated rules and legislative changes that would address this problem. Strengthening these rules for building along these roadways would certainly be one answer, but to this point our efforts have been unsuccessful. So we urge the commission to take advantage a rule-writing process to amend the rural road rules to ensure the integrity of business activities that are used to qualify new outdoor advertising structures.

We commend the commission and TxDOT for taking the opportunity to equalize the regulation of outdoor advertising to be sure that rules are administered equally and fairly to all operators, and we recognize that the changes in these rules will most likely increase the cost to TxDOT, and in that sense, we would support justified increases in the permit fee structure. So our analysis is, on first look at the proposed rules, that many of the changes are of concern to the industry but we look forward to working with the staff and the commission to address those concerns.

MS. DELISI: Commissioner, you have questions for him?

MR. HOUGHTON: Yes, I do. Bob, do you want to come up? I thought we had this all worked out. I mean, this has been going on for years, I think, and we agreed to the rules and regs regarding the digital signs and then we set forth and said let's go fix the rule, and now we're back here again. What happened? That's a quick overview of a long period of meetings and discussions, and what's happened since that?

MR. JACKSON: Quite a bit has happened, and I'm not sure that I'm the proper person to address that.

MR. HOUGHTON: Who is the proper person?

MR. JACKSON: Amadeo, John Campbell, John Barton.

MR. HOUGHTON: Who would like to take this one?

MR. BARTON: Mr. Campbell would like to take this one.

(General laughter.)

MR. CAMPBELL: Good day, commissioners. I've recently returned from Australia. I understand that I would like to answer your question.

MR. HOUGHTON: What happened? I thought we had this all worked out.

MR. CAMPBELL: And I'm equally as interested in what happened because I also thought that we had tentative agreement by industry as well as the interest groups that we've maintained communications with for the substance of the rules as we have them currently drafted.

MR. HOUGHTON: Well, I guess the choice is if the industry and we can't agree and rural Texas and Scenic Texas, whoever they are, we'll just punt it to the legislature and take your chance. Is that an option?

MR. CAMPBELL: I think taking the option of punting it to the legislature, we forego an opportunity to do a lot of things within the context of the rules without the need for statutory changes, to better enforce them, to apply them equally. I think we have that opportunity, and quite frankly, punting it to the legislature I think just puts that opportunity off for the duration of the session.

MR. HOUGHTON: So what's the solution?

MR. CAMPBELL: My recommendation would have been to put the rules up for consideration as proposed and then take advantage of the public comment period here and incorporate any changes that industry or the interest groups might have suggested.

MR. HOUGHTON: When is this coming back, Amadeo?

MR. SAENZ: Don't know.

MR. HOUGHTON: Don't know. Well, I guess we'll punt it to the legislature; it's getting late in the game.

MR. CAMPBELL: Thank you.

MR. HOUGHTON: Lee, what do you guys want to do?

MR. VELA: Well, certainly we agree that there needs to be some look at the changes in the rural road regulation so that we don't have the unfettered building of billboards that we do have currently, so we would hopefully like to work that out with rule-making as opposed to legislation, but it's at your pleasure at this point.

MR. HOUGHTON: Well, I think it's at your pleasure too.

MR. VELA: Yes, sir. Well, we're willing to work with you and work out whatever we can do to make it happen.

MR. HOUGHTON: Ball in your court.

MS. DELISI: Any other questions?


MS. DELISI: I'd like to call up Mike Morrill.

MR. MORRILL: Thank you, commission. I appreciate the opportunity to speak. My name is Mike Morrill. I have a company, a one-man billboard company, been in the business 20 years, a company named Metro Outdoor Advertising.

I believe I can speak to Commissioner Houghton's questioning about the disconnect between the rural roads and the rule changes proposed here today, and from my perspective, I think the disconnect occurred when the proposed rule changes went beyond dealing with just rural roads. These changes are substantial; there are a lot of significant changes in here that adversely affect the business. And that's my opinion.

But we are willing to work. I'm a small guy but I'm willing to work with the staff. Mr. Cannon has done an admirable job, I compliment him and his staff on trying to do this in a manner to make this rule process efficient and the whole program better. So there is willingness to work for sure.

MS. DELISI: Any questions? Thank you, Mr. Morrill.

MR. MORRILL: Thank you.

MS. DELISI: Next I'll call up Brett Gilbreath.

MR. GILBREATH: Hello. My name is Brett Gilbreath. I'm executive vice president of Sign-Ad Outdoor Advertising Company, and I appreciate this opportunity to speak with you today.

I wanted to touch on a couple of things in the proposed rules that we think would be substantial changes that could hurt the industry in a substantial manner. One of them is the repair and maintenance section that Mr. Rothfelder touched on, not being able to replace on any poles on wood pole structures and so forth, as well as adding safety features such as adding walkways for employees that may work on such structures. We would like to keep the 60 percent rule as it is in state law right now, so we can alleviate some of these safety issues as well as be able to maintain our signs.

The second issue I would like to speak to is the cancellation of permits. What is proposed now is if a site becomes non-conforming after a permit is issued and developed, through a closure of a business that has nothing to do with our business whatsoever down the road, or a zoning change which we have no control over, it could render the sign a non-conforming use and the highway department could ask for its removal. And I just wanted to point out to you today as a businessman, we buy land, we buy easements, we make certain decisions that are significant, and we rely on getting a permit from the highway department, and as long as we follow the rules and regulations, we place a lot of faith in maintaining that permit, and to have it canceled and force removal of the sign and lose your asset, we think is a particularly substantial change and it could harm our business as well.

One other item I'd like to touch on is the discontinuance of signs due to destruction. There's a couple of issues where, including vandalism to signs which if someone was to come out and cut down a wood pole sign, for instance, that we could be forced to remove that sign and we wouldn't have any opportunity to put it back, and we would like to have that rectified if possible and added to where if there's no fault of ours from maintenance and whatnot that we be able to put that sign back and maintain that permit on a non-conforming sign.

And the last issue I would like to speak to is the permit application decisions. My company has been real active, we're an old company, we've been open since 1964, and we've had to wait as long as a year to get permit decisions out of the highway department. I'd love to see, like Mr. Rothfelder mentioned, 30 to 60 days. As a businessman, again, when you're out buying land, buying easements, committing to long term leases, a seller of a piece of property is not going to wait a year to get a decision on whether to sell the property or not, and we'd like to keep that and we think it would be reasonable to keep that in a shorter term.

That's all the points I have today.

MS. DELISI: Thank you. Questions? Thank you, appreciate it.

MR. GILBREATH: Thank you.

MS. DELISI: Next I'll call up Steve Jennings.

MR. JENNINGS: Good morning. I'm Steve Jennings. I'm with Benchmark Outdoor. We operate signs in the Rio Grande Valley.

All our clients are small businesses. Our largest client was named Businesswoman of the Year by the State of Texas a few years ago and she does home health care, taking care of people that are invalids and elderly and have other special needs, and she puts all of her budget into billboards because it's the best way to reach and to serve these clients, and she is the largest employer in the city of Harlingen outside of the school system. So as small billboard operators, we serve a lot of the lower profile people, motels, car dealers, a lot of businesses that may not have a lot of profile statewide or nationwide but do have an impact on the budget of the state.

Making the operation of the Right of Way Division of the highway department more efficient will both benefit the state and will benefit us as sign owners, sign operators, and ultimately that will benefit everyone who uses the highways. And all of the improvements that you are making and these changes that are good, we appreciate that and there are good things in this deal. But as the others have mentioned, there are some things that need to be addressed that may be some pitfalls or some things that will come up that will cause problems that we would like to work with the commission and get all of these things ironed out so that when we do pass the rules that we have something that doesn't generate a bunch of litigation here and there, that doesn't cause inequities or anything like this that maybe had not been addressed when the rules were put together.

I want to address one item which was lightly touched on by Brett a while ago, the acts of man, the vandalism, the car wrecks, things like this that would eliminate a billboard operator from replacing a sign that might be located in a non-conforming location. We, as billboard companies, go out and look at situations, we look at revenue possibilities, we look at the pluses and minuses of every location and we try to assess based on the information that we have of whether to make an investment or how big of an investment to make. Once we have decided to go in to do that and we have placed our investment and made all of our financial commitments to come in and change the rules and say these acts of man, accidents, vandalism, things like this that no longer would terminate a billboard will now terminate a billboard where it cannot be placed back, it changes the equation and it increases our risk and our cost of operation. And these factors, we did not have access to those at the time that we made the commitment, and most businesses are allowed to have a grandfather clause, once they have gone into business and they're operating their businesses.

