CorridorWatch.org - Challenging the Wisdom of the Trans-Texas Corridor.

HOUSE COMMITTEE ON TRANSPORTATION
TEXAS HOUSE OF REPRESENTATIVES
INTERIM REPORT 2004

A REPORT TO THE
HOUSE OF REPRESENTATIVES
79TH TEXAS LEGISLATURE

MIKE KRUSEE
CHAIRMAN

COMMITTEE CLERK
LAURIE MCANALLY

Committee On Transportation

November 17, 2004

Mike Krusee
Chairman

The Honorable Tom Craddick
Speaker, Texas House of Representatives
Members of the Texas House of Representatives
Texas State Capitol, Rm. 2W.13
Austin, Texas 78701

Dear Mr. Speaker and Fellow Members:

The Committee on Transportation of the Seventy-Eighth Legislature hereby submits its interim report including recommendations for consideration by the Seventy-ninth Legislature.

Respectfully submitted,

Mike Krusee, Chairman

Larry Phillips, Vice Chairman
Al Edwards
Linda Harper-Brown
James E. "Pete" Laney

Peggy Hamric, CBO
Timoteo Garza
Fred Hill
Ken Mercer

INTRODUCTION

At the beginning of the 78th Legislature, the Honorable Tom Craddick, Speaker of the Texas House of Representatives, appointed nine members to the House Committee on Transportation. The committee membership included the following: Chairman Mike Krusee, Vice-Chairman Larry Phillips, CBO Peggy Hamric, Al Edwards, Timoteo Garza, Linda Harper-Brown, Fred Hill, James E. "Pete" Laney and Ken Mercer.

Pursuant to House Rule 3, Section 34, the Committee has jurisdiction over all matters pertaining to:

(1) commercial motor vehicles, both bus and truck, and their control, regulation, licensing, and operation;

(2) the Texas highway system, including all roads, bridges, and ferries constituting a part of the system;

(3) the licensing of private passenger vehicles to operate on the roads and highways of the state;

(4) the regulation and control of traffic on the public highways of the State of Texas;

(5) railroads, street railway lines, interurban railway lines, steamship companies, and express companies;

(6) airports, air traffic, airlines, and other organizations engaged in transportation by means of aerial flight;

(7) water transportation in the State of Texas, and the rivers, harbors, and related facilities used in water transportation and the agencies of government exercising supervision and control thereover;

(8) the regulation of metropolitan transit; and

(9) the following state agencies: the Texas Department of Transportation and the Texas Transportation Commission.

CorridorWatch.org Sidebar Notes:

Charge to monitor and review HB3588

Trans-Texas Corridor, The Governor's Vision

Right-of-Way Leasing

Authority To Expedite Condemnation

RMA Authority
for CDAs and
Trans-Texas Corridor

State Control of RMA

Toll Tags Required

Free Road to
Toll Road Conversion

Inflated Needs Cost

Admittedly Inferior Free Alternatives

Embrace Tolls or Lose Funds

Highway-to-Toll Conversion

Land Purchase Options

Land Banking

Environmental Shortcuts

Download this Report as a PDF Document.
[click here]

TOP OF TABLE

HOUSE COMMITTEE ON TRANSPORTATION

INTERIM STUDY CHARGES AND SUBCOMMITTEE ASSIGNMENTS

During the interim, Speaker Craddick charged the committee with the following issues:

1. Review transportation best practices in other states to determine possible improvements in administration, operations, delivery of projects, and improving overall efficiency of the Department of Transportation.

2. Review and study all existing legislation affecting the development of transportation infrastructure in areas adjacent to the Texas-Mexico border. Study international trade issues as they relate to transportation, the adequacy of existing infrastructure to facilitate international traffic related to trade, and potential for development of inter-modal hubs and other mixed use facilities which promote more efficient trade and economic development, and the opportunities for contracting with Mexico or any of the Mexican states for joint development of transportation infrastructure. (Joint Interim Charge with House Border and International Affairs Committee)

TOP OF TABLE

3. Actively monitor and review Texas Department of Transportation's rulemaking, promulgation of policies and procedures, implementation of programs, and other activities related to the implementation of HB 3588, 78th Legislature. (Joint Interim Charge with Senate Infrastructure Development and Security Committee)

4. Actively monitor agencies and programs under the committee's jurisdiction, including identifying possible ways to merge or streamline agency functions to produce long term financial benefit to the State and better efficiency of the agencies.

