Link to article here.

Ever wonder why the tolling authority, TxDOT, and politicos are so tone-deaf to the public opposition to toll roads? They’re PAID not to listen. So the tolling authority salaries have exceeded $1 million a year, yet they have NOTHING to show for it but a trail of deception and conflicts of interest.

Performance bonus for Terry Brechtel? For what? Failure to get a single toll road off the ground? Even their lowest paid employee gets a higher salary with benefits than the average San Antonian. When Brechtel gets a $25,000 cost of living increase and “performance bonus” for underperformance (in the midst of a down economy with driving and toll road usage going down due to high fuel prices), it’s no wonder why she ignores the testimony of the masses who can scarcely afford to fill their gas tanks as they plead with the RMA to stop tolling our freeways.

Toll-road salaries top $1 million
By Pat Driscoll
Express-News
August 25, 2008

A local agency’s salaries and benefits to plan and eventually operate toll roads will come to $1.2 million in the upcoming fiscal year, including two people yet to be hired.

(Alamo Regional Mobility Authority)

Alamo Regional Mobility Authority leader Terry Brechtel will pull the highest pay — with a $177,407 base and up to $23,527 to cover a cost of living increase and a performance bonus.

Terry Brechtel

The $200,934 total isn’t too far from the $206,000 she made in 2004 as San Antonio’s city manager, when she oversaw a $1.5 billion budget and 12,000 employees. She quit that job after a run-in with then-mayor Ed Garza.

Brechtel’s predecessor at the toll authority, Tom Griebel, only made $160,000 when he left at the end of 2005.

The lowest paid employee at the agency is the administrative assistant, who gets $38,183.

Two jobs — a director of toll operations ($104,771) and an attorney ($99,297) — haven’t been filled yet.

• Salary breakdowns
• Fiscal ‘08 and ‘09 budget summaries

Recent toll authority news:

• U.S. 281 lawsuit delayed two months
• High gas prices raise questions about toll plans
• Construction contract ready for U.S. 281 tollway

Link to article here.

Even toll road industry insiders must now acknowledge what the rest of us have been observing for years: toll roads are no longer financially viable with high fuel prices! It is obvious that toll roads are purely speculative risky deals that the prudent must shun. These deals depend on low fuel prices, a booming economy, and more vehicle miles traveled, none of which we have now or into the foreseeable future. Selling billions in bonds knowing these toll roads are famous for overprojecting rosy outcomes and have a history of underperformance that will require massive toll hikes and/or taxpayer bailouts, is malfeasance.

Traffic hit hard by fuel prices - average down over 5%, but some way worse
By Peter Samuel
Toll Road News
August 24, 2008
Traffic on tax roads in the US seems to have dropped on average by 4 to 5% and on toll roads by 5 to 6% over the past year. The reduced travel is attributable almost entirely to the big run-up in gasoline prices and is about was to be expected from long-established economists’ estimates of the price elasticity of demand of about -0.2. Fuel prices which dominate the marginal cost of driving are about 30% higher so you would expect traffic as measured by vehicle-miles traveled (VMT) to be 6% lower (-0.2×0.30=-0.06). Deduct one percent for the sluggish economy and you have 5%.

Toll road traffic may be down marginally more than tax roads traffic because tollroads are somewhat skewed to discretionary travel.

FHWA/OHPI data for travel on all roads show the drop in traffic slightly greater in the west (excludes TX) and the southeast but single digit percent falls have occurred in all major regions. Indeed in June all 50 states were down (only DC is up slightly).

Rural travel is down more sharply (5% to 7%) than urban (3% to 5%). Rural interstates are down nearly 7%. (VMT08juntvt.xls)

Fitch Rating survey

A survey of US tollers’ traffic and revenue by Fitch Ratings shows a fall-off year on year clustered in the single middle digits range. Declines are as much as 10% in Florida and California. In Texas are declines in traffic in the lower single digits.

They say that standalone toll projects have the greatest declines and the turnpikes with their dependence on longdistance and rural traffic. Next come the bridges with the least affected being the (urban) expressway networks.

TOLLROADSnews needs to do a proper survey toll agency by toll agency, but that will have to wait a bit longer. A few tollers publish their data monthly (Orange County Toll Roads) and even weekly (91 Express Lanes). There are some more spectacular drops in traffic than Fitch mentions.

91 Express Lanes down 15% to 20%

The 91 Express Lanes are way down. Through July their toll transactions were about 17% lower than the same week last year and the first two weeks of August have been down 18%. Revenue is down about 15% in the last six weeks.

It would be interesting to see if the other express lanes are losing traffic as heavily but it seems logical that they will be more volatile than full tollroads. Most of their users are occasional users taking the toll lanes only when they want a faster ride so their use is discretionary. Furthermore and maybe this is more important: declining traffic in the free lanes means there is less congestion there and faster free trips, so the Express Lanes suddenly aren’t saving as much time as before.

The Toll Roads of Orange County nearby have suffered serious traffic losses too, close to 10% in the case of Foothill Eastern TR (FETR) and San Joaquin Hills TR (SJHTR).

The burst of the housing bubble has hit this part of southern California as well as parts of Florida especially hard.

Orlando Orange County toll expressways in Florida have suffered a traffic drop but not as large. (see OOCEA in table nearby).

Macquarie hemmoraging

Macquarie has reported June quarter traffic and it has some huge drops 2008Q2/2007Q2:

- Indiana Toll Road average daily traffic down from 122.8k to 95.6k, 22.2%

- Chicago Skyway from 44.2k vs 51.7k, down 14.6%

- Dulles Greenway VA is down less from 58.6k to 55.1k or 5.9%

The three major Macquarie tollroads in the US have gone from 233k/day 2007Q2 to 195k 2008Q2 or 16% down. (South Bay Expressway is at 26k day but wasn’t open in 2007).

On the Indiana TR the ticket system portion of the tollroad which caters to longdistance traffic is down 5%.

The spectacular drop is on the barrier system where daily traffic is down from 98.4k 2007Q2 to 70.5k 2008Q2. That’s 28.4% down!

That’s commuter and weekender traffic.

Some of the drop may be attributable to opening of improvements to the competing free route of I-80/I-94 (Bishop Ford, Kingery, Borman Expressways) and the higher tolls, but regardless, it doesn’t look good for the Macquarie shareholders.

Macquarie recently lowered their valuation of these tollroads substantially.

Canada not seeing the same declines in traffic

A lot of the rise in the price of gasoline in the US is simply the fall in the value of the US$ relative to other currencies. Gasoline has risen much less in C$s because C$s now bob around at parity with US$s whereas they were 15% below a year ago.

Also rises in the oil component of the gasoline price seem less north of the border, because the fuel taxes are so much higher already.

Toronto 407ETR up over last year

In Toronto 407ETR traffic continues to be above last year’s levels. Its traffic is larger than all four US Macquarie tollroads combined, so the North American Macquarie traffic in total is down only 5.8% vs 16% for Macquarie’s US roads.

Where from here? (SPECULATIONS)

Our sense is that traffic should stabilize at roughly present levels if gasoline prices stay where they are. Short-term adjustments to the higher prices have been made.

And if the US economy continues in its present sluggish state but avoids a real recession and systemic financial collapse then traffic won’t get much lower than now.

Over the longer term one adjustment to higher prices will be a move to more fuel efficient vehicles - to smaller lighter vehicles, to hybrids, plug-in hybrids and diesels. That will allow road travel to recover somewhat.