Plus, it's even possible that it would create a whole new arena for damage or vandalism or protectionism, rackets, hostage type situations for those that are unscrupulous that might want to either use it as a source of getting what they want or a source of getting money or something like that. And there's costs there that if that was not allowed to be rebuilt, there still might be time remaining on the lease, who would be responsible to bear those costs. Once a permit is canceled, it has no value, it can't be used in a city that has a relocation program. We make all of these investments of our time and our money to provide a living for our families and to take away from that, as this one particular law is, would be substantial.

I do appreciate the work you are doing, but I think this is just one, I'm sure others will bring up other items. I would recommend that we take time to go over and fine tune these proposed changes before you take action on them. I want to thank you for your time and attention.

MS. DELISI: Thank you. Mark Chancellor.

MR. CHANCELLOR: Good morning. My name is Mark Chancellor. I'm respectfully coming before you today with concerns about these changes and proposed changes. I have a small sign business and also am a sixth generation Texas landowner.

A lot of these rules could have a negative effect. I'm not going to try to get into each one, for my three minutes, there's no way I could do it. They could have a negative effect not only on my small business but a lot of small businesses. These billboards, like you've been pointed out, help the small businesses, also the towns; every small business in the state depends on a lot of this stuff. These rules have already eroded a lot of the property rights, and that's something I'm concerned about. I own rural Texas land. More rules could affect the property rights of not only my kids but my grand kids, your kids and your grand kids, and we're taking these rights away from people on down the line. These rules in the future are going to affect our generations to come, not just the ones we know about but way on down the line.

In addition to banning these billboards, a lot of these groups are wanting to go after on-premise signs which is another thing that's going to stab a knife in the heart of businesses. Overhead wires, cell towers, this is something that we all use, and they're after those too. I personally don't like those yellow trucks and cars but I don't think I have a right to ask you to ban those off the highway. None of these groups that are opposed to the billboards are offering to pay any of the property taxes, and believe me, I'm sure you're aware, that's a big deal every year. I have to come up with it every year. They want to deny me the use of some of this land on a rural road, but when property tax time comes, they're nowhere to be found, they don't want to chip in or offer to rent that space to pay for the non-use of it. In my opinion, they want control of the land but they don't want to pay for it, and that's just plain wrong. Let them buy the land, they can pay the taxes, then I have no problem with them not doing to doing whatever they want with the land. That's called property rights.

I live in rural Texas, I feel that some of these rules are more pointed and have a more adverse effect on the rural Texas property owners than they do the ones in town. And here again, I'd respectfully ask for you to do everything in your power to strengthen our property laws, not weaken our property rights, and leave the control of the land with the landowner. They're the ones that have to pay the taxes every year.

And as far as billboards, many of these cities that we're talking about already use them to boost their economy, they're attracting tourists and more businesses alike. Let's keep Texas friendly and say no to more restrictions. In these tough economic times, more restrictions are not good for businesses or our state. I thank you for your time this morning.

MS. DELISI: Thank you. John Walton.

MR. WALTON: Hello. My name is John Walton and I represent a small billboard company out in East Texas, and I apologize, I just got back from Arkansas where we were attending an appeal hearing there, but I haven't been able to get up to speed on everything that's taken place up to date. I did, when I got back Tuesday night, went through 127 pages of these proposed rule changes, and quite frankly, I'm astounded at the hostility in the overall nature and tone of it, and personally, I think that it exceeds the intent of the original act, number 640.

However, listening to some of the people that preceded me, one of the things that I think is important, and that's the enforcement of the laws that are on the books. There are signs out in our area that are just totally illegal and when we call the local district to do something about it, they're negligent. I think that if you can enforce the rules that are on the books, I think then we can start to talk, but right now I think what I'm seeing -- and I was originally going to talk about open records and Open Meetings Act, and some of the things that I've heard have transpired, I don't know for a fact. I do want to find out because I think we have interests that are specific or specialized in the fact that we have some big companies in Texas, they're publicly traded, it leaves the small guy out of the loop, and I'm very concerned about that. However, I don't want to speak about that until I can find out more information about what has transpired prior to this date.

So I just want to thank you for your time. I would ask that you maybe address the enforcement of the existing rules. We've got people out there that are putting up boards with no permits, and when you're notified of it, no action is being taken to have them removed. I have no problem with that. There are other small sign owners that I've talked with that have actually called the districts and are told for him to do the research for the district, and he responded to them: Hey, that's your job, isn't it; that's not my job. And nothing ever happens. So he expressed that to me and I did want to pass that on because I haven't heard that mentioned today. And I want to thank you for your time.

MS. DELISI: Thank you. James Ramsey.

MR. RAMSEY: May I provide you a copy?


MR. RAMSEY: Chairwoman Delisi, commissioners, good morning. My name is James Ramsey and I am a licensed outdoor advertising operator in the North Texas area.

In response to the notice that I received regarding this meeting to discuss the draft to repeal Title 43, Texas Administrative Code regulation of outdoor advertising signs, I've provided each of you my written comments and/or helpful suggestions for each section being proposed by the department. I realize that this is a short time here on the podium and I ask that you please take time during the review period after this meeting to see my comments.

On the subject of regulation in general, be aware that the current regulations that we have in place are very stringent compared to our neighboring states and abroad. As a regulatory agency, I recognize over time change is imminent due to the technological advances, increasing costs and the necessary clarification to efficiently enforce the regulations of the code that we have at hand. Many of us behind us, we support the agency as an industry, and we support them to enforce the current code that we have in place. I also respect those who have concerns and sometimes constructive criticisms of our industry, as I hope we can work those issues out in a fair and balanced manner.

In closing, I appreciate the opportunity to own a small business, be a part of this industry and its future. I want to thank you for your time, as I applaud you, the commission, and TxDOT staff in your efforts moving the outdoor sign program forward for the benefit of both the industry and the general public. Thank you.

MS. DELISI: Thank you. Charlie Cooper.

MR. COOPER: Good morning. Thank you for the opportunity. My name is Charles Cooper and I have been in the outdoor advertising business for over 35 years in the Dallas area, and what I'm going to say this morning has changed a little bit because I'm sure there's a lot of people behind that want to speak.

I can understand the need for rules and rule changes, modifications, and I'm for that. I've lived under these rules for many years and I think they could be enforced better, but my main concern is if we're going to have rule changes, that's fine, if we need to improve things, that's fine. I would like for my company, for me and the other independents to be involved with TxDOT. I feel like we were left out, and I'm not really sure where all of these changes came from, but a lot of them are detrimental, I feel. And so moving forward I would love the opportunity to be involved like many of the other independents here would like to be involved.

Thank you for your time.

MS. DELISI: Thank you. Cullum Thompson.

MR. THOMPSON: My name is Cullum Thompson. I've got a small, independent outdoor advertising company out of the Dallas area. I am second generation in the business.

In the interest of your time, I will not touch on the details of some of the rule changes. What I would like to just say to the commission is in reflecting on what Charles Cooper just commented, the independents -- and a lot of the voices you're hearing here are of independents -- were not notified, were not aware of these changes that came about. I know there was proper procedure, I think, in a public notification process in the state, however, in a practical sense, these changes did not come to us. We recognize, obviously, you can't get anywhere if you have too many voices, and I just want to make you aware -- and I think you'll probably hear later -- that when we did learn this was taking place and we had been left out of the process, we worked very stringently in the last number of months to bring together the independents so we would hopefully be able to come and work on this process with Mr. Cannon and the staff, bring one voice of the independents because we are affected differently.

We understand at the Senate committee meeting in Irving it was made very clear that, as Mr. Houghton observed, this has been going on for a long time, something needs to change. We'll embrace that, we will work with Mr. Cannon and the staff to do that. As an example, there was a meeting last week where the industry was advised of some of these changes and we received notice of that meeting actually about 48 hours before the meeting and some other independents received notification of that meeting less than 48 hours before that meeting took place, so we didn't have time to prepare or anything.

So we simply would like to have a voice in the process, we want to work productively with the state in making changes that are necessary. Thank you.

MS. DELISI: Thank you. Gordon Cooper. Is Gordon Cooper here?

(No response.)