All charges were studied by the committee as a whole.

Committees in both the House and Senate are charged with reviewing the implementation of HB 3588.

TOP OF TABLE

It All Starts Here -- HB 3588

"I have seen the future of highway finance and it works." [1]

"A clear vision for the future, coupled with a commitment to providing Texans with better mobility, a better economy and a better quality of life, provided the foundation for what today, by any measure, is overwhelming success in funding and delivering major mobility projects for the citizens of Texas." [2]

"I believe there are three key elements…funding, leverage and sweat equity. And what I mean by that is the ability of raising funds, leveraging them in a partnership program, and ensuring those who leverage the funds are able to move forward with transportation projects without fear money is moved to some other portion of the state. And all those tools are in place now for the first time." [3]

TOP OF TABLE

Background

HB 3588, passed during the regular legislative session, and HB 2, enacted during the third called special session of the Legislature, changed the transportation landscape in Texas dramatically. Existing transportation policy was bolstered with new initiatives and financing mechanisms designed to accelerate project delivery and generate additional cash flow. The legislation gives a voice to approved local authorities by providing them the tools to build the infrastructure they deem most necessary to their region. The Texas Department of Transportation has been given new responsibilities, such as rail management and public transportation, and new abilities to bring long-conceived transportation initiatives into the realm of reality, including the Trans-Texas Corridor.

TOP OF TABLE

Testimony from Public Hearings

The Committee heard testimony on the implementation of HB 3588 and HB 2 during two scheduled hearings in Austin. Those who testified and their representation were:

January 26, 2004

Michael Behrens, Texas Department of Transportation
Brian Cassidy, Central Texas Regional Mobility Authority
Frank Elder, Texas Department of Public Safety
Bob Jackson, Texas Department of Transportation
Michael Kelley, Texas Department of Public Safety
Mark Rogers, Texas Department of Public Safety

May 4, 2004 (Joint Hearing with Senate Infrastructure Development and Security Committee)

Michael Behrens, Texas Department of Transportation
Robert Daigh, Texas Department of Transportation
Bob Jackson, Texas Department of Transportation
Robert Nichols, Texas Transportation Commission
Amadeo Saenz, Jr., Texas Department of Transportation
Michael Stevens, Governors Business Council/Texas Urban Transportation Alliance

TOP OF TABLE

A New Vision: The Trans-Texas Corridor

HB 3588 established the groundwork for Governor Perry's vision: the Trans-Texas Corridor. The Trans-Texas Corridor, as conceived, is a 4,000 mile transportation network with separate highway lanes for passenger vehicles and trucks, high-speed passenger rail, high-speed freight rail, commuter rail, and a dedicated utility zone.

TOP OF TABLE

While the actual routes of the Corridor are only conceptual at this point, their purpose is to link major metropolitan areas. With that concept in mind, there are four areas that have been identified as priority segments. These segments parallel I-35 from Denison to the Rio Grande Valley, I-69 from Texarkana to Houston to Laredo, I-45 from Dallas-Fort Worth to Houston, and I-10 from El Paso to Orange.

Although ambitious, the plan does have its precedents. The interstate highway system and the transcontinental railroad both had their critics, and both changed history. But more importantly, the Trans-Texas Corridor will help Texas solve its own transportation problems, which are expected to grow significantly during the next fifty years.

The Corridors
do not link metropolitan areas – they intentionally avoid every urban center. As a result, the Corridor path between major metropolitan areas is longer and less efficient than the existing Interstate Highways.

TOP OF TABLE

HB 3588 broadens the authority of the Texas Department of Transportation to finance the Corridor. TxDOT can use toll equity, right-of-way leasing and the Texas Mobility Fund to either fully or partially fund the Corridor. In addition to appropriations, fees, and bonds, financing may also include federal loans, grants and reimbursements, private investments, and donations. TxDOT may authorize any other governmental or private entity to build or operate any part of the Corridor. It may grant franchise rights and access licenses and may contract with rail operators, public and private utilities, communications systems, common carriers, transportation systems, or other entities to use corridor facilities. Instead of selling their property, landowners may enter into corridor participation agreements, receiving percentages of identified fees related to a corridor segment. TxDOT may also buy land and lease it back to the sellers, and buy land from willing sellers in advance of final project location.[4] TxDOT may also used expedited condemnation to acquire land for the Corridor.