Significant and last mode shift to rail transit seems unlikely. It is seriously unprofitable and capacity constrained and is only competitive at the margin.

Motor fuel prices of course could go strongly up, or they could collapse.

So much crude oil comes from the Middle East and South America and is under the control of hostile governments that major supply disruptions could easily occur. Iran’s nuclear program could lead to war in the Persian Gulf just months from now. At home there is fierce resistance to any new production and to any new oil refinery capacity, while the Democrats vilify “Big Oil” and threaten discriminatory taxes against the very companies which will increase fuel supply if they’re allowed to.

On the other hand public sentiment has shifted in favor offshore drilling and concerns about disruptions may already be reflected in oil prices. With luck and even a glimmer of good sense by governments, fuel prices could fall as quickly in the next year as they rose in the last. But you can’t count on it.

With forecasting so difficult, organizational agility looks key.

Feds data: http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.htm

Link to article here.

Investing pension funds in toll roads is an irresponsible–and immoral–idea
By Paul Burka
Texas Monthly
Saturday, August 23, 2008

I doubt whether Rick Perry, David Dewhurst, or Tom Craddick has ever heard of the Lane Cove Tunnel in Sidney, Australia. If they had, they might not be so eager to raid the teacher and state employee retirement funds to build toll roads.

On the day the Olympics opened (08/08/08), the Sidney Morning Herald carried the news that the tunnel “is rapidly turning into a bottomless pit for its financial backers….” Two credit rating agencies, Standard & Poor’s and Moody’s, have warned that the toll road could default on its $1.1 billion debt with a year. The tunnel has suffered three consecutive monthly dropoffs in traffic usage. The estimated usage before the road was built was 100,000 vehicles per day; actual numbers in June and July barely exceeded 50,000. A Standard & Poor’s analyst predicted that unless the project gets fresh capital (at least half a billion dollars), it will default within 10 to 16 months. Perhaps TxDOT, since it is such a believer in such projects, would like to invest.

The problem with the financial wheeling and dealing with retirees’ funds that Perry, Dewhurst, and Craddick have proposed is that toll road projects are risky investments. They are risky for two reasons. One is that they are subject to economic fluctuations that affect people’s driving habits, such as the price of gasoline or the pace of development. The second reason is that, when government is involved, they are vulnerable to political pressure and favoritism. Google “toll road defaults” and you will find a trove of stories with unhappy endings. The Camino Columbia toll road in Laredo, which was rife with political intrigue over which landowners would benefit from having a road go through their property, opened in 2000 and defaulted in 2004. Cost: $90 million. Auctioned off for: $12 million. Tx-DOT bail out acquisition payment: $20 million. The Dulles Greenway toll road to Washington’s Dulles Airport defaulted on its bonds within a year of its opening in 1995. The private owner, Toll Road Investors Partnership II, have lost money every year since the road opened. When toll roads lose money, tolls go up–in this case, to $4.80 by 2012. That works out to an astronomical 35 cents per mile. There are similar stories in Orange County, California (where the state had to buy failing toll lanes), and along Florida’s west coast, and near Richmond, Virginia, where the 8.8-mile Pocohantas Parkway, financed with tax-free bonds, has suffered around a 50% shortfall in projected toll receipts; the state has had to maintain the road because the private owners don’t have the money. Bond ratings have been lowered to below investment grade. To pay off the bonds, the toll was increased by 50%.

It is true that many toll roads have been success stories. In Texas these include the Dallas-Fort Worth Turnpike, which paid off bondholderes with toll revenues after thirty years and became free Interstate 30; the Dallas North Tollway and its northern extension; and the Sam Houston Tollway on the west side of Houston. The issue here is not toll roads per se. It is toll roads built with pension funds (and probably other investment funds as well, such as the Permanent School Fund and the Permanent University Fund). These are trust funds. They belong to the members. It is morally wrong to require fund managers to invest them in risky ventures like toll roads. Does anybody doubt that there will be pressure on the pension funds to invest in certain projects that favor certain people and certain contractors and certain areas? We all know what kind of people we are dealing with here. Rick Perry can’t resist it. He appointed the members of the boards that oversee the pension funds. These deals will be neck-deep in politics.

The Statesman’s story on the leadership’s plan quotes Britt Harris, the chief investment officer of the Teacher Retirement System, as saying that investments in infrastructure made sense if the proposal was “equal or better than something we can get [in another project].” Harris then pointed out that the fund’s “ultimate loyalty is to the members,” not to target investments based on geography or politics. The last clause does not appear in quotation marks in the article. Bravo for Britt Harris, but I think he should keep his resume updated.

The biggest risk in toll roads as investments is political pressure. The pressure comes in two forms. The first is pressure on the consultants to provide favorable projections for use of proposed toll roads. Does anybody trust TxDOT–or the consultants they hire, or the private entities they seek to contract with–to do hardnosed, accurate projections? If you do, then consider these comments from an article in Business Week several years ago, at about the time Rick Perry was unveiling his proposal for the Trans-Texas Corridor:

* “There is a history of feasibility studies for toll roads being overly optimistic,” says John J. Hallacy III, director of municipal bond research for Merrill Lynch and Co.

* “Of the 10 major private toll roads constructed since the mid-1990s, nearly half carry far less traffic than projected. Some $4 billion in toll road bonds risk default over the next five years unless they’re refinanced,” estimates Robert H. Mueller, a municipal bond analyst at the J.P. Morgan securities Inc.

What about financing toll roads with bonds? Well, don’t expect bond raters to give the bonds a good rating. I’m quoting here from an article that appeared eight years ago in a tollroad industry publication, so it is possible that things may have changed, though I doubt it. Credit is much harder to get today than it was in 2000.

Fitch-ICBA, the New York bond rating agency says that there is a permanent bifurcation of the toll road bond market. Established systems of toll facilities can expect to be rated in the range A to AA, whereas most standalone and startup toll facilities will be rated BB- to BBB. They see a continuing demand for new toll road financings because of what they call a “seemingly unbridgeable gap” between highway needs and the ability to finance them with tax monies that toll projects can often help to fill.

According to BondsOnline, bonds rated BBB are “lower medium grade” and bonds rated BB- are “speculative.” The lower the bond rating, of course, the higher the interest rate that bond buyers demand. No one is going to be getting any bargains on toll road bonds. And AAA ratings are just a dream: “Fitch says that the ever present possibility of state governments siphoning off surplus toll revenues or leveraging them for other borrowings prevents state owned turnpikes from achieving the AAA rating.” So how can asking pension funds to invest in these bonds ever be a prudent investment? It can’t.

The article continues: Another problem with bonds for highways is that bond rating houses distrust state governments. It is unlikely that any state owned turnpikes will ever reach AAA: The key reason is susceptibility to political interventions.

I have said this before, and I will say it again. There is a sensible way to finance roads. It is to increase the gasoline tax and index it to inflation in the highway construction index. The gasoline tax has some weaknesses. Part of it is diverted to public education. People drive less when gasoline prices go through the roof. Cars are more fuel-efficient. All of this cuts into the revenue potential of the tax. Nevertheless, Texans still love their cars. The suburban lifestyle here is designed around the automobile. Even if the revenue per mile driven is declining, there is a lot of life left in the tax. A portion of the revenue could be dedicated to paying off the bonds for toll roads. This should be capped to ensure that money will still be available for free roads. While the resistance to tax increases is formidable, so is the resistance to toll roads. If you can persuade the public that a gasoline tax increase will reduce the need for toll roads, I think that proposition could be sold. Anything is better than insisting that the savings of retired teachers and state employees be invested in risky ventures like toll roads.