MS. DELISI: All right. Jody Wallace.

MR. WALLACE: I don't want to take much of your time. There are a few things that I've noticed, I've been in the business just five years, a salesman for an outdoor company in Dallas. I think someone hit on earlier, the big thing that gets a bad taste in a lot of people's mouth in the sign business is the illegal signs that are out there. People putting them up close to the road, no observation of the right of way, and they're just throwing up signs everywhere with no regulation or no enforcement on those. When we're adhering to them, we don't get much of a voice. So that's really one of the big things that I've noticed. Thank you.

MS. DELISI: Thank you. Barney Bigham.

MR. BIGHAM: Good morning, Madame Chair, commissioners. I'm Barney Bigham. I'm a resident of west Travis County, Texas, and I'm here to bring awareness to the growing billboards on the scenic Highway 71 West. Bear with us a second, I've got a short power point.


MS. DELISI: Mr. Bigham, would you mind if I brought up the next witness while they bring up your presentation? That way we can keep it going.

MR. BIGHAM: Absolutely.

MS. DELISI: Thank you. Margaret Lloyd.

MS. LLOYD: Madame Chair, thank you so much for having me, commissioners. I wish Commissioner Houghton was back in here because I'm a little confused about what happened too.

MS. DELISI: There he is.

MS. LLOYD: There he is, good.

MR. HOUGHTON: Are you waiting for me?

MS. LLOYD: I'm waiting for you.

MR. HOUGHTON: Margaret, nice seeing you again.

MS. LLOYD: Thank you. Good to see you too. And I'm a little confused, as you are, about what happened, so I just wanted to commiserate with you for a moment.

I've passed out a letter that we wrote on June 2, giving recommendations about how to control or limit billboards in rural Texas, and I've sent you all copies of this so you may have already seen it. What you haven't seen is the handout that's the binder that we presented to the Texas Senate Transportation Committee that sort of gives a story of State Highway 71, and I'm happy to see a resident here from western Travis County to talk about that. I'm not going to go through this whole book, I just want to point out a couple of things.

But first, let me just say these rules should be non-controversial. These rules are proposed to bring efficiency to the administration of this program, to bring fairness across the board to all the outdoor advertisers, to bring consistency across the state among all the districts, and to be cost-neutral. That should not be controversial. Those, I believe, are the first four goals that you all have in your notice when you did these rule changes. We support all the rules that are drafted that will achieve those goals.

I have to say, though, that we were disappointed that the fifth issue that was in your notice, and that issue is to restrict new billboard construction on both primary and rural roads located in rural areas, none of the rules that are proposed do that. So all of the billboards that you're seeing in this book -- and I want to especially point out to you pages 17 through 19, brand new billboard on State Highway 71 in western Travis County. If you pass these rules today, that billboard could still be built on that scenic road and look exactly like it does.

Commissioner Houghton, we talked about your concern and how we all share concern about these rural scenic roads and views, and what we had recommended in our letter was really things: one was how to have the business activity area more stringent so that these billboards couldn't be built in areas where there's, as on pages 17 through 19, this is called a commercial activity area. Now, where's the commercial activity? There is a business called Spicewood Stone Company that's set off back from the highway that does landscaping and sells stones. That was not intended under the Highway Beautification Act to be a commercial and industrial activity area. That's what we're trying to address in all of our comments that you've been hearing for ten years. This is it, this is the problem.

Secondly, even if you do allow new billboards in rural Texas, they don't have to look like this. They can be half the size, they can be half the height, they can be smaller, they can look like countryside signs rather than urban billboards. So that's what our comments go to is where do we put these things and then what do they look like, and we were disappointed that those were not included in the proposed rules because we thought that was the spirit of what the motion was in February.

I'm happy to answer questions?

MR. HOUGHTON: Where's Carroll?

MS. LLOYD: Carroll, unfortunately, had some health issues and he couldn't come, and he also lost his house on Bolivar Peninsula, and we just got power back yesterday, so there's a lot of things going on in Houston, I know.

MR. HOUGHTON: A great advocate.

MS. LLOYD: Yes. His heart is here; we talked yesterday and he sends his regards. Can I answer any questions for you?

MS. DELISI: Thank you very much.

MR. HOUGHTON: Thank you, Margaret.

MS. DELISI: Mr. Bigham, are you ready?

MR. BIGHAM: This is the latest monster billboard on 71. All the billboards are large, they're at least 42-1/2 feet. This one has got four faces, as large as they can get, and you can see it's right in the middle of a pristine view of Lake Travis. Large billboards. This billboard was one of the first on 71. The advertiser, Pamela Turner, called me, said her contract expired nine months ago, she can't get the billboard company to take the sign down, she's embarrassed about it.

Same story, Bee Cave, the advertiser, their contract expired six months ago, have not been able to get the billboard down. I received a call from Roger Beasley of Roger Beasley, he did not realize that he had purchased a sign that was going to be on a scenic Texas highway; that sign will come down when his contract expires in six months.

MR. HOUGHTON: Let me ask you a question, hold on. You're talking about the sign itself or the structure?

MR. BIGHAM: I'm talking about some of the advertisers on these signs.

MR. HOUGHTON: Who owns the land underneath that board?

MR. BIGHAM: That I don't know.

MR. HOUGHTON: The landowner leased that to the company.

MR. BIGHAM: That's correct.

MR. HOUGHTON: Is it compliant?

MR. BIGHAM: Well, I haven't had it checked out.

MR. HOUGHTON: How long has that structure been up in the air?

MR. BIGHAM: Most of the newer ones have gone up, I would say, in the last six months to a year.

MR. HOUGHTON: That structure was put up in six months to a year.

MR. BIGHAM: I believe so.

MR. HOUGHTON: Is it compliant?

MR. BIGHAM: Again, I haven't checked it out to know whether it's compliant or not -- it's offensive.

MR. HOUGHTON: I understand, but we have a legal issue and an offensive issue.

MR. BIGHAM: I don't know the answer to that. I do know that there is a billboard now that there is a neighborhood, Travis Settlement, that is reviewing that may be against some deed restrictions. Whether this board is, I don't know.

Since the Austin City Council sent the billboard companies hiking, they've decided to hike out 71 and you can see that we're just continuing to get cluttered with billboards. Many of them are vacant. We've got seven vacant billboards, about three that would like to be, and more coming along. This advertiser, Zoltan David, has placed a billboard, you can see, with the sky view of clouds. I think even the billboard advertisers realize it's offensive.

I'd just ask that we turn the lights out on these billboards and I would ask the commission to consider a moratorium to ban future billboards until legislation can hopefully ban them in the future. And I would also like to ask the commission to consider a program, marketing program such as Don't Mess with Texas, for Texas Scenic Highways. Thank you.

MS. DELISI: Thank you. Gordon Cooper, is he still gone?

(No response.)

MS. DELISI: All right. Thank you, everybody, for coming. We'll take those comments and get back to work.

MR. SAENZ: Agenda item 5(b)(5) deals with the Pit and Quarry Safety Program. Zane Webb, director of our Maintenance Division, will present the minute order.

MR. WEBB: Good morning. I'm Zane Webb, director of the Maintenance Division.

The minute order you have before you has to do with the Quarry and Pit Safety Act, proposed changes to 21.701 through 21.724. When TxDOT got the Quarry and Pit Safety Act from the Railroad Commission, we substantially adopted the rules as they were at the Railroad Commission. Two items that are in the statute never were really addressed by rule, and that's the setback from the pit to adjacent property lines, and the amount of compacted material that would be upon closing of the pit. These changes, along with some clarification, will take care of those two items.

Staff recommends approval.

MS. DELISI: Are there any questions?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. WEBB: Thank you.

MR. SAENZ: Thank you, Zane.

Agenda item 5(c) deals with Rule Review, and Bob Jackson will present the minute order on Chapter 30, Aviation, Chapter 31, Public Transportation.

MR. JACKSON: Bob Jackson, general counsel.

State law requires agencies to review the rules every four years and consider whether the rules should be re-adopted. Notice was placed in the Texas Register asking for public comments; no comments were received on the re-adoption of TxDOT's rules concerning Aviation and Public Transportation. We recommend adoption of this minute order which would re-adopt these rules.

MR. HOUGHTON: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Bob.

Agenda item number 6 deals with the corridor segment committees, and Mark Tomlinson will present a minute order designating entities that may appoint additional members to the I-35 and I-69 corridor segment committees. Mark.