"right-of-way leasing" means taking private land that is not needed to build a highway, and allowing a private entity to profit from that taking.

"expedited condemnation" also called
"quick take"

TOP OF TABLE

In response to a request for proposals (RFP), TxDOT has received three proposals from consortiums wishing to develop the I-35 parallel portion of the Trans-Texas Corridor (from the Rio Grande Valley to Dennison). It is anticipated that TxDOT will elect a team to begin negotiating a contract before the end of the year. The first phase of the contract allows the team to begin the study and development of specific segments of the I-35 corridor. Actual construction of the Corridor would entail the letting of an additional contract with any successful bidder.

Funding Tools

Texas Mobility Fund

Historically, Texas has used a "pay-as-you-go" model to fund infrastructure projects. With Texas only receiving 90% of its gas taxes back from the federal government, and with TxDOT forced to maintain an increasing number of lane miles with a stagnant revenue source, this system has allowed only about one-third of the new capacity required by the state to be constructed. The Texas Mobility Fund (TMF), established during the 77th legislative session through legislation by Senator Shapiro, and a constitutional amendment approved by Texas voters, sought to supplement the current system by allowing the Transportation Commission to issue bonds on a limited basis for transportation infrastructure needs. Although the fund was put in place, a revenue source was not established until the 78th legislative session.

HB 3588 created the funding source for the TMF with revenues from the Driver Responsibility Act and increased traffic fines that are expected to direct $138.7 million to the fund in fiscal year 2004. This amount is expected to increase each fiscal year; the furthest forecast is $325.1 million in fiscal year 2011. In fiscal year 2006, vehicle registration fees will directly fund the TMF and the Driver Responsibility Act funds and the increased traffic fines will be directed into the General Revenue fund. The Transportation Commission will issue bonds funded by the revenue stream directed into the Texas Mobility Fund. Under current interest rates, TxDOT should be able to issue approximately $2 billion of bonds. These new funds will allow TxDOT to accelerate completion of highway improvements and start new projects. This large, one-time-only allocation is not expected to be available again for many years.

As a result of the new tools provided by HB 3588, the Texas Department of Transportation awarded about $4 billion in contracts during this fiscal year. By comparison, Texas spent a billion dollars more than California, and $2.9 billion more than New York.

TOP OF TABLE

The Metropolitan Mobility Plan

In the past, the Texas Transportation Commission determined how much Fund 6 money was available every two years and then prioritized projects from across the state. Funds were then allocated to the various regions across the state based on the prioritized projects in that region. Last year, TxDOT implemented a new system for allocating funds, known as the Texas Metropolitan Mobility Plan. Under this plan, the eight largest metropolitan areas (Dallas-Fort Worth, Houston-Galveston, San Antonio, Austin, El Paso, Lubbock, Hidalgo County (McAllen) and Corpus Christi) are given block grants from the state to use on projects those regions give the highest priority. The regions, through their metropolitan planning organizations, are required to submit a list of priorities to the state by the fall of 2004. Final authority for spending on specific projects will still rest with the Transportation Commission, but each region will be allocated a certain amount of funding. The new plan will make it easier for local officials to predict how much money will be available on an annual basis, as well as what projects will be financed. In the past, desperately needed but expensive projects were often deferred to another funding period.

TOP OF TABLE

This new funding plan also eliminates the historical "punishment" incurred by a region when it decided to use its own money to accelerate construction of a badly-needed project. In the past, such a decision would mean that the state money that would have come to the area for that project in future years was lost. It was instead given to the next project on the statewide list as opposed to replacing the local funds the region spent on that project. That should no longer be the case with the Metropolitan Mobility Plan. [5]

Regional Mobility Authorities

Regional Mobility Authorities (RMAs) were created during the 76th legislative session for the purpose of constructing, operating and maintaining toll road projects in the state. At the time, it was envisioned that RMAs would provide more local control and investment in projects of significance to the region encompassed by an RMA. The RMAs, however, were not given the necessary authority and tools to fully accomplish this objective until the 78th legislative session.