Link to article here. Link to letter from Perry, Dewhurst, Craddick to Transportation Chair Delisi here.

Teachers had better stage a Texas-sized taxpayer revolt over this sell-out by Rick Perry and his minions. As if Perry’s destruction of his own Party thanks to his relentless push for toll roads and the Trans Texas Corridor that nobody wants isn’t bad enough, now he’s coming after teacher retirement and public employee pension funds to be his suckers on toll road schemes that even the private sector is calling “risky.” And why not when Rick Perry has great influence over these boards, many appointed by him.

Here’s what made it into the article:
“It’s a mixed bag, ending the DPS diversions is a start, but forming a corporation and using public employees pension funds to fund risky toll projects the private sector is beginning to shy away from borders on malfeasance.”

Here’s what didn’t:
The warning signs that toll roads are risky deals due to high gas prices and a decline in driving and toll road usage are flashing like neon lights to anyone with a pulse. Fitch just downgraded toll road bonds and Moody’s warns that new toll roads may not be financially sustainable without toll hikes. How will Legislators defend to a retired teacher on a fixed income that they squandered her retirement on risky toll road deals? “Oops, we couldn’t foresee the toll road bust” won’t fly with the evidence already before them. The options in this letter don’t change the fundamental direction away from the most expensive transportation tax, tolls. Texans can’t afford Perry’s long-term debt and high tax “solutions” any longer. Read more here.

Top leaders strike deal on funding Texas toll roads
By Peggy Fikac
Express-News
August 22, 2008
AUSTIN — State leaders trying to meet Texas’ transportation needs said Thursday they’ll work to stop the diversion of more than $1.1 billion from the highway fund and to allow state-based public investment funds — including pension funds — to invest in toll roads.

Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick also backed the sale of road bonds already authorized by voters. The GOP leaders said transportation officials should immediately sell up to $1.5 billion in bonds to “ensure that greater road funding levels are maintained through the fall and spring until we can work with other elected officials to provide additional solutions.”

Perry had stood against the sale of the bonds until leaders could agree to a broader transportation solution.

The leaders laid out their agreement in a letter to Texas Transportation Commission Chairwoman Deirdre Delisi, who is Perry’s former chief of staff and who took part in the discussion over funding solutions. Their proposal drew praise from those looking for more road funds and concern over the ramifications for other programs and services.

The $1.1 billion that’s now diverted from the gas-tax-fueled highway fund to the Texas Department of Public Safety, for example, would have to be replaced with general revenue money. That would pit DPS against other programs “so someone else is going to come up $1 billion short,” said Dick Lavine of the Center for Public Policy Priorities, which advocates for programs for lower-income Texans.

“It’s just another indicator that we don’t have a revenue system that can produce the money we need to provide the services we need,” Lavine said. Ending that diversion could be phased in over two or more years, said Perry spokeswoman Allison Castle.

While the state comptroller has projected $10.7 billion in balances will greet lawmakers when they return in regular session in January, $3 billion of that is dedicated to property tax relief and $5.7 billion is in the rainy day fund, which requires a two-thirds vote of the Legislature to spend.

In addition, collections from the state’s new business tax are projected to be $1.5 billion less than anticipated this year, although other tax collections have been higher than projected.

The proposal to allow public investment funds — such as the Teacher Retirement System and Employees Retirement System — to invest directly in toll roads also drew attention. The investment would occur through a new entity that could be called the Transportation Finance Corp.

“TRS needs to make those decisions exclusively on the same basis they make any other investment decisions. The fact that the person who appointed them might have a preference really shouldn’t matter to them,” said Richard Kouri of the Texas State Teachers Association. Perry and other officials appoint TRS and ERS board members.

Castle said decisions about investing in toll roads would be made using the same standards as other investment decisions.

Terri Hall of Texans Uniting for Reform and Freedom, which objects to the way that the Texas Department of Transportation has been moving forward with toll projects, called the leaders’ proposal “a mixed bag.”

Ending the diversion of highway money to the DPS “is a start, but forming a corporation and using public employees’ pension funds to fund risky toll projects the private sector is beginning to shy away from borders on malfeasance,” Hall said.

Justin Keener of the Texas Public Policy Foundation, which advocates limited government, called the agreement “a significant step towards reducing traffic congestion and improving the flow of people and goods.”

Link to article here.

As usual, Frank Corte is belligerent and spouting legal technicalities to defend the indefensible. The guy doesn’t live in the district, and claims as long as “he intends to return” to that vacant lot he claims as a residence, that meets the legal threshold to run as a State Representative for District 122. It shouldn’t surprise anyone that he lied about his residence when he lied about much bigger things like saying he never voted for toll roads when he voted for them in so many bills it’s hard to count them all (HB 3588, HB 2702, SB 792, HB 2661, HB 3775 to name a few). Corte also took campaign cash from the same lobbyist, Gary Bushell, that TxDOT ILLEGALLY hired to lobby elected officials in the path of the Trans Texas Corridor with its Keep Texas Moving campaign. Corte needs to go.

08/22/2008

Dems say Corte can’t run from House district

AUSTIN — San Antonio state Rep. Frank Corte must be declared ineligible to run for re-election this fall because the place he claims as a residence is nothing but a vacant lot, the Texas Democratic Party said in a letter Thursday to Republican Party officials.

Chad Dunn, a lawyer for Texas Democrats, provided Bexar GOP Chairman Richard Langlois with public documents showing that Corte lists 4203 Honeycomb St. as his residence. It is a vacant lot in northwest San Antonio.

But Corte said he plans to build a house on that lot, where he once had a residence.

“As long as I intend to return — that’s my residence,” Corte said.

Corte applied for a permit to have the house moved in the fall of 2006, according to documents. But Corte listed the vacant lot as his residence when filing for re-election on Dec. 17, 2007, and on a legally required personal financial statement last summer.

“There’s no house. There’s no shed. There’s no cot. There’s no way that Mr. Corte’s living at the address that he certified as his residency,” Dunn said. “It’s as serious as can be when it comes to eligibility of somebody who wants to serve in the Legislature.”

The issue is a nonstory, Corte said, because lawyers have assured him that he can claim that spot as his residence so long as he intends to return. Corte said he currently lives with his family in an apartment complex located about one-quarter mile from the Honeycomb location.

State Rep. Trey Martinez Fischer, D-San Antonio, represents the area where Corte has taken up temporary residence.

Corte wouldn’t say when he plans to start building a new home at his Honeycomb address.

“What process I’m in is irrelevant. I intend to return,” he said.

The documents “conclusively establish that Frank Corte, Jr. knowingly and materially misrepresented facts on his ballot application and is not a resident of District 122, Texas House of Representatives and is therefore not entitled to election to that office,” Dunn said in the letter to Republican Party officials.

Langlois did not return a phone call.

The deadline for replacing a candidate on the Nov. 4 election ballot is today, Dunn reminded Langlois in the letter.

Inaction could result in a legal ruling against Corte’s candidacy and the inability for Republicans to field a candidate, Dunn said.

Corte has represented the area in the state House since his first election in 1992. It’s considered a Republican district.