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

This minute order designates additional entities that may appoint members to the I-35 and I-69 corridor segment committees. Members of the segment committees are appointed locally and in two phases. The first phase of appointments is selected by counties and MPOs; this process is ongoing. The second phase of appointments must be initiated by the commission by designating which additional entities may submit appointments. The additional entities include cities, economic development corporations, chambers of commerce, and port authorities.

Specifically, the purpose of the corridor segment committee is to provide input on the designation of a route in a proposed segment and to give advice and recommendations on transportation improvements in those segments which may include whether to construct a proposed segment, segment planning, individual project development, and financing as requested by the department. The corridor segment committees' advice and recommendations will provide the department with a better understanding of public, business and private concerns about the corridor for which it's created, improving the department's communications and project development objectives, and hopefully resulting in greater cooperation between the department and affected parties.

I would note that the staff recommendations before you today include extensive input from the corridor advisory committees that were previously set up, the districts that have these segments in their boundaries, and divisions, and in particular, GPA and TTA. I'd be happy to give you any further detail or answer any questions you may have.

MS. DELISI: Any questions?

MR. HOLMES: Mark, it looks like you've left two to four spots vacant on each one of these.

MR. TOMLINSON: Yes, sir, we have.

MR. HOLMES: They could be filled at some later date?

MR. TOMLINSON: Could be, at your discretion, yes, sir. The statute allows 24 members, I think, and we range from 20 to 22 designees here in this action, so if you choose in the future, you have some additional appointments to make.

MR. HOLMES: What happens if some of these that have been designated fail to appoint? That just comes back?

MR. TOMLINSON: It would, yes, sir.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes. Thank you.

MR. SAENZ: Thank you, Mark.

Agenda item number 7(a) deals with approval to add some additional projects to the State Highway 121 regional toll revenue work program, and James Bass will present this minute order.

MR. BASS: Good morning. For the record, I'm James Bass, chief financial officer at TxDOT.

Item 7(a) seeks your approval to add some projects to a work program in the Dallas District utilizing payments received from the NTTA associated with the 121 toll project. With approval of this minute order, projects listed in Exhibit A will be authorized for CONSTRUCT authority in the work program, and staff recommends your approval.

MR. HOUGHTON: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. BASS: Thank you.

MR. SAENZ: Thank you, James.

Agenda item 7(b) will be deferred. We were asking for some additional authority to program projects in several categories, but now with the discussion item we had yesterday on the Prop 14, staff wants to go back and review our recommendations and bring them back to the commission at a later date.

Agenda item number 8(a) deals with an increase in the stipend for a project in Tarrant County, the DFW Connector. Mark Tomlinson will present this.

MR. TOMLINSON: Again for the record, Mark Tomlinson, director of the TTA Division of TxDOT.

Item 8(a) authorizes the department to pay a maximum of $750,000 to each proposer that submits a responsive but unsuccessful detailed proposal for the DFW Connector project. This minute order supersedes only portions of Minute Order 111102 that authorized payment for work product stipend up to $500,000. The DFW Connector project has been revised and has become quite a bit more complex. The proposers were originally required to submit a single proposal for the CDA. The current procurement requires each proposer to examine and prepare bid submittals for project options. The additional project options require a greater level of engineering effort associated with the examination of transitions and staging than was originally required.

Staff feels it's appropriate to allow increased payment for work product up to this $750,000 limit which we think is commensurate with the value of the work products that TxDOT will purchase and will own in relation to this project. Staff would recommend your approval of the minute order.

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Agenda item 8(b) is a similar minute order for a project that we call the North Tarrant Express in Tarrant and Dallas counties. Mark.

MR. TOMLINSON: Yes, sir, very similar, authorizes the department to pay up to a maximum of $1 million for each proposal that is submitted and is responsive but unsuccessful for the North Tarrant Express. Similar minute order supersession. This project has also been revised and expanded, also is more complex with respect to analysis and engineering work that is required. The proposers were originally required to submit a single proposal for the concession CDA and the project pre-development agreement for future segments of the project. The current procurement now requires submittal of both a base scope proposal and an ultimate scope proposal for the concession CDA, in addition to the pre-development agreement. In essence, it is a lot more in-depth, complex and will require substantially more work on behalf of the proposers.

So we would also recommend adoption of this minute order.

MR. HOLMES: You also think you're getting value for money. Right?

MR. TOMLINSON: Absolutely, and for these to come into play, the proposals have to be responsive and will be a work product that we will own and can be incorporated with the successful proposer.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Mark.

Agenda item number 8(c) is the acceptance of a report of the traffic and revenue for the Central Texas Turnpike System projects, and Mark will be presenting that also.

MR. TOMLINSON: I thought I'd have a little break there. This minute order accepts the report of actual traffic and revenue for the CTTS as of August 30, 2008 and is required by the CTTS indenture of trust. The 65-mile system is now complete and fully open to traffic. During this fiscal year the CTTS generated over 65 million transactions and more than $48 million in revenue. With that, the CTTS significantly exceeded projections for both average weekly transactions and revenue. In particular, the average weekly transactions were exceeded by 72 percent this year, total revenue exceeded projections by 40 percent. During this quarter the average monthly revenue was $4-1/2 million, and that revenue exceeded projections for the quarter by approximately 54 percent and exceeded revenue in the same months of 2007 by 74 percent.

It should be noted that full tolling on Segment 4 of State Highway 130 will not begin until September 1 of 2008, so the effect of this last section on the revenue of this system won't be fully realized until the first quarter of FY 2009. And as a side note, we continue to have outstanding TxTag penetration throughout the system, it's currently about 75 percent of all transactions.

Staff would recommend your approval of this minute order.

MR. HOUGHTON: Just a question, Mark. Going through this, when you look at the linear, do we have the original T&R on this -- is it reflected in here, the investment grade T&Rs?

MR. TOMLINSON: That report itself is not in the report, but these figures are reflective of those original projections. Does that answer the question? When we talk about revenue exceeding projections, it's those original T&R that that's based from.

MR. HOUGHTON: But on a graph, we don't have that line.

MR. TOMLINSON: I don't believe that's shown; I think we just show the reflection of last year's.

MR. HOUGHTON: It's one year to the next.

MR. TOMLINSON: Yes, sir.

MR. HOUGHTON: I'd sure like to see what that original T&R looked like that.

MR. SAENZ: We can get that incorporated.

MR. TOMLINSON: We can definitely include that in the future.

MR. HOUGHTON: How many toll tags have been issued in this region?

MR. TOMLINSON: I think the figure is up around 500,000, 450- to 500,000 in this region.

MR. HOUGHTON: In this region?


MR. HOUGHTON: So people have voted.

MR. TOMLINSON: Yes, with their pocketbooks, really. Yes, definitely have.

MR. HOUGHTON: Great. Congratulations.

MR. HOLMES: Mark, in looking at the average weekday transaction comparison on page 6, am I to take any message from the May to August of '08 numbers, going from 219 to 214, 216, 220. Is that a leveling off or is that just summer travel issues?

MR. TOMLINSON: Typically this is generally a commuter system that we have workday traffic, so it tends to flatten out during the summer months. Of course, you know during this particular time frame in this year, gas prices have probably influenced some travel patterns as well. We don't see a huge impact from that but I think it probably affects that as well.

MR. HOLMES: Do we know anything about the run rate for this month?

MR. TOMLINSON: For this month, I haven't seen those yet, but we can get that to you.

MR. HOLMES: Thank you.

MR. HOUGHTON: We don't have it broken out -- yes, we do. Okay, never mind. Thanks.

MS. DELISI: Is there a motion?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Mark.

Agenda item number 9, commission, staff recommends that we defer this minute order. We're still working with staff to come up with a minute order that will put in place the delegation of powers and responsibilities concerning the operational budget. We're also looking at Sarbanes Oxley to see how that ties into that and we'll come back with a minute order that will address both of those.

Agenda item number 10 deals with reports. The first report is a report by Steve Simmons, deputy executive director, concerning our implementation of the Sunset Commission staff recommendations. Steve.

MR. SIMMONS: Good morning, commissioners. Since I've missed the last four meetings, I feel like my for the record introduction will also be re-introducing myself to you. For the record, my name is Steve Simmons; I'm the deputy executive director of the department. I'm here today to give you an update on where we are in regards to implementing Sunset staff recommendations on improving the department.