TOP OF TABLE

Among other tools, HB 3588 gave RMAs the power of eminent domain, the authority to enter into comprehensive development agreements, and the authority to issue revenue bonds for transportation projects. HB 3588 also expanded the projects an RMA can develop to include airports, rail projects and ferries.

TOP OF TABLE

HB 3588 also allows an RMA to acquire, construct, operate, maintain, expand or extend a transportation project in a county that is not part of the authority if the transportation project in the affected county is a continuation of the RMA's transportation project extending from an adjacent county. RMAs can now enter into agreements with a public or private entity, a toll road corporation, the federal government or any individual state, Mexico or any one of its individual states, another governmental entity or a political subdivision, to study the feasibility of a transportation project or to acquire, design, finance, construct, maintain, repair, operate, extend or expand a transportation project. RMAs can use surplus revenue to finance other local transportation projects, and can participate in the development of the Trans-Texas Corridor.

RMA's are authorized to
enter into Comprehensive Development Agreements and can participate in the development of the Trans-Texas Corridor.

Those counties interested in forming an RMA must submit a request to the Texas Transportation Commission. The request must include a regional implementation program outlining projects, a preliminary financing plan, and the proposed makeup of a board to oversee the RMA. Participating counties appoint board members with the chair named by the governor.

Despite claims of local control, the Governor's Office will maintain control of the RMA leadership.

TOP OF TABLE

The Texas Transportation Commission has approved RMAs in Grayson and Bexar counties, joining the Central Texas RMA already in existence prior to the 78th session. Petitions for RMAs have also been filed by Cameron County, Webb County, and the North East Texas RMA (Smith and Gregg Counties).

Hays County commissioners have created a committee to study whether the county should form its own RMA or attempt to join the Central Texas Regional Mobility Authority, currently made up of Travis and Williamson counties. The Paris Economic Development Council, City of Paris and Lamar County commissioners are also considering formation of an RMA. Others interested include the Temple area, and several counties encompassing the Corpus Christi/Laredo region. All of these regions are weighing the merits of forming an RMA as a vehicle for developing needed projects.

TOP OF TABLE

Tolling

New Technologies

Tolling is not a new concept. The state of Texas has had tolling authority since 1913. Many opponents of the practice picture an outdated scenario: a motorist approaches a toll booth, stops, tosses his money into a basket, and waits for the arm to raise to allow him to continue on his way. This collection method has changed dramatically.

New technology allows motorists to purchase an electronic toll tag, which is affixed to their windshields. Scanners mounted above the toll road read the tag and deduct payment, or charge payment to a credit card while the car is traveling at a normal rate of speed. A camera snaps a picture of the license plates of those who do not have the tags, and they are mailed a notice of payment. Most who receive the notices pay up promptly. One toll booth is typically available to those who are not regular commuters, and don't have passes.

A human toll taker can handle 300 cars per hour, says Jack Finn, national director of toll services for the engineering firm HNTB in New Jersey. Dedicated electronic tolling lanes, with reduced speeds through the toll plaza, can process 1,000 cars per lane per hour. The most efficient of all, the transponder system where toll plazas are eliminated altogether, can manage 2,200 cars per lane per hour.[6]

With this type of technology, Houston and Dallas can combine their resources to allow a motorist to use one toll tag for both regions. It is predicted toll tags will eventually be used interchangeably with other systems on a nation-wide basis. Other innovations being considered include using one's toll tag to pay for fast food in a drive-through establishment. Credit card companies are looking into the feasibility of awarding "frequent toll miles" instead of "frequent flier miles" to their customers.

Tolling was addressed in several ways in HB 3588. The legislation authorizes the RMAs to issue revenue bonds backed by tolls and to enter into comprehensive development agreements with private entities to design, construct and operate toll road facilities. In addition, the Texas Transportation Commission was given authority to convert regular state highways to toll facilities and to transfer them to RMAs for operation and maintenance; and TxDOT can now provide payment of per-vehicle fees (pass-through tolls) as reimbursement to RMAs for construction and maintenance of state highways or as compensation for the cost of maintaining toll facilities transferred to an RMA.[7]

"New technology" requires motorists to purchase an electronic toll tag, and maintain a minimum balance.