If Corte is declared ineligible, Democrats could improve their chances to regain control of the state House. They need to pick up five seats in the November election, and Corte’s district is not one of the Democrats’ targeted districts. Democrat Frances Carnot is running for the seat.

Link to article here. Toll roads aren’t free market, they’re government sanctioned monopolies. If Krusee and his crowd have their way, we’ll soon be taxed for the very air we breathe. Gone will be freedom and mobility, in will be a two tiered highway system, one for the government bureaucrats, special interests, and politicians and one for the rest of us.

Fee-way: Could toll roads replace gas taxes in Utah?
By Brandon Loomis
The Salt Lake Tribune
08/21/2008

Utah’s pending shift to time-of-day tolls in freeway express lanes moves the state one step closer to a necessary overhaul in highway funding, a national transportation advocate told legislators Wednesday.

Tolls are fairer and stabler revenues for road building and must anchor infrastructure plans since gas taxes will fail, starting next year, to keep the federal highway trust fund solvent, said Texas state Rep. Mike Krusee, a member of the National Transportation Infrastructure Finance Commission.

After the presidential election, that commission will recommend a national shift away from gas taxes and toward tolls to charge people for interstates they use - and more during rush hours - essentially turning freeways into fee-ways.

Both federal and state governments will have to make the change - some key Utah lawmakers are interested - as the trust fund is drained, Krusee said. The fund’s shortfall will start at $5 billion next year and swell to $30 billion in 2010, likely meaning a one-third reduction in federal assistance for Utah roads, he warned.

“We don’t even know in 20 to 30 years if [motorists] are going to be buying any fuel or what kind of fuel they’ll be buying,” Krusee told the Utah Legislature’s Revenue and Taxation Interim Committee. His answer: Charge for miles traveled.

The Utah Department of Transportation plans to use electronic transmitters on Interstate 15 within two years so commuters can spot-pay for express lanes. The amount - which has yet to be set - will depend on how busy the freeway is at the time of travel. Higher traffic will mean a higher toll.

That plan could stretch to all lanes if state and federal lawmakers do as Krusee suggests.

The Texas lawmaker called the current funding plan a subsidy by taxpayers to suburban developers who use the roads to open cheaper lands and further bog down commuter-hour traffic. Charging a toll instead means everyone pays their way and the government gets a return on its investment, which it can bond against for future projects.

Electronic scanners are the method of future tolls nationwide and already are used in places such as Chicago, Krusee said. It’s necessary to install cameras as well, so that cars without transmitters can be charged the toll by mail if their license plate is spotted.

Texas built a $3 billion tollway around Austin four years ago, Krusee said, and within six months sold as many transmitters for it as there are residents in the county.

UDOT pays about 85 percent for its own road projects, potentially lessening the blow from federal shortfalls compared with states that get half or more from U.S. gas taxes. But Krusee sees a market approach as the surest way for future generations to snag needed funding.

He found enthusiastic supporters in the Utah Legislature.
“Hearing you is a breath of fresh air,” Sen. Howard Stephenson, R-Draper, said. “I just want to welcome you to the socialist republic of Utah,” a reference to what he considers subsidized rush hours.

Stephenson is president of the business-backed Utah Taxpayers Association, which supports freeway congestion pricing. He said it is wrong for taxpayers to subsidize interstate capacity built to meet the demands of just four hours a day. Better, he added, to have those peak-hour drivers pay their way.

More than half the motorists on the nation’s freeways during rush hours are not driving to or from work, Krusee said. Charging them might move them off the road until later, speeding up traffic.

Sen. President John Valentine, R-Orem, said he is “intrigued” by a market approach to roads.

Link to article here.

New documents cause delay in U.S. 281 tollway lawsuit
By Pat Driscoll
Express-News
August 21, 2008

A judge on Wednesday granted a 60-day delay on the U.S. 281 tollway lawsuit so federal officials can review recently discovered documents from a state environmental study.

The documents, called “a small addition” by the Texas Department of Transportation but “numerous” by U.S. District Judge Fred Biery, could alter the Federal Highway Administration’s environmental clearance for the eight-mile toll road.

Toll critics and environmentalists filed the lawsuit in February to challenge the environmental study’s thoroughness.

“TxDOT has discovered numerous documents containing potential evidence which, to its credit, says should be reviewed,” Biery said in a four-page order.

The Alamo Regional Mobility Authority, which took over the U.S. 281 toll project from TxDOT, promised not to start construction during the break, the order says.

Biery also noted that court battles take time. Thirty-plus years ago, the U.S. 281 project now known as McAllister Freeway was locked in litigation for 14 years and many contracts were delayed.

“The court presumes counsel and the parties will continue to use best efforts to proceed efficiently and professionally,” the order says. “Like good wine, the court will make no opinion before its time.”

The delay, effective Aug. 7, will end in October.

Link to article here. Add to the Fitch Report this story in the Austin Business Journal about how vulnerable Texas drivers are to high gas prices, taking 6% of one’s income (tolls could easily double one’s gasoline cost), it’s malfeasance for politicians and their political appointees to continue to push toll roads.

Toll road and airport projects are now riskier
By Pat Driscoll
Express-News
August 20, 2008

High fuel prices, inflation and a dragging economy have made bonds for toll roads and airports riskier, Fitch Ratings said in a report today.

With tollway and airport traffic down as much as 16 and 19 percent, respectively, the report said the outlook for tollways and airports is now negative, down from a stable assessment just five months ago.

“The question is whether the current trend will continue for a longer period,” it states. “It is Fitch’s view that challenging conditions will persist over the next one to two years.”

Though fuel prices have been dropping from last month’s record, the economy and credit markets remain troubled and Europe and other countries show signs of stress, the report explains. Besides, food and other commodities haven’t joined the fuel-cost slide.

Not mentioned is that the U.S. Energy Information Administration expects even higher gas prices next year, and a debate slogs ahead on whether global oil production has peaked — and if not, then when — and how well technologies and alternative sources can fill the gap. Many agree that the age of cheap energy is over.

If pressures continue, and policymakers start pushing more money to public transit and more people begin shunning suburbs to live in urban cores, toll roads will face bigger problems, the report says. Airports could lose 10 percent of capacity within several years.

The report’s title rings ominous: U.S. Transportation Assets: Facing a Temporary Decline or a Permanent Change?

TOLL ROADS

Most U.S. toll roads now face traffic losses of 2 to 10 percent, says the Fitch report, which tracked numbers through June. Operators may have to boost rates and cut costs to keep bond ratings healthy, which might be difficult, even more difficult for private concessionaires charging maximums allowed in contracts.

Texas toll hopes, though, aren’t as bleak.

“Facilities in Texas appear to be a bright spot, with year-on-year reductions of less than 5 percent, which is half of what most other facilities in the Northeast, Midwest, Southeast and the West are experiencing to date,” the report says.

AIRPORTS

Seats on domestic flights could be down nearly 8 percent in the last quarter of 2008 compared to a year ago, the Fitch report says. Major airport hubs will fare better, losing only 6 percent.

Some airports could grow mostly because Southwest Airlines continues to expand, it says. San Antonio International Airport, where Southwest is by far the biggest carrier, saw record months in May and again in June. But several airlines, including Southwest, recently announced they will pull back some flights here.

Most U.S. carriers plan to cut capacity 6 to 14 percent in the third and fourth quarters of this year, Fitch says. Airports in the middle of big projects, such as San Antonio’s huge expansion, will likely have less flexibility to weather any financial storms.