First, I want to thank John Barton for filling in and pitch-hitting for me last month when we presented each of the Sunset recommendations and our strategies for implementing them. And Commissioner Underwood, I also want to thank you for allowing me to use your assistant, Zeke, in putting a lot of this stuff together too.

We are currently working on the implementation of 27 recommendations, and I'm happy to report we are making good progress on these plans and are experiencing minimal delays only on a select few. But I want to assure you at this time we are still on track to complete all the recommendations within the time frame originally established. This has been an excellent learning process but we are still refining individual tasks for each recommendation to better ensure that the task is clear and understandable to the legislature, Sunset, the public, the commission, and TxDOT staff. We're also continuing to scrutinize the time frames for each task to determine if there are opportunities to expedite the implementation.

I'm pleased to announce we have completed implementation of recommendation 4.6 since last month and are near completion on recommendations 3.3 and 4.2. Recommendation 6.6, 6.7 and 6.8 regarding the outdoor advertising industry were included in the proposed rules you deferred earlier today and we'll continue to pursue those and hopefully present them to you soon.

Now, recommendation 4.6, I mentioned we completed, requires TxDOT to consider providing additional professional staff to support its consultant contract office. This was accomplished by allocating additional FTEs to this office -- which is in our Design Division -- earlier this month. The positions created will be filled as soon as we can get them posted and get the people onboard and trained.

Recommendation 3.3 requires the department to provide a formal process for staff with similar responsibilities to share information with one another about their best practices. We are addressing this recommendation in two parts. The first will be to include a discussion item at all of our department meetings, conferences and seminars to allow staff an opportunity to discuss these issues. This includes our quarterly district engineer staff meetings with the administration. This step has been accomplished

The second part of implementing the recommendation will be to create best practice pages and chat rooms on our TxDOT I-way intranet site, so that employees will be able to use these tools to post ideas and questions, chat about successful experiences and challenges, and to seek advice and input from one another and our agency experts on issues and problems they are facing. This is near completion and we are eagerly anticipating rolling out the enhanced web tools next month.

Recommendation 4.2 requires the department to remove provisions in statute and rule that requires TxDOT to advertise its contract solicitations in local and statewide newspapers. Staff has identified the laws and rules that require this advertisement and is crafting proposed changes to these statutes and rules for consideration by the commission and the legislature, and we again anticipate those to be completed next month.

To follow our open and transparent direction, we will soon post the recommendation and the individual implementation strategies necessary to complete each of them on the TxDOT website. This information will include the expected completion date and advice of any public participation available to provide input. A scheduling chart is also being developed to provide a visual analysis of where each of these recommendation's implementation plan is, and it's just a small gant chart. I've got it kind of briefly one slide here. But you'll be able to look at a date and see where we are, there will be color codes to tell are you on schedule or behind schedule, is it a public participation item, things of that nature that will give people another idea on how to look at where we are in the process.

This concludes my comments on staff's plans and efforts to implement the Sunset Advisory Commission recommendations. I commend our staff on their hard work. We're on the very early phases of this; this is a high priority for the department, and our employees are giving it their full and undivided attention. And I look forward to continuing this dialogue each month with you until we get this completed. I'd be happy to see if you have any questions.

MS. DELISI: Are you providing all this information to Sunset staff?

MR. SIMMONS: Yes, ma'am.

MS. DELISI: All right.

MR. HOUGHTON: Did I hear you say we're bringing back the billboard stuff?

MR. SIMMONS: I said that is one of the items in Sunset that we will have to continue to see how we implement, and part of it was in the rules.

MS. DELISI: Anything else? Thanks, Steve.

MR. SIMMONS: Thank you.

MR. SAENZ: Thank you, Steve.

Agenda item 10(b) is a status report by James Bass on our obligational limits and a report of our actual September letting for highway construction and maintenance.

MR. BASS: Good morning. I'm James Bass, CFO at TxDOT.

As you'll recall, last month the commission adopted a 2009 obligation limit for the year and that was from our traditional funding sources and out of the UTP a total of $2.53 billion. In addition to that, we said if the commission directed staff to move forward with Prop 14, there was likely another $1.7 billion or so that we could add to that.

Just to remind everyone, on that $2.53-, to give you an estimate, some of the assumptions on that, it still includes an assumption on the amount of federal funds that we'll get in 2009; therefore, that number could change, depending on once the federal government gets a budget and we receive that. And as always, we continue to monitor primarily the motor fuels tax these days coming into the State Highway Fund, and as that fluctuates and we go throughout the year, we may need to make adjustments to that.

In addition, last month we showed you a schedule for the September 2008 letting and so I was going to provide an update to that. I think what Roger handed out was an update to the last page of your packet, and I'll get to that in a couple of minutes.

First was an update on what we discussed last month, the planned statewide letting in September was $142.9 million and the local letting was almost $87.4-. What occurred in the September statewide letting, there was about $7.8 million of projects that were postponed, and if you look on page 2 of your report, you can see those two projects that were postponed. There's a postponed column and so you can readily see which two projects got postponed from the statewide letting. Then the projects that did move forward, overall the actual bids were about $14 million less than the engineers' estimates.

The local letting -- which is on your third page -- has not yet occurred in the month of September. It's scheduled to happen, I think some as soon as today, but through the remainder of the month, and we will provide that update to you next month on the actual amounts for the September letting.

Moving on, the next page then gives you an estimate and update on what we plan to award next month in October, both on the statewide letting and the local letting. On the October 2008 letting, there's roughly $392 million, and you can see on this sheet that a large chunk of that, around $162 million or so, is associated with surplus toll revenues or concession payments primarily from the 121 account. So the impact to our UTP and the impact to that $2.53 billion number for '09 from the statewide letting in October is scheduled to be about $229 million. From the local letting scheduled in October, there's $65 million. A lot of that is some of the pass-through projects moving forward, initially being financed by local funds, and so out of that $65 million of local letting, only $7 million or so will impact our UTP allocations and therefore, impact that $2.53- number.

Details on specific projects through the statewide letting and the local letting in October are on the following two pages in your packet. Again, next month we'll come back and update you, as we did for September, with what the low bids were and highlighting any projects that might have been postponed.

If we then flip to the last page -- which is the one that Roger just passed out a couple of minutes ago, an update to that last page -- it shows the total base case letting, so it does not have any of the Prop 14 bond proceeds plugged into it yet, it's just the $2.53-. If you look in the lower right-hand corner of that table, you'll see $2.53 billion which is the 2009 obligation limit we've discussed the past couple of months. This table breaks down, by district and by category, how we will reach that $2.53 billion without Prop 14. So with Prop 14 and with continued direction from the commission on how to utilize those Prop 14 proceeds, we'll be able to increase that. Again, our estimate last month was we'd be able to add roughly $1.7 billion to that number, and so in coming months we'll add information and plug that $1.7- of proceeds into this schedule.

MR. HOUGHTON: But we haven't made decisions on Prop 14 usage yet.

MR. BASS: Correct, so that's what I was saying, as you do and as we receive that direction, we will update this sheet.

MR. HOUGHTON: We haven't said go forth and build.

MR. BASS: One of the things I would highlight at the bottom, there are a couple of districts that have been highlighted and pulled out here from some discussions we've had in previous months. There are three large CDA, comprehensive development projects ongoing in the Dallas-Fort Worth Metroplex, and one of them is just a pure design-build, two others involve managed lanes that are current estimates, we don't have actual final bids on them, we think they're going to require some public subsidy as part of that comprehensive development agreement.

That total amount, what we've done for each of those projects, we've scheduled a maximum payment curve, roughly over a five-year period. Well, that cash payment equals obligations in 2009, 2010 and 2011, and so what we've done is taken basically those five years of payments and we've spread the obligation limit over three years, and so what you see here is kind of the first installment, if you will, for those payments. We would have something very similar in dollar amount and impact to both districts in 2010, and then in 2011 it would be slightly less. These total $585 million for 2009; I believe the number in 2011 will be in the neighborhood of $488 million. But we've just highlighted that and so some of the columns, specifically Category 2, 3 and 4, you see very little activity and that's because those are being consumed, if you will, by what you see at the bottom of this chart.

MR. HOUGHTON: So bottom line?

MR. BASS: Bottom line, we're still on track to be able to obligate $2.53-. Again, that still has an assumption on what we're going to get on federal funds and what's going to happen on our state fuel tax that we continue to monitor every month.