TxDOT has already said that they have no intention of providing toll booths for those who do not have, or do not want, an electronic toll tag.

Despite repeated denials of the Transportation Commission, TxDOT, and the CTRMA, free road to toll road conversion is a very real provision of HB 3588.

TOP OF TABLE

A Policy of Tolling

The federal transportation re-authorization bill remains unresolved, and according to Transportation Commission Chairman Ric Williamson, the gasoline tax receipts of the entire state now just equals the maintenance cost of the state's highway system. Obviously, the resources are going to be far fewer than the needs; only about 36% of the needs can be funded.

It is now policy in Texas to look first at tolling for all new limited-access highway projects. Commissioners have been very up front about the fact that money from the Texas Mobility Fund will be used primarily for the implementation of toll roads. This policy is not intended to be punitive, but to stretch tax dollars further. By financing through toll revenues, a road that would otherwise be built entirely with tax dollars would now require less than 40% in tax dollars. Future maintenance on the road, which has taken a large portion out of TxDOT funding for years, would now be paid out of toll revenues. Toll roads can be used by RMAs, regional toll authorities, TxDOT, and certain counties to build a revenue stream. Consider this comparison: It has taken 14 years to build the eleven miles of Highway 183 in Austin on the pay-as-you-go basis. On the other hand, the current toll road construction on the north end of Loop 1 and SH 45 (45 miles of pavement) will be completed entirely in less than five years.

Motorists will always have a free alternative to toll roads, although the alternative will typically be congested with an uncertain travel time. Money raised through tolls will remain in the community of origin, not used for projects in other parts of the state.

Opponents of tolling prefer that roads remain "free." They envision traffic pouring into quiet neighborhoods by drivers unwilling to pay tolls, resulting in neighborhood decline and loss of property values. Others, such as the city of El Paso, feel that TxDOT should first correct past transportation inequities before looking at tolling. El Paso mayor Joe Wardy testified before a joint committee in May that the city would prefer a phased-in approach. The mayor testified that the region does not have the basic infrastructure to meet the traffic and commerce needs imposed by NAFTA, and does not have the economy to support the use of toll roads. Projects that are commonplace and long existing in other cities have yet to be completed in the city of El Paso. Once El Paso has the basic transportation infrastructure components in place, it will be able to contribute to the advancement of Texas mobility with the development of tolled expansion projects in the community. Although El Paso knows tolls are inevitable, its leadership does not believe that the city is currently equipped to move in that direction.

The Austin area reports its pockets of resistance, mainly among upper middle-class citizens who do not believe that TxDOT will use Mobility Fund money only for toll projects, although that has been stated policy. Tolling has gained its proponents as the populace has become more informed about the financial situation, and the Capital Area Metropolitan Planning Organization voted to approve the region's road plan last July.

The Dallas-Fort Worth and Houston areas, having introduced tolls to their regions some years ago, report less resistance than cities where tolling is a new concept, and officials from those areas report they will gladly toll whatever is needed for a larger share of transportation money freed up by those metropolitan areas who refuse to embrace tolling. The Dallas/Fort Worth area has submitted proposals for twelve projects that would require the entire $6 billion of one-time funding. All of these projects are being examined for toll viability.

San Antonio expects to begin collecting tolls by 2009; the city's first toll project is expected to be Loop 1604 on the north side of the city. If San Antonio had waited for conventional funding for the project, construction would not have begun until 2015.

Smith and Gregg counties would like to work together to complete Loop 49, which has been on the books for years. A preliminary toll analysis indicates a completion of the southern, western, and northern segments to be partially toll viable. Regional leaders support the tolling concept to finally complete this long-awaited project.

MPOs were directed under
Sec. 201.601(c), added by HB 3588, to provide a
non financially constrained
"wish list" of transportation improvements.
It is that inflated dollar value now described as "needs." [link]

Toll roads require alternatives to be congested

Experience in other states, like Ohio, demonstrate that traffic has increased through communities and neighborhoods as drivers, especially trucks, avoid toll roads.

Communities like
El Paso were told that they would not be punished for resisting toll projects. This however sends the message that DFW and Houston may very well receive fund denied El Paso and others.