Link to article here.

The story here is this (Note: the term “equity” is code for effective ownership of U.S. assets, like public highways):

“The U.S. trade deficit exceeded $712 billion last year, or 5.1% of GDP. That’s nothing more than America’s borrowing money from abroad to support a lifestyle that is unsustainable. But whether foreigners are now buying hotels, pharmaceutical companies or utilities, the numbers tell us that the rest of the world is no longer willing to foot the bill to feed America’s consumption habit. ‘It’s not just that American assets are cheaper. The untold story here is that foreign investors are no longer willing to finance American debt,’ says Stiglitz. ‘They now want equity.’

“If you were to look at America Inc. as a company, it’s like owning a company and you own a smaller and smaller fraction of it. So the fraction of America Inc. owned by Americans is diminishing,” says Stiglitz.

The Great American Yard Sale
By Jeff Israely/Paris, William Boston/Berlin
Time Magazine
Thursday, Aug. 14, 2008

When Belgian-based, Brazilian-controlled InBev launched a hostile offer for American beer king Anheuser-Busch last month, xenophobia quickly foamed to the top. Beer drinkers in St. Louis, Mo.–A-B’s home–vowed to swear off Bud if those foreigners bought “our” beer.

They’ll get over it. A-B’s shareholders sure did, considering the $52 billion price tag, which at $70 a share was a 27% premium for a stock that had gone flat. The ruling Busch family ultimately faced up to the fact that the U.S. is for sale, and foreigners are buying. It’s everything from the St.-Tropez crowd buying up condos in Palm Beach, Fla., to Asian and Middle Eastern governments sinking billions into U.S. banks to Europeans taking over U.S. pharmaceutical and infrastructure companies. Even tourists are busy using their euros and pounds to snap up iPhones, jeans, shoes and everything else they can stuff into the empty suitcases they carry along for just that purpose, damn them.

The weak dollar and our weakening economy are underwriting the great American yard sale. Investors from Dubai are behind the June purchase of the General Motors Building in New York City for $2.8 billion. The Abu Dhabi Investment Council’s sovereign wealth fund bought a 90% stake in the landmark Chrysler Building. General Electric’s plastics division is gone, and its famed appliance unit could soon be in the hands of China’s Haier or South Korea’s LG. Chrysler is hoping to hook up with India’s Tata Motors or Italy’s Fiat. Switzerland’s Roche Holding is offering about $44 billion to acquire the 44% of the biotechnology outfit Genentech that it doesn’t own.

The surge of foreign buying spans the economy. Since 2003, foreign-led mergers and acquisitions have increased more than sixfold. Last year there were over 2,000 foreign-led acquisitions of U.S. companies in deals worth some $405.4 billion, twice the value of deals in 2006 and up from $60.8 billion in 2003, according to Thomson Reuters, the financial-information company. Unlike the 1980s panic about the Japanese buying up American landmarks like Rockefeller Center, the response of the financial establishment has been to welcome the latest rush of foreign investment. “The U.S. needs these flows, particularly now,” says Bank of America chief market strategist Joseph Quinlan. “It helps create income and jobs for Americans.”

That would include Anne Marie Moriarty, a vice president at Corcoran Real Estate Group, who shuttles between New York City and European capitals, tempting foreign buyers with choice American properties. Moriarty is brokering the $16 million sale of an apartment in Manhattan’s Chelsea neighborhood to an Italian buyer, just one of the latest in her run of foreign deals. She says that since March 2007 her residential sales to foreigners have doubled, which is part of the reason that New York’s real estate prices have held up in an other wise tanking market. “It’s bucking the trend,” says Moriarty. Foreigners “see it as a long-term investment. Part of [real estate] for them is owning a piece of New York.”

Foreign companies were also the buyers in four of the top U.S. commercial real estate deals in 2007, according to Real Estate Alert newsletter. Rome-based investor Valter Mainetti has been building his Michelangelo Fund around trophy properties, ones that have historical or architectural value beyond their location and square footage. In 2006 he acquired a minority share in New York City’s Flatiron Building, a property that today is valued at $180 million. In June he raised his holdings to a 53% share of the famous building. “The Flatiron is expensive, but with the [cheap] dollar, it made sense to increase our share,” says Mainetti. “The stability of the New York real estate market is unique. This current crisis will pass, and the dollar will re-establish itself. We are confident.”

Foreigners spent $52.2 billion on U.S. commercial real estate in 2007, double the previous year’s total, according to Real Capital Analytics, a research group based in New York City that tracks property investment. Dan Fasulo, head of research at Real Capital Analytics, says foreign investment in U.S. property is a relatively recent phenomenon. He compared the current trend to the globalization of stock-market portfolios in the 1980s. “This isn’t just about the dollar. The strongest driver is that investors are looking for geographical diversification. The same situation played out on Wall Street about 10 to 15 years ago,” he says.

Buy American (Companies)

Over the past five years, foreign takeovers of U.S. companies have steadily risen. Among the more notable: Swiss pharmaceutical maker Novartis’ $39 billion staggered buyout of Alcon, the world leader in eye care; British energy distributor National Grid’s takeover of utility KeySpan Corp. for $11.8 billion; Saudi Arabian petrochemical company SABIC’s acquisition of GE’s plastics division for $11.6 billion; and Italian aerospace company Finmeccanica’s pending takeover of the U.S. military contractor DRS Technologies in a $5.2 billion deal. Some 55% of foreign direct investment in the U.S. came from the Old Country last year, with extra impetus now coming from its currency advantage. Says Scévole de Cazotte, senior policy director for Europe at the U.S. Chamber of Commerce: “European companies are very much conscious of the potential windfall. You buy cheap now with the belief that in 10 years the currency will have rebounded.”

Infrastructure is a prime example. Barcelona-based Abertis has been buying up airport-operation contracts from Atlanta and Burbank, Calif., among others, and a variety of service contracts in tele communications and parking garages. Now it is seeking a $12.8 billion deal to operate the Pennsylvania Turnpike, but the state legislature has balked. The road to growth leads to the U.S., says Abertis spokesman Toni Brunet, who notes that states and municipalities have lagged behind European public entities in privatization. “In terms of infrastructure, the U.S. is an emerging market,” says Brunet.

Indeed, European infrastructure firms calculate that the U.S. needs a massive infusion of capital to modernize its roads, bridges and power lines, highlighted by a recent spate of blackouts and the tragic collapse of a Minneapolis highway bridge last year. Steve Lucas, cfo of British power utility National Grid, says estimates are that the U.S. will spend $2 trillion in the next two decades upgrading electricity and gas infrastructure. “That’s bigger than China,” he notes.

The U.K.-based utility has been on a shopping spree that–while hardly anyone was looking–has transformed the company into a force in power and gas in the U.S., serving 4.4 million electricity customers and 3.4 million gas customers. In 2000 it bought New England Electric System and the Eastern Utilities Association. Two years later it grabbed Niagara Mohawk. Then in 2006 it scooped up Rhode Island Gas, and last year it completed its acquisition of KeySpan. That deal put National Grid among the top five distributors of electricity and natural gas in the U.S.