MR. HOUGHTON: How is state fuel tax?

MR. BASS: The July and August receipts were less than the prior period, than July and August of 2007, but for the entirety of Fiscal Year 2008, we ended up about 1.7 percent higher than Fiscal 2007.

MR. HOUGHTON: We didn't see the spikes in fuel prices until mid summer.

MR. BASS: Right, and for that 12-month period, we were up 1.7 percent; the last two months of that 12-month period, we were actually lower which obviously creates a concern for us: is this the beginning of a trend, is it a two-month spike. What happened for September, the first month of '09 we were one-quarter of 1 percent higher than September of last fiscal year for that 12-month period. So there is not continued growth, we're not seeing a large degradation month after month after month on the revenue, it seems to be holding its own right now. But it's something that we're very closely monitoring every month because if we do continue to see a trend of a quarter percent up or a quarter percent down, means we're not going to hit our projection for 2009 which would be 1.5 percent higher than last year.

MR. HOUGHTON: How does that reflect on the lettings?

MR. BASS: If, after a couple more months of actuals we say we can't have that, we'll have to come in and back off of that $2.53- number. But right now we're still comfortable with the $2.53-, but these are plans based upon an estimate based upon assumptions. One of those assumptions is the federal funds. I know, rock solid, right? The federal funds and what we're going to get from Congress through the budgeting process, how much of a rescission we'll get in 2009 and how much that rescission hits our obligation authority -- not just apportionment but if it hits our obligation authority and by how much, we may have to come in and adjust this. It could be an adjustment up -- not counting on it; could be an adjustment down.

Same thing with motor fuels tax, and I'm highlighting motor fuels tax because it's the most volatile one right now, but we look at vehicle registration fees and all the revenues coming into the Highway Fund, but there's only a few significant ones, registration fees and federal reimbursements and motor fuels tax. Registration fees is performing close to expectations; motor fuels tax is the one that's having the volatility and the uncertainty. And so as we continue to monitor that, if and when we adjust our estimates of what we think the motor fuels tax is going to generate, we'll have to come in and make an adjustment to '09 letting amounts. If we don't see that money coming in in the future, we can't award the contracts today.

MS. DELISI: I want to make sure I understand. So your assumption on the motor fuels tax is 1.5 percent higher than the previous year?

MR. BASS: Correct. And that has been based upon roughly the last three years of activity and deposits in there, that's what we've seen. As I mentioned, last year it was actually 1.7 percent more than the prior year, so we added some conservatism -- anyway, we were somewhat conservative by only saying 1.5 percent, but what we're seeing in the second half of this last year and especially during the summer is actual deposits being less than they had been 12 months prior. So we had two months of that where it happened, and then sure enough, September came in and it was back up, it was higher.

So when we review these, we often say that one month up or one month down does not a trend make, it might just be a large producer was early or late in making a payment to the Comptroller's Office, so month to month when you look, there might be wild fluctuations. So we look at it more when you get to three, four months in a row heading in the same direction, then that's something -- and we're looking at it every month.

MR. HOUGHTON: I'd call that a trend.

MR. BASS: Right, that's more of a trend. One month, two months, you're watching it because it may be the beginning of one, but once you get to three to four months in a row heading in the same direction, you can no longer ignore and expect it to change overnight.

MR. HOLMES: The deposits are received from sales at the rack as opposed to consumption by the consumer.

MR. BASS: Right.

MR. HOLMES: And so September numbers would reflect sales that occurred in July?

MR. BASS: Yes, in July. What would happen is sales in July at the rack would get remitted to the Comptroller in August and then the Comptroller would distribute that to the State Highway Fund and the School Fund in September. And so as you said, driving habits have an influence on what's being purchased at the rack but so does the expectation of are prices going up or going down, where's my reorder point, I might let it go lower or I might reorder sooner, depending upon what I think is going on with the price. So there's a number of influences, and that again leads us to say one month, we're not going to jump and react to one month of actuals.

MR. HOUGHTON: You have two months now?

MR. BASS: Out of the last three, two were down and one was up. The one that was up was a quarter of 1 percent.

MR. HOLMES: How much were July and August down?

MR. BASS: August, I believe, was down in the neighborhood of 4 percent, and I think July was down in the neighborhood of 2 percent. I can get you the precise numbers; we have a sheet, unfortunately, I didn't bring that with me. But July and August were down more than September was up.

MR. HOLMES: Two and 4 percent versus a quarter of 1 percent.

MR. BASS: A quarter of 1 percent.

MR. HOLMES: But that could also reflect the refiners' expectations on pricing and there are a lot of other influences that could have caused that movement.

MR. BASS: In the past we've had single months that might be 12 percent higher than the prior 12-month period. Well, sure enough, the subsequent month comes in 10 percent lower and that's what I was talking about it's just the timing of a particular payment that was different between the two periods.

MR. HOLMES: Obviously its something we want to monitor closely, but the 1-1/2 percent amounts to what, $35- or $40 million?

MR. BASS: The rough number that we get each month is in the neighborhood of $190 million. Of course, it goes up or down, and last year the annual total we received was right at, round numbers, $2.3 billion, just under $2.3 billion for the year from state fuels tax.

So my whole point of all of that is this month we're still at $2.53-. There is a chance that as we continue on throughout 2009 that number may fluctuate. I don't think it's going to fluctuate -- well, from state motor fuels tax, I don't think it's going to fluctuate hundreds of millions of dollars. It could be significant as we're looking for payout in future years.

The other unknown factor or the assumption that I think probably has an equal or greater potential for movement in that $2.53- is the federal funds and what are we going to receive in obligation authority for 2009 from the feds, and then when the rescission comes in from the feds, is it only going to be apportionment which is going to affect future projects and planning dollars, or is it going to hit our actual obligation authority which would hit planned projects in the very near term. And so the whole point is it is not something we can etch in stone and say this is going to be the number, it's not going to change for the entirety of the year. It's based on a variety of forecasts and as we continue to monitor those and if actuals tell us that we need to make adjustments, we're going to do that and then update you as we discuss this on a monthly basis.

MR. SAENZ: James, then I guess this last chart that you're discussing is how we will be tracking each of the districts to see how they're doing on their letting amounts for the year.

MR. BASS: Right. The other thing that we'll start doing -- since September is not fully completed -- if you'll recall, the $2.53 billion is an obligation limit and in my mind that's key and significant that I'm not saying it's a letting cap. Because as we've talked in prior months, whether a district awards a $5 million project or they add a $5 million change order to an existing project, it still costs $5 million. We can increase our expected contract payments -- again, ignoring Prop 14 for the time being -- by $2.53 billion during 2009. That's either through the award of new projects or increasing the expected cost of existing projects. And so as those change orders come in for a month, we'll be updating you on what those dollar values have been and applying those against the statewide total of $2.53-, both statewide and at the district level.

MR. HOLMES: James, yesterday in the workshop we looked at some allocation proposals or possibilities for Prop 14 and there was around a $580 million number kind of at the bottom that was not allocated. Could that be used to make up any shortfall that might occur in federal funds or gas tax money?

MR. BASS: Yes, it definitely could. But what that would do, just to be painfully clear, last month we spoke about $2.5- plus $1.7- which got us up to $4.2-. If we have to use some of that $1.7- to make up a shortfall in the $2.5-, obviously the $4.2- is going to drop along with that.

MR. HOUGHTON: We're charging the change orders back to the districts. Correct?

MR. BASS: Yes. And so there have been some, obviously, during these first three weeks of September, but the report I get on change orders is for the entirety of the month. And so next month at the October meeting, I'll add something to the report to show not only September actual letting but September change orders and anything else that's impacting the $2.53-.

And that's another comment I'll take the opportunity here for the members of the commission or your staff. The format, this is obviously something new and the report that we're doing is new, and so if the format is not providing the information you're looking for or wanting, certainly let us know that and we'll adjust and alter the format of these reports to get you the information you need.

MR. HOLMES: James, Hurricane Ike was obviously a terribly destructive and expensive storm. On a statewide basis, do we have enough information to understand how that impacts TxDOT's cash flows and finances?

MR. BASS: The estimate currently is in the neighborhood of $75 million -- some of that infrastructure, some of it signs, signals, different costs. Our expectation is that much, if not all, of that will be eligible for federal reimbursement.

