Private toll road agreements never had a prayer

ANDY HOGUE, Lones Star Report Correspondent

July 3, 2009

With CDAs DOA in the special session, it’s apparent there’s not much trust in the Texas Department of Transportation to go around the members of the Legislature.

On the afternoon of July 1, it seemed possible for at least three comprehensive development agreement (CDA) transportation projects out of 13 included in SB 3 to bepreserved. But by noon the next day lawmakers were texting, tweeting, and talking about CDAs being dead. About four hours later, they were.

By 4:30 p.m., both chambers had adjourned sine die — having passed Sunset extension and authorizing $2 billion in bond money, but with CDAs and a new “revolving fund” dead. The rejection of SB 3 was a vote of no confidence on what was once arguably the most influential department in state government.

What happened?

Most CDAs in Texas are scheduled to expire Sept. 1. So Gov. Rick Perry — himself a strong advocate of private funding of state transportation projects — wanted CDAs in the call. But legislators knew that an adequate debate on CDA agreements listed in HB-SB 3 would take longer than the two or three days Perry and Lt. Gov. David Dewhurst had wanted (though it should be noted that the Legislature could have extended the session well beyond July 4th to the 30-day deadline).

The result was some hurried attempts to address CDAs, but with most legislators content just to approve HB 1, which pertained to Proposition 12 highway construction bonds, and SB 2, which extends Sunset dates for several agencies, including TxDOT.

Around 11:40 a.m. July 2, Dewhurst called Sens. Steve Ogden (R-Bryan), Robert Nichols (R- Jacksonville), Jeff Wentworth (R-San Antonio) and a few others to meet in private “for the latest information from the Governor’s office and TxDOT” regarding the fate of SB 3 in the Senate. When they came out about two hours later, Dewhurst and other Senate leaders said CDAs were done for.

Dewhurst confirmed to reporters that SB 3 failed as legislators from both chambers couldnot agree on whether or not continuation of certain CDAs was necessary before 2011.

Sen. John Carona (R-Dallas), chairman of the Senate Transportation committee, assured reporters that no major transportation efforts would be aborted by a lack of legislative action on SB 3.

“We have been assured that no major project is going to be left behind,” said Carona.“...[I]t would be a mistake to do away with CDAs. But we need to take some time to look at this issue. And we can do that in 2011 without any impact on projects.”

Bill Noble, executive director of CDA advocacy group Texans for Safe and Reliable Transportation, said Perry was justified in placing CDAs in the call —even in absence of any legal urgency. “We felt there was an adequate, thorough airing of the CDA issue during the full legislative session, and we felt the Governor had a good reason to put it on the call,” Noble said.

What was at stake?

Three CDA agreements were, as certain staffers said, “in the pipeline” — all under-development toll lanes. They included: the DFW Airport Connector toll lane project in Dallas County; the North Tarrant Expressway toll lane project in Tarrant County; the LBJ Freeway (I-635) toll lane project, in Dallas County.

According to Carona, the only project that has any significant work being done on it isthe LBJ managed lane, and none of the other projects have undergone any major construction or dirt work.

“If the Legislature does not reauthorize CDAs during this very short special session, I don’t think it will cause any problems for the state,” said Sen. Nichols, the bill’s author, in a written statement.

Dewhurst, though supportive of a “thin list” of CDAs to be continued, said he also does not expect any interruption of projects.

“I think if we don’t address some areas of the state that are not going to receive funding otherwise, the voters are going to ask, why didn’t you pass legislation which would enable us to get additional roads built?,” he said, prior to SB 3’s demise.

According to proponents of continuing CDA agreements, there is another price to be paid: in the form of the inevitable result of increasing numbers of vehicles on limited road space.

“Those communities that were well underway to fighting gridlock with motorists being told ‘help is on the way’ are going to be put on hold for another 18 months,” Noble said. “... Eighteen months is a terribly long time for motorists to have tosuffer through not only existing gridlock, but the kind of gridlock we’re going to see.”

A funding alternative presented early in the 81st Legislature, but which never saw the light of day on the Governor’s desk, was a plan to index the state’s motor fuels tax to match the rate of inflation. Some opponents to this plan said the gas tax would not be an adequate source of revenue in future years as alternative energy sources become more readily available. Other opponents rejected the idea in favor of CDAs and tolls as better tools for funding highways.

Carona’s Local Options Transportation Plan (originally in SB 855 in the regular session, and later an amendment to the regular session’s TxDOT Sunset Bill) would have allowed counties and large metropolitan areas to raise the gasoline tax and other fees to pay for voter-approved projects.

But by the Legislature’s unlocking $2 billion in Proposition 12 funds in SB 1 on Thursday, perhaps a handful of projects now have a means of going forward.

“According to testimony by Amadeo Saenz, projects could conceivably move forward in hopes that CDAs are reauthorized in the 2011 session, but it’s hard to imagine anyone who would invest the time and resources when they’re not certain to be finished,” Noble said.

Perry, though grateful for release of the Proposition 12 funds, lamented the loss of CDA authority.

“With more than 1,000 people moving to Texas each day and a growing economy, improving transportation in our state continues to be a top priority of mine,” Perry said in a statement. “I had hoped to reduce uncertainty regarding several major transportation projects across the state by extending the comprehensive development agreement authority for local and state transportation agencies. Although the CDA bill [HB-SB 3] did not pass, we will continue to work with legislators and local officials to find transportation solutions for our state.”

Mistrust evident

Some indicators of the Legislature’s mistrust of TxDOT were on display in the July 1 Senate Finance Committee, when SB 3 was being addressed.

“We have three choices,” Nichols said. “We can do nothing, kick the can down the road a few years, or we can fix it. I’d like to fix it.”

Nichols said TxDOT actions over the last few years have resulted in the “death of local control.” He said the rise of Regional Mobility Authorities, CDAs and toll equity “set the stage for the biggest deal of them all — The Trans-TexasCorridor. ... We never knew how all these new laws would work together.”

Ogden took a shot at concession fees for toll road contractors, saying they were “for the privilege of building a toll road.”

All the blame wasn’t on TxDOT or the Governor — Ogden expressed a bit of mistrust at the economy, as well. He said toll projects would have to be awarded without private equity in the future, explaining that his feeling was that it will become increasingly harder to award CDAs with the bond markets hobbling along.

The House committee was also the scene of much skepticism, as what could have beenan easy-to-pass bill in the form of HB 3 got carved up like a Thanksgiving turkey before it died. House members must have feared that by giving the Texas Transportation Commission any discretion at all would result in another HB 3588 (the controversial 2003 bill which granted authority to create the Trans-Texas Corridor).

Another example of mistrust of the Transportation department was the number of tags found on SB 3 — from the most liberal Democrats to arch-conservative Sen. Dan Patrick (R-Houston) — attempting to amend the bill.

Still, approving Proposition 12 funds and renewing the department gave some reason tocheer.

“There’s an old saying, that politics is the art of the possible. ... But there’s another saying: Two out of three ain’t bad,” said Sen. Craig Estes (R-Wichita Falls), on the passage of SBs 1 and 2.