Shopping for Innovation

It’s not just about accumulating buildings or businesses. The U.S. is also a technology supermarket. Talk to Peer Michael Schatz, CEO of Qiagen, a German biotech firm that is a leader in technologies to isolate and prepare DNA and RNA for medical testing. Last year Qiagen merged with Digene, a U.S. biotech group that has developed groundbreaking diagnostic technology for the early detection of cervical cancer. Schatz says constant shopping for innovation in the U.S. is a key to his business plan, scouring technology-auction sites of American universities, searching for the right technology in the early phases of development. “The difference between the U.S. and Europe is that the U.S. has stellar science and a rapid rate of innovation and transferring that technology to the market for commercial purposes,” he says. “No other country comes close.”

There’s even an upside to the relative cheapness of the U.S. dollar. Volkswagen CEO Martin Winterkorn wants to boost the number of VWs the company sells in the U.S. to 800,000 over the next decade. But he has to cut costs to get the price down, which means building the cars on American soil with more U.S.-made components. So in July, Volkswagen announced plans to build two new sedan models in a $1 billion plant in Tennessee. VW hopes to export cars to Europe. “They could save $8,000 a car by building in the U.S.,” says Sean McAlinden, chief economist with the research group Center for Automotive Research, based in Ann Arbor, Mich. “The market has changed. It will be a much bigger market for the kind of small car with advanced technology that the Europeans are so good at making.”

And it’s not just Volkswagen. GM’s European-manufactured Opel Astra is expected to be built in the U.S. in the future. Volvo, writhing under the burden of the weak dollar, has reportedly asked Ford to find facilities for it to produce Volvos in the U.S. instead of Sweden.

Viewed from ground level, rising investment in the U.S. looks like a great thing. Without the inflow of foreign capital, the dollar would probably be even weaker and interest rates and inflation could be higher. But Joseph Stiglitz, a Nobel Prize winner and former chief economist of the World Bank, says there may not be a happy ending. For years, Stiglitz has warned that Americans are living beyond their means. The U.S. trade deficit exceeded $712 billion last year, or 5.1% of GDP. That’s nothing more than America’s borrowing money from abroad to support a lifestyle that is unsustainable. But whether foreigners are now buying hotels, pharmaceutical companies or utilities, the numbers tell us that the rest of the world is no longer willing to foot the bill to feed America’s consumption habit. “It’s not just that American assets are cheaper. The untold story here is that foreign investors are no longer willing to finance American debt,” says Stiglitz. “They now want equity.”

We used to measure the economy in terms of GNP, which is the amount of income produced by U.S. citizens. But now we measure it by GDP, the income that is actually produced in America. The distinction becomes important, says Stiglitz, when an increasing proportion of the country is owned abroad. “If you were to look at America Inc. as a company, it’s like owning a company and you own a smaller and smaller fraction of it. So the fraction of America Inc. owned by Americans is diminishing,” says Stiglitz.

That means that when the economy recovers, there will be less wealth left in the country to reinvest in it. But then returning to the original question–Why is the American yard sale not setting off alarms?–Stiglitz explains that the alternative is even worse. “There isn’t an outcry,” he says, “because the focus right now is the weakness of the American economy, and anything to keep our economy going is welcome.” That’s why no one really objected to Citibank’s becoming a Middle Eastern–financed bank, because it’s better than Citi’s becoming a dead bank. “But clearly we’re worse off as a country,” he says.

When the dust settles on the current downturn, the U.S. economy will probably regain its dealmaking swagger. But unlike the Japanese experience in the 1980s, the current trend of foreign buyouts won’t be unwound. Yet the only way for the U.S. to avoid becoming a second-rate economy is to make the investments necessary to stay ahead in knowledge and innovation. Will we do it? There are a whole bunch of rich foreigners who have just bet their future on it.

• Find this article at:
• http://www.time.com/time/magazine/article/0,9171,1832861,00.html

The road building and transportation lobby’s biggest event of the year is arguably the Texas Transportation Summit, hosted annually by Dean International in Irving, TX. Not usually an invited guest among those whom ordinary citizens have ardently opposed, TURF was invited to attend by the Summit’s Founder, David Dean. An olive branch and honest effort to incorporate differing views? We hope so. Time will tell. Below is the TURF testimony at three public hearings that were held concurrently with the Summit: one addressing MPOs, another public private partnership toll roads, and another addressing the diversions from the gas tax to non-transportation uses.

Testimony by TURF Founder, Terri Hall, before the Senate Transportation and Homeland Security Committee Addressing MPOs, August 12, 2008

Chairman Carona, Senators, thank you for having public testimony on this vital issue effecting transportation decision-making in the state, MPOs. The citizens have found by and large that MPOs are rife with many of the same problems we’ve experienced with TxDOT. MPOs are tone-deaf to the public and do not represent the will of the taxpayers anymore than TxDOT does, regardless of the elected officials that sit on those boards.

The process by which this shift to toll financing for nearly every road project is flawed to begin with. The public has been shut out from DAY ONE and has never been given ANY meaningful input  as to whether Texans even want to be charged both gas taxes and tolls to get to work or have any chance at mobility.

We don’t want or need any more organizations that give political cover to TxDOT (and frankly to the Governor and Legislature) that allows TxDOT to check the public involvement box and ignore the overwhelming opposition to tolling existing right of way and proceed as planned anyway.  I’ve personally witnessed it in the NEPA public hearing process and there is no meaningful public input to date.

There is no provision that allows the public to veto a project or influence how its financed. There are already 2 lawsuits pending against the MPOs in this state due their flawed decision-making processes. MPOs are not a reflection of the will of the people. When hundreds of citizens have turned out to ask MPO Boards to nix toll plans (by a 2 to 1 or even 3 to 1 margin against), they consistently vote to toll anyway.  What is the point of “public involvement” if the public’s input is consistently ignored? The only redress is to unseat at least half the MPO Board in the next election only to again have it stacked with pro-corridor, pro-toll, pro-privatization appointees. The citizens never know who will be appointed to the MPO,  and therefore have no way to truly impact the MPO even at the ballot box. If a board member votes with the people, they promptly get removed from the Board and replaced with one who will vote pro-toll. Ask former Chairwoman Andrade, she facilitated that retribution in Bexar County.

THE FAIR AND EQUITABLE SOLUTION
Ordinary citizens and taxpayers have been alienated from the process of transportation decision-making at EVERY level. The citizens have a right to self-determination in a Republic and we deserve the right to bring this to a public vote or have some other means of having citizen input heeded perhaps through the NEPA process, rather than continue the TxDOT & MPO charade of “citizen involvement.”

Let’s remind ourselves what TxDOT thinks of as citizen involvement…it’s them breaking the law to hire a lobbyist to lobby elected officials and hire marketing firms and political consultants to write and coordinate their speeches, public appearances and press statements in order to spout the glowing benefits of the tolling to taxpayers in Town Hall meetings to convince an angry public that they really do want toll roads.

Texans are smart enough to know if we truly need this new infrastructure, how they want it financed, and what the preferred route and solution ought to be. It’s not just the top-down approach that’s upsetting people, it’s the lack of any meaningful input into the decisions being made at EVERY level of the process.  It’s abundantly obvious that the decision has already been made for us. That’s what people are objecting to.

I do hope our message is clearly communicated and HEEDED in your recommendations to the Legislature.