MS. DELISI: How does that work? Would that require a congressional appropriation to pay for that or would it be done through FEMA?

MR. BASS: Some of it is through Federal Highways, and then there's a possibility, in looking at previous incidents such as this, we have received some FEMA money, but within the Federal Highway Program there's an emergency relief program that addresses instances such as this, and so we're hopeful that we'll get the reimbursement. And I apologize, I don't know if it will require a specific action of Congress or if everything is already in place for that to happen.

MR. HOLMES: That's not a deduct from our otherwise normal allocation?

MR. BASS: No. The emergency relief is separate from that.

MS. DELISI: Any other questions?

(No response.)

MS. DELISI: Thank you, James.

MR. BASS: Thanks.

MR. SAENZ: Thank you, James.

Agenda item 11 was really the chart that James presented and made part of the report, so that agenda item is deferred and not needed. We will be tracking, as James mentioned, the district obligational expenditures to those totals and keep track of how they're doing on a month-by-month basis.

Agenda item number 12 deals with our award or rejection of highway improvement contracts. Thomas Bohuslav -- a shorter Thomas Bohuslav. Sorry about that, Ken.

MR. BARNETT: That's okay. Our apologies. Thomas had to take his in-laws to Galveston today; they used to live there. Ken Barnett, director of the Construction Section in the Construction Division.

Item 12(a)(1) is for consideration of award or rejection of highway maintenance and department building contracts let on September 9 and 10 of this year. We had 16 projects; the average number of bids was 4-1/2 -- that remains high.

We have one project for rejection. The project had two bidders in Harrison County; it was for hot mix overlay, 39 percent over the estimate. The district felt really good about the estimate that they had so they'd like to reject bids on this project and see what other options they have to address this need.

Staff recommends award of all projects with the exception noted.

MS. DELISI: Any questions?

MR. HOLMES: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. BARNETT: Agenda item 12(a)(2) is the award or rejection of highway and transportation enhancement building construction contracts let on September 9 and 10 of this year. We had 40 projects with an average number of bids per project at 5.8 bidders per project -- that's extremely high.

We have one project we recommend for rejection; it had three bidders in Willacy County for replacement of four off-system bridges; it came in 46 percent over. The district felt that the plans didn't adequately address some of the irrigation canal bypasses, so we'd like to reject on that project and re-evaluate that and try to redesign and get some better prices.

Staff recommends award for all projects with the exception noted.

MR. HOUGHTON: Let me ask you a question. Is it low bid? We have the amount underbid of about 10 percent under $14 million under the estimate.

MR. BARNETT: Yes, sir.

MR. HOUGHTON: Is the amount of bidders commensurate, is there an association with that?

MR. BARNETT: There is an association with that.

MR. HOUGHTON: You just said that on the prior.

MR. BARNETT: Five point eight bidders per project is really high.

MR. HOUGHTON: So they're sharpening their pencil.

MR. BARNETT: They are sharpening their pencil because our volumes have gone down and we are under the engineers' estimates this month, but I'm sorry to report, commissioners, that does not mean the projects are getting less expensive, it just means we're estimating better. The HCI for September 2008 is the highest that it's ever been.

MR. HOUGHTON: And what is that?

MR. BARNETT: 205.21. This time last year we were in the upper 190s; we had been trending down because of our lower letting volume, but it's been trending back up the last few months. And we had an extremely difficult summer in the construction industry, we had some shortages of materials, we had the spike in fuel prices, a major bankruptcy of a supplier, plus the hurricanes. That's my thought as to why it's so high for September. I'm hoping it will return to normal in the fall, but I don't know that for sure.

MR. HOLMES: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Ken.

Agenda item 12(b) deals with the award to a second low bidder of a maintenance contract, and Zane Webb, director of our Maintenance Division, will make this presentation. And Zane, I want to personally thank you and your staff, as well as all the people across the state, for your great work in Ike.

MR. WEBB: Thank you, Amadeo, appreciate that. My staff has worked a lot of hours but it was in support of the people in the field and they feel good about that.

For the record, my name is Zane Webb, director of the Maintenance Division.

The minute order you have before you is to approve a contract to a second low bidder in the Odessa District on a picnic area maintenance contract. The low bidder made a bid error; this was confirmed. The second low bidder notified the district that they would like to do the work at the apparent low bidder's price. The district determined that that price was good unit prices and we recommend award to the second low bidder.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. WEBB: Thank you.

MR. SAENZ: Thank you, Zane.

Agenda item 12(c), we have Glenn Hagler will present the annual participation goals for our Historically Underutilized Business Program.

MR. HAGLER: Good morning. I'm Glenn Hagler, director of Purchasing with the General Services Division.

This request proposes the establishment of statewide annual participation goals for the Historically Underutilized Business Program under Title 43, Section 9.54 of the Administrative Code. The section requires the commission to establish annual goals for the HUB participation on state and locally funded contracts, and these are other than highway construction and highway maintenance.

The goals that we're requesting are consistent with those set by the Comptroller and the goals are based on three criteria: a percentage of the total cost of these contracts; the most current state disparity study; and the availability of HUBs. Accordingly, the current goals are as follows: 21.6 percent for building construction contracts, 57.2 percent for special trade contracts, 20 percent for professional services, 33 percent for other service contracts, and 12.6 for commodity purchases.

Staff recommends approval and I'll be glad to answer any questions the commission may have.

MS. DELISI: How is this agency at meeting those goals?

MR. HAGLER: We exceed the requirements on the commodities, we're below in all the other areas. The one area of concern is the building construction, and we currently have an initiative underway to review the reporting structure. We have some reason to believe that maybe we're under reporting our numbers in those areas, so we're currently refreshing the reporting structure for each of these categories.

We also have a very robust outreach program in place to try to reach additional minority and underutilized business contractors throughout the state. For instance, last year our staff attended over 44 economic opportunity forums, we hosted three regional small business briefings, and we had over 1,100 small businesses attend those briefings. So we have five permanent staff members that are hosting our outreach program and we feel like we're making some headway.

Just as background, the disparity study these goals were based upon was established in 1994 and the Comptroller is currently in the process of securing a new vendor to conduct a new disparity study.

MS. DELISI: Any other questions? Motion?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; the motion passes.

MR. SAENZ: Thank you, Glenn.

MR. HAGLER: Thank you.

MR. SAENZ: Agenda item 12(d), Jesse Ball will present a minute order establishing our statewide annual participation goals for our Small Business Enterprise Program.

MR. BALL: Good morning. For the record, my name is Jesse Ball; I'm director of the Office of Civil Rights.

Title 43 of the Texas Administrative Code, Section 9.55, requires the commission to set an annual goal for participation by small business enterprises in state and locally funded highway construction and maintenance contracts. This agenda item number 12(d) is a minute order that establishes the department's Small Business Enterprise goal for FY 2009 for highway construction and maintenance contracts. The proposed goal is 23 percent.

Staff recommends approval.

MR. HOUGHTON: What's our experience been?

MR. BALL: In 2007 our participation percentage was 13.95 percent, and I don't have stats for 2006 but I do have stats for 2005. In 2005 we attained SBE participation of 13.1.

MR. HOUGHTON: And our goal is 23?

MR. BALL: Twenty-three.

MS. DELISI: So how do you propose we're going to meet that goal?

MR. BALL: Well, we partner with Glenn and his folks to try to induce participation for the Small Business Program. The best we can do is try to communicate. We have a problem with getting the material suppliers participating in this program, so that's been a problem ever since this program has been in existence. The program has been in existence since 2000 and it's as a result of litigation by a contracting company called Kossman, and what happened, the litigation, before it got to court there was a consent decree which called for the establishment of this Small Business Program, and from what I understand -- and the litigation concerned the HUB program, and of course, the agreement was that if Kossman would leave the HUB program alone, then the department would establish an SBE program, and that's what happened. And ever since the program has been in existence, it has been 23 percent, and that is because what they're trying to do is to induce material supplier participation.

MR. HOLMES: Have we ever reached that goal?

MR. BALL: No, we haven't.

MR. HOLMES: Has it kind of consistently been in the 10-12-13 percent?

MR. BALL: From what I gather from stats in the short time that I've had the program, all of seven months, what I've gathered -- and I haven't gathered any more in the six or seven months that I've had the program -- is that it appears from 2002 to the present up to now, it's averaged between 13.1 and 13.95.