TOP OF TABLE

Pass Through Tolling

A pass through toll, also known as a "shadow toll," is a payment by TxDOT of per-vehicles fees as reimbursement to public entities or private companies for road construction, operation, or both. Pass-through tolling can be used by RMAs for construction and maintenance of state highways or as compensation for the cost of maintaining toll facilities transferred to an RMA. The payments are not made until after project completion, and completion of projects can often be expedited because the entity has the assurance that TxDOT will repay them. The local area benefits from timely improvements in mobility and safety, and the state benefits by not having to pay the hefty initial investment associated with road building and maintenance. TxDOT plans to use the money that it generally allocates to counties through various programs, although those rules have not yet been established, but generally it is money that would normally come to the county through the regular planning process. Rules will most likely set a minimum and maximum amount that can be used to reimburse the counties.

TOP OF TABLE

Montgomery County, which has the highest death rate per capita of any other county in the state of Texas, has a goal of passing a bond issue of $100 million towards high priority system projects that normally would have been funded by ISTEA or TEA-21. Part of the $100 million would go towards Montgomery County's first two toll projects. After the first phase is complete, Montgomery County is requesting that TxDOT pay them back a portion of the dollars through pass-through tolls. As they are paid back through the first round, the county is proposing to take those proceeds and reinvest them into new state highway projects. It has been calculated that the $100 million in local bonds could be leveraged into about $800 million in projects. The total source of funds will be from the TIF, the state pass-through money, toll dollars and local bonds. Critical projects will be moved forward as much as five to ten years. Montgomery County leaders anticipate that this money will make the county more self-sufficient, and they will no longer need to visit TxDOT on a regular basis to request funding for their projects.

Lamar County commissioners are teaming with Paris city leaders to determine if shadow tolls would be feasible for the widening of U.S. 271 from Paris to the Sulphur River. According to County Judge Chuck Superville, widening would be an economic, as well as a safety issue. Trucking companies charge a penalty for picking up and delivering freight to a location that does not have a four-lane connection to the interstate, which increases the costs of shipping to and from Lamar County.[8]

TOP OF TABLE

Highway-to-toll Conversion

The Texas Transportation Commission may transfer non-toll road highway segments to counties, which would then assume all liability and full responsibility for maintenance and operate them as toll roads. The toll revenue would be deposited into the state highway fund and it would be used to fund the improvement, extension, expansion, or operation of the converted segment of highway and may not be collected except for those purposes. TxDOT has proposed converting an eight-mile stretch of the Tomball Parkway into a toll road. Revenues generated by tolls would be used to extend the freeway around Tomball and through Magnolia to Navasota in Grimes County, where it would link up with Texas 6 into College Station. The state will go through the public hearing process while analyzing the viability of the toll road.[9]

Toll Equity

Toll equity gives TxDOT the ability to put money into a project and not be reimbursed. For instance, should TxDOT provide a portion of the funding for a toll project, a private entity would provide the rest.

This saves the state money, since TxDOT isn't providing all of the money for construction. When TxDOT provides a portion of the funding, the road usually reverts back to the state after a certain period of time.

TxDOT is currently limited to providing $800 million a year for toll equity projects.

Public testimony indicated that legislation may be needed to clarify funding when an existing road is converted to a turnpike. The money put in by TxDOT prior to the road becoming a toll facility should not count against the $800 million per year that TxDOT is allowed for toll equity projects.

Despite repeated denials of the Transportation Commission, TxDOT, and the CTRMA to the contrary, free road to toll road conversion is a very real provision of HB 3588.

TOP OF TABLE

Public-Private Partnerships

Design-Build

Design-Build is a method of project delivery in which one entity (design-builder) forges a single contract with the owner to provide for architectural/engineering design services and construction services. By contrast, the "traditional" design-bid-build approach means that the owner commissions an architect or engineer to prepare drawings and specifications under a design contract, and subsequently selects a construction contractor by competitive bidding (or negotiation) to build the facility under a construction contract.

HB 3588 addresses design-build, and its more encompassing counterpart, comprehensive development agreements, as they apply to regional mobility authorities. According to the legislation, "a comprehensive development agreement is an agreement with a private entity that, at a minimum, provides for the design and construction ["design-build"] of a transportation project and may also provide for the financing, acquisition, maintenance, or operation of a transportation project."