Testimony by TURF Founder, Terri Hall, before the Legislative Study Committee on Private Participation in Toll Roads, August 12, 2008

The invited testimony before this CDA Study Committee has been noticeably stacked in favor of CDAs or PPPs, despite the overwhelming public opposition to privatizing our public infrastructure. Rather than heed the public’s concern, you have instead chosen to try and tweak PPPs in order to make them more palatable to an angry public rather than truly study what you were charged with studying: the EFFECTS of PPPs on the traveling public. This committee operated form the assumption that PPPs would continue from day one, rather than deliberate whether we should be engaging in any more of these types of contracts and whether this type of contract is in the public’ best interest.

We feel strongly that you should take a few steps back and study whether or not the government should even be in the business of making a profit and whether or not massive leveraged debt in this lending is the right approach. This committee also ought to study whether we should continue such a heavy reliance on tolling considering the sustained volatility of the price of gas. Considering both Houston and Dallas toll roads have experienced a decline in toll road usage and that there has been an overall decline in driving due to high gas prices, will 87+ toll projects be toll viable in 5 or 10 years given these conditions. Will the taxpayers be stuck with even higher toll prices because of lower ridership or worse be stuck bailing out a toll road in default?

Increasing the cost of transportation, particularly with a market-based toll rate and/or a PPP which is the most expensive transportation tax, is not only unwise, it’s a recipe for economic disaster.

Gas prices have caused a dip in toll road usage (per articles in Express-News and Landline Magazine) and caused marked drops in driving in general. The bond debt for these toll projects is very likely to default under these conditions, which most leading energy analysts agree will continue for the foreseeable future.

Where is the consideration of the taxpayer in all of this?  Short of some brief comments by Senator Tommy Williams and Rep. Wayne Smith, the taxpayers pocketbooks and their ability to pay these new taxes hasn’t even been on the radar. Where was the invited testimony from leading experts about high gas prices and the dwindling availability of oil and its effect on driving and the subsequent increase in usage of other modes of transportation? These issues have an enormous impact on the sustainability of 87+ leveraged toll projects. The Transportation Summit put on by Dean International had a speaker on this subject, and this area is being investigated by Congress, yet the Committee didn’t see fit include such an elephant in the room in its decision of whether or not to recommend the most expensive transportation funding option….PPP toll roads?

Several witnessed testified that most toll roads aren’t self-sustaining. Why are we building toll projects that can’t sustain themselves and need massive taxpayer subsidies? Raiding other public funds to piece these projects together does the exact same thing the gas tax does, takes from some to give to others. How is this process better or more efficient for the taxpayer? It’s not, it just allows an unaccountable government revenue stream.

Testimony in answer to Senator Robert Nichols’ question concluded not a single PPP currently on the books anywhere in the U.S. could be used as an ideal model or exemplary PPP deal. The taxpayers can’t afford any more untested experiments when the risks and costs to the pubic are so high. We’re not guinea pigs for the financial markets and road builders to “try out” their “innovative financing” schemes.  We’ve studied these deals for many years now and we’ve been reaching to find one that served the public well. So far, one doesn’t exist. To continue such risky schemes and to ignore the obvious warning signs to the tune of billions of dollars is totally unacceptable.

Dennis Enright testified that CDAs cost 50% more, that there is no risk transfer, and these projects should always stay in the public sector. None of these areas make PPPs palatable to the taxpaying public. We keep hearing PPPs and tolling are just a tool in the “toolbox” and that “one size doesn’t fit all,” but due to TxDOT’s Minute Order passed December 18, 2003 mandating all new capacity be studied for tolling, it’s become the only tool in the toolbox unless you remove it.

The GAO recently cautioned that public protection must be put in place when using PPPs and indicated PPPs aren’t right for every project. SB 792 took the first step toward primacy, but the fundamental assumption that everything that can be tolled will be tolled (including subsidizing projects that aren’t 100% self-sustaining) must be removed. Senator Nichols’ Primacy Determination model needs to take a few steps back to change the assumption that everything will be a toll project of one kind or another, to one where the priority is to improve freeways and keep them freeways, resorting to tolling dead last.

To ignore the economic warning signs and bury our heads in the sand and continue down the path of models that require sustained increases in driving and affordable gas, is to foolishly invite economic disaster and would be a complete failure of the Legislature’s fiduciary duty to the public it swears an oath to protect and serve.

Testimony by TURF Founder, Terri Hall, before the House Appropriations Transportation Subcommittee on Transportation Financing Options, August 13, 2008

Thank you for studying the vital issue of transportation. There are many considerations before this committee that will impact the taxpayers’ everyday lives. The shift to privatizing and even maximizing profit (even on public toll roads) should cause every public servant to pause.

While some are trying to “fix” PPPs to make them more palatable to an angry public already suffering under high gas prices, we need to take a step back and look at whether this shift to reliance on tolling to fund new road construction is prudent, protects the public interest, and is sound fiscal policy that best serves the public interest. We submit that tolling satisfies none of those areas.

While we’re not opposed to all tolling, the tolling of existing right of way, market-based tolls, and privatization smack of runaway taxation and both government and private profiteering exploiting what amounts to government-sanctioned monopolies, our public highways. The toll-first Minute Order #109519 passed by the Transportation Commission on December 18, 2003 demonstrates tolling isn’t just a “tool in the toolbox,” it’s the only tool they’ll continue to use in order to fill their coffers. Through the prolific use of tolling, TxDOT has become a defacto taxing entity with no accountability to the traveling public who depends on these highways for their daily living.

We’d like to bring some things to your attention that we feel are vital to setting transportation on the right course.

TOLL ROAD USAGE, DRIVING DOWN
First, we cannot bury our heads in the sand and ignore the warning signs around us. In a San Antonio Express-News article July 29 and a Landline Magazine article from August 1, it states that toll road usage is down in both Dallas and Houston, largely due to high gas prices. The FHWA also reports that driving is going down causing gas tax revenues to also drop.

One can see there is an inverse relationship between a drop in driving and the escalating price of gasoline. So any transportation policy that substantially increases the cost of transportation will not only wreak havoc on the economy and leave less money for taxpayers to cover other necessities, it’ll actually reduce tax revenues, particularly toll road usage, necessitating increases in toll rates or causing the massive leveraged debt used to build these facilities to go into default leaving the taxpayers to bailout a HUGE mess not unlike the mortgage and banking crisis we’re seeing now.

INDIRECT EFFECTS OF TOLL ROADS
We must also consider indirect effects and the unintended consequences of toll proliferation like traffic diversion to surface streets which will increase wear on county and city roads, not meant to handle such traffic loads. In a study called the Empirical Evidence of Toll Road Traffic Diversion by Peter Swan of Penn State and Michael Belzer of Wayne State, released January 14, 2008, Swan and Belzer noted that efforts to “monetize” existing toll roads is a recipe for the level of higher toll rates that increase truck diversion.

A summary of the findings published in the Newspaper.com (January 14, 2008) states:

The researchers analyzed decades of data from the Ohio Turnpike and nearby alternate routes in Ohio, comparing both to national data to determine the effects the toll rates had on nearby free roads. Ohio raised toll rates in the 1990s and subsequently lowered them, allowing an easier calculation of the effect of different rate levels. The study showed that as the Turnpike toll increased, truck traffic increased on alternate, free routes as truckers balanced the monetary savings with the cost of the extra time needed to take an indirect route.

Swan and Belzer’s economic modeling showed that the Turnpike could maximize its revenue by setting a truck toll rate of 46 cents per mile and collecting $111 from each truck driving the length of the Turnpike. At this high rate, however, the number of trucks avoiding the toll road would quadruple and place 608 million vehicle miles of added traffic and wear on secondary roads.