MR. HOLMES: Do we define a small business in terms of their annual revenues? How do we define a small business?

MR. BALL: Small business, as far as we're concerned, a small business -- what we consider a small business, a business that is race-neutral, as opposed to the DBE and HUB programs where you have considerations for whether or not a business is a minority or a woman-owned business. This program is strictly race-neutral, anybody can apply to be in the program.

MR. SAENZ: But you've got a size limitation.

MR. BALL: No, there is no size.

MS. DELISI: That's what this says in here, required size limitation.

MR. HOLMES: If there's no size limitation and it's race-neutral, then the biggest supplier in the state could be a small business.

MR. SAENZ: We do have a size limitation.

MR. BALL: I brought Jerry here because Jerry has been with these programs longer than I am old.

(General laughter.)

MR. JERRY JACKSON: My name is Jerry Jackson. I've worked with TxDOT's DBE program for the past 15 years but I've been in this with the federal programs for the past 28 years, since the inception of the DBE program back when it was the DBE-MBE-WBE program.

Our problem here in defining the SBE program and the SBE goals is because this was a compromise program -- these are my terms; I was pay grade way down when this program came about -- it's a compromise program, and what I understand is the goal came about in trying to implement the 10 percent overall goal which at one time was mandatory under 49 CFR 23 -- remember the 10 percent goal. When the regulations changed in '99, the 10 percent goal became an aspirational goal -- in other words, the feds wanted you to aspire to meeting 10 percent participation but that is not your overall goal. You have to establish your own criteria for establishing DBE participation goals.

In looking back and trying to review the goal-setting criteria, I really don't see it. That's one problem. And I think what happened was the 10 percent, along with the 13 percent goals that we usually aspire to was combined somehow, and that's how you came up with the 23 percent participation goals.

There are other things under that court decree that we didn't follow to the letter, and what we may be trying to do is meet some artificially high goals. We need to go back and take a look at our goal-setting criteria and base it upon that decree that was set down by the court in not only that case but Aderan when they were taking a look at participation in all DBE programs.

MR. HOUGHTON: It seems to me, Jerry, that when you have those kind of goals if they're set at 23 percent, there's no way to get there.

MR. JERRY JACKSON: There's no way to get there.

MR. HOUGHTON: So if you're doing 23, we show 13, we go across the street and you get hammered, we say based upon our experience, we just can't get there for a variety of reasons, and what those reasons may be, you guys know. And earlier we were talking about other participation and I have a hard time figuring out, because of bonding requirements, performance bonds, how you get to these goals that we don't meet so we kind of beat ourselves with our own club.

MR. JERRY JACKSON: That's my sentiment exactly, and that's why I say we need to go back and take a look at the goal-setting criteria that we've come up with.

MR. HOUGHTON: What's realistic.

MR. JERRY JACKSON: Well, you have to look at, like you say, past, current and future experience in those areas to make that determination as what's fair. We may have contractors out there, like you say, that we're beating over the head with a club trying to come up to a certain level when we don't have the legal background to say that that's what that goal level should be until you take a look at it. The last two disparity studies that they came up, the HUB goals have been rejected based on the figures, that's why they're out now for another contract for someone to conduct a disparity study where we can come up with goals that are more realistic and based on the different criteria as far as participation success, et cetera.

TxDOT, we have a lot of leverage in how we set goals and to think that we're going to get blown out of the water if we don't meet the goals on certain areas, because we have legal precedence that says we have a lot of leeway in how we set goals, and so we may be out there trying to run with the big dogs when some of those contractors can stay on the front porch with the puppies in certain areas, but it depends on your criteria. And what I'm saying there is that we may be trying to reach goals that are totally out of proportion to where that participation levels are needed and should be based on and narrowly tailored to the type of contract that you're doing.

When you're looking at HUBs and DBEs, you're looking at apples and oranges, and when you go and try to mix the two together, that's where the problems come in. SBE project was implemented mainly to placate those people who were doing maintenance contracts. It was the original intent to have SBEs participate only in maintenance contracts, but of course, that line has gotten blurred. Size criteria, there was no size criteria because when the regulations came out for DBEs at that time, there were no size requirements. We followed SBA goals, under 2113, the SBA size standards for a small business enterprise, and that definition was the definition we were supposed to be following with that, but for some reason, we weren't following that definition.

So for instance, in certain contracting areas, SBA size standard for a particular contractor is $13.7 million, and SBA size standard for a small business in the DBE program has now moved to $20.410 million. And so when you have an SBE participating in contracting opportunities, it looks like they could make it, but we have SBEs registered and signed up under a non-certification program with a size standard over a three-year average in excess of $20 million. So we are going to go back and take a look at our goal-setting criteria and how we establish goals and we need to take a look at do we need the SBE program and where does it fit in.

MR. HOLMES: The numbers sounded quite precise: $13.7 million and $20.410 million. When were those numbers developed and have they been reviewed recently? Because if the SBE program was done and put in place in 2000, there's been a tremendous amount of inflation since that time, and kind of help me understand that a little better.

MR. JERRY JACKSON: The SBE program goals have never been reviewed or changed since the implementation of the program, as far as I know. The SBA size standards that we follow, or the program was supposed to follow, they are reviewed and re-established. That's a federal program SBA. Those are the goals that we follow for that.

MR. HOLMES: We voluntarily follow those goals.


MR. HOLMES: That was not part of the consent decree.

MR. JERRY JACKSON: That was part of the program in the initial part of the program when the SBE 8(a) program was established in 2000. That's a TxDOT program, SBE; that's a TxDOT program just like MBE is with the City of Austin, or SDBE is with the City of Houston, or FDBE is with the City of Fort Worth, or whatever. And we established those goals and we were supposed to follow SBA 8(a) size standards and their criteria, but somehow it became 23 percent for all projects, all goals.

MS. DELISI: Is there any reason why these goals have to be adopted today at this commission hearing?

MR. BALL: To be honest to the commission and Mr. Saenz, I was a little uncomfortable about doing this today because number one, two weeks ago I was told that I needed to do this because it is an annual requirement. But as you can see, upon my personal research, I feel the same way that this is something that we need to look at. As I said, I assumed responsibility for this program six or seven months ago, and with Jerry's help, I would like to postpone adoption of these rules today so that we could take a look at it, if we can do that.

MS. DELISI: Bob, is there any legal reason why we need to do this today?


MS. DELISI: Oh, okay. Well, then I'm going to make a motion that we postpone this, defer it and take it up at a later commission date.

MR. BALL: And to be honest with you, I'm glad this is happening.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed, so we're going to defer adoption.

MR. SAENZ: Thank you, Jesse.

MR. HOUGHTON: Thanks, guys.

MR. SAENZ: Agenda item 13 deals with our routine minute orders that deal with donations to the department, eminent domain proceedings, highway designations, load zones and postings, right-of-way dispositions and donations, and speed zones. Staff has reviewed and makes a recommendation that all these minute orders be adopted.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

MR. HOUGHTON: All in favor?

(A chorus of ayes.)

MR. HOUGHTON: Opposed? We won.

MS. DELISI: It passes.

At this time we will recess the open meeting so that the commission can meet in executive session. We will be meeting under Section 551.074, consultation with and advice from legal counsel regarding pending and contemplated litigation, including a briefing by the Office of Attorney General on Texans Uniting for Reform and Freedom v. Texas Department of Transportation, and Marjorie Meyers, et al v. State of Texas.

(Whereupon, at 11:35 a.m., the meeting was recessed, to reconvene this same day, Thursday, September 25, 2008, following the conclusion of the executive session.)

MS. DELISI: The meeting of the Texas Transportation Commission is reconvened. For the record, the time is 12:53 p.m. The commission has concluded its executive session during which no action was taken on any matter.

We will now enter into the open comment period of the meeting. Are there any speakers signed up for open comment? There's no speakers signed up.

Is there any other business to come before the commission?

(No response.)

MS. DELISI: There being none, I will entertain a motion to adjourn.

MR. HOLMES: So moved.


MS. DELISI: All in favor?

(A chorus of ayes.)

MS. DELISI: No opposed; we are adjourned. Please note for the record that it is 12:54 and this meeting stands adjourned.

(Whereupon, at 12:54 p.m., the meeting was concluded.)


MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: September 25, 2008
I do hereby certify that the foregoing pages, numbers 1 through 113, 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.

(Transcriber) (Date)

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


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