Benefits of design-build include a singular point of responsibility for quality, cost and schedule adherence, which serves as a motivation for quality and proper project performance. Delivery of the project is done in a more time-efficient manner as the designers and contractors work as one team during the entire design process. Because design and construction are overlapped, and because bidding periods and redesign are eliminated, total design and construction time can be significantly reduced. Change orders due to "errors and omissions" are virtually eliminated, as the design-builder has responsibility for developing drawings and specifications as well as constructing a fully-functioning facility.[10]

TOP OF TABLE

Comprehensive Development Agreements

A comprehensive development agreement (CDA) is an agreement with a private entity that provides for the design and construction of a turnpike project. It can also provide for financing, acquisition of property, and the maintenance and operation of the facility. It is particularly advantageous to those entities, such as startup RMAs, that are constrained in both financial and human resources.

TOP OF TABLE

CDAs are not a not a new concept. The Federal Highway Administration, as well as a number of states, have been successfully designing and building smaller road projects through CDAs or design-build since 1988. They are an accepted method of project delivery in roughly half the states in the U.S.

TOP OF TABLE

Texas' first experiment under a comprehensive development agreement is State Highway 130, currently the largest highway contract in the nation at $1.3 billion. This particular CDA takes a design-build approach and covers it with a toll financing package. By being able to sign the CDA before designs of SH 130 were 100 percent complete, TxDOT was able to enter into a contractual agreement for a guaranteed maximum price. Working in design-build speed, the new state highway should be completed by December 2007.[11] If the project had been built in the traditional, pay-as-you-go method, construction would have begun in 2007, and concluded in 2020.

TOP OF TABLE

Dallas officials are looking into using a CDA to reconstruct LBJ Freeway. TxDOT officials hope to begin construction in July 2005, and have it finished in five or six years. Conventional construction practices would add five years to the opening.[12]

TOP OF TABLE

Testimony during a joint hearing in May indicated that there seems to be a tendency to define the CDAs too rigidly on the front end, and leave no flexibility on the back end, consequently defeating the purpose of the CDA. The more pre-engineering that is done on the front end by the owner, the more constrained the responses and innovation on the finished product. Testimony indicated that CDAs should be less constrained, rather than half-conceived and then low-bidded to the finisher. The balancing act is complicated--the more engineering done by the owner before the CDA is awarded, the more allowance is left for innovations. However, the less engineering done beforehand means that more risk is taken by the bidders, and less by the owners (the taxpayers).

TOP OF TABLE

The Texas Transportation Commission is still working to develop CDA policy, and has included the issue as a discussion item during its monthly meetings. TxDOT has recommended that CDAs be used on large projects, especially in the turnpike area, and that they not be utilized for a broad range of nonspecific services.

As to unsolicited proposals, TxDOT is leaning towards proposals that focus on the business and the financial aspects, and specifically their ability to leverage state and federal dollars. A high level of engineering would not be required, but enough to understand the basic concepts and validity of the plan. Proposers would rather see a process where the goal is defined, the amount of money is decided upon, and the proposers decide how to get to the goal. Commissioners have indicated that they believe the rules and guidelines ought to be focused more on goals and objectives and less on process.

The issue of stipends paid to unsuccessful proposers is also being examined by the Commission. Proponents of stipends have testified that pre-engineering work can make a bid expensive, and some sort of reimbursement is necessary. Testimony before the Senate Infrastructure and Development Committee in May indicated that proposers would also like the opportunity to reject the stipend and retain ownership of the design concept instead.

Transportation Commission Chairman Ric Williamson has indicated that the commission needs to be very cautious in developing rules and guidelines to not protect those with whom they do business and guarantee their profits. Williamson admonished TxDOT that "what's in the public's interest is getting railroads and asphalt roads and water roads and air roads built in the state as fast and as cheaply as possible. It's not in the public's interest to guarantee an engineering firm a profit; it's not in the public's interest to guarantee that 72 construction companies get a shot at the same billion-dollar contract. Be cautious about that, please."[13]

TOP OF TABLE

Other Innovations

Land Acquisition

Land