The study did not directly examine accident rates but the results suggested that imposing tolls on divided highways would increase the number of road fatalities by pushing truck traffic onto roads not designed to handle heavy truck traffic.

“Because we know that secondary roads pose greater safety hazards, the safety cost of diversion will be substantial,” the study explained. “We know enough about the frequency and severity of crashes based on highway type to suggest that a substantial increase in crashes, crash severity, and fatalities in the state of Ohio probably would occur as a result of this diversion.”

Interestingly, 46 cents a mile is the exact truck toll rate set by the Alamo RMA in the 281 toll project. In a TURF lawsuit to stop that toll project due to an insufficient environmental study of the impacts of that toll road on existing residents and businesses, no economic impact was conducted nor any study of the indirect effects of the toll road on surface streets and neighborhoods due to diversion.

DELIBERATE SUPPRESSION OF POTENTIAL NEGATIVE IMPACTS HIDDEN
Also found through litigation to stop the 281 toll road, TURF attorneys discovered a key study by a geologist TxDOT hired was deliberately hidden from the FHWA during the environmental review process. The report speaks of potentially “severe” impacts from the toll road on the Edwards Aquifer. Obviously this information could have changed the outcome of the FHWA’s environmental clearance (“Finding of No Significant Impact” or FONSI) for the 281 toll project had it been submitted with the environmental assessment. TURF’s attorneys also uncovered correspondence that shows management at TxDOT tried to pre-determine a FONSI on both 281 and 1604.

Such deliberate deception by a state agency cannot be tolerated, not to mention it violates the National Environmental Policy Act (NEPA). The public trust can only be restored by direct punishment (employee terminations) for such violations and through strong legislative oversight.

PUBLIC PROTECTIONS PARAMOUNT
The GAO recently released a report to Congress in February 2008 citing concerns about needing more rigorous up front analysis of PPPs to ensure pubic protections are put in place. Senator Robert Nichols released a draft of a decision tree of sorts called a “Primacy Determination” that suggests a process by which any decision to toll would go through to determine if a PPP was the right type of method for a given project. We think this sort of process must be in place to ensure the public interest is protected. However, it assumes most if not all projects will be toll projects.

We submit that this decision-making draft ought to take one step back, and that is, to have a process by which TxDOT and the MPOs must go through to keep our freeways toll-free FIRST. Tolling should be the last option considered (PPPs, if not completely eliminated, the last on the tolling option list), especially considering high gas prices and tighter, more expensive lending conditions.

HIGH COST OF BORROWING
Even if a public toll authority does the project, a Bloomberg article, Not Even 2% Fed Funds Help Munis Amid Record Rates, from just days ago, August 7, 2008, shows that even municipal bonds and other government financial instruments are experiencing higher lending rates.

Two experts didn’t parse words:

“The world is falling apart'’ for borrowers, said Robert Doty, the president of American Governmental Financial Services, an advisory firm in Sacramento.

“The unwinding of the credit bubble has had dramatic implications,'’ George Friedlander, a municipal strategist at Citigroup Inc. in New York who has covered the market for more than 30 years, said in an Aug. 1 report.

Government and certainly the Appropriations Committee cannot ignore its fiduciary duty to the public by looking the other way and ignoring the warning signs.

OVERSIGHT AUTHORITY MUST HAVE TEETH
Another area the Legislature needs to consider addressing in statute is giving the State Auditor the authority to force a tolling entity (whether public or private) to redo their traffic and revenue studies if the methodology or study is insufficient in any area. For instance, the State Auditor asked the Alamo RMA to redo its traffic and revenue study to take into account high gas prices, which is an obvious factor tolling authorities must consider in whether a toll road will be viable long-term. These agencies are doing inadequate studies to ram their agendas through. An article in the Express-News about this recommendation from the Auditor, emphasizes that the Auditor cannot force the RMA to re-do anything, that SB 792 only has the Auditor review their methodology. The Auditor should have the ability to force a tolling entity or TxDOT to redo an inadequate study that could potentially put these public roads in default at the taxpayers’ expense.

MPO TONE DEAF TO PUBLIC
Also, MPOs can be just as tone-deaf to the public as TxDOT. Certainly RMAs and unelected toll authorities fit into this category as well. The public by and large has been left out of transportation decision-making at EVERY level. There is no provision that allows the public to veto a project or influence how its financed. There are already 2 lawsuits pending against the MPOs in this state due their flawed decision-making processes. MPOs are not a reflection of the will of the people.

When hundreds of citizens have turned out to ask MPO Boards to nix toll plans (by a 2 to 1 or even 10 to 1 margin against), they consistently vote to toll anyway.  What is the point of “public involvement” if the public’s input is consistently ignored? The only redress is to unseat at least half the MPO Board in the next election only to, again, have it stacked with pro-corridor, pro-toll, pro-privatization appointees. The citizens never know who will be appointed to the MPO, and therefore have no way to truly impact the MPO even at the ballot box. If a board member votes with the people, they promptly get removed from the Board and replaced with one who will vote pro-toll. Ask former Chairwoman Andrade, she facilitated that retribution in Bexar County.

THE FAIR AND EQUITABLE SOLUTION
The taxpayers have a right to self-determination in a Republic and we deserve the right to bring this to a public vote or have some other means of having citizen input heeded, perhaps through the NEPA process, rather than continue the TxDOT & MPO charade of “citizen involvement.” We need some public involvement REQUIREMENTS that FORCE TxDOT to implement the alternative chosen by the public, not the one that makes the State the most tax revenue.

LOBBYING FOR TOLLS/PPPs
Let’s remind ourselves what TxDOT thinks of as citizen involvement…it’s them breaking the law to hire a lobbyist to lobby elected officials and hire marketing firms and political consultants to write and coordinate their speeches, public appearances and press statements in order to spout the glowing benefits of the tolling to taxpayers in Town Hall meetings to convince an angry public that they really do want toll roads.

We provided the Sunset Commission as well as the Chairwoman Harper-Brown’s office with in-depth documentation of TxDOT’s illegal lobbying activities. The Texas Government Code Chapter 556 states that TxDOT is subject to a reduction in appropriations per 556.005

(c)  A state agency that violates Subsection (a) is subject
to a reduction of amounts appropriated for administration by the
General Appropriations Act for the biennium following the biennium
in which the violation occurs in an amount not to exceed $100,000
for each violation.

DETERMINE TRUE NEEDS, COMPARE FREEWAY FIX TO TOLLWAYS
We need to end the toll road wish lists (MPO TMMP plans that even the Governor admitted were based on an if-money-were-no-object principle) and get a true side-by-side, apples to apples comparison of the cost of fixing our roads and keeping them freeways versus the cost of turning them into tollways. If it’s anything like the US 281 project in Bexar County, TxDOT/ARMA has turned a $100 million gas tax funded FREEway plan into a $1.3 billion toll project. This side-by-side comparison will help Legislators and the public discern our true “unfunded needs,” since we cannot rely on TxDOT’s “funding gap” figures to be accurate. Then and only then can we accurately assess funding our roads in the least invasive, most affordable, and most transparent fashion.

Thank you for allowing us testify to the citizens’ concerns and we trust their voices will be heard and heeded as we seek to restore trust in the transportation decision-making process across the state and to put the citizens back in the driver’s seat.