Respectfully submitted by
Grady W. Smithey, Jr.
September 2008
After reviewing the testimony that has been provided to the members of the Legislative Study Committee on Private Participation in Toll Projects, I respectfully submit the following recommendations for consideration:
1.) Remove the provisions in SB 792 that unnecessarily pits one public agency against another public agency.
• Remove any provision that offers either TxDOT or a tolling agency "primacy" or the "right-of-first-refusal" for project delivery.
• Remove any provisions that allow an entity to block any toll project from advancing simply by failing to meet or agree.
Collaborative, integrated partnerships between the Metropolitan Planning Organization (MPO), TxDOT and the local toll provider provides the most effective framework for maximizing the strengths of each agency, and ensures the efficient delivery of transportation projects throughout the state. SB 792 included a "one size fits all" solution for Houston and North Texas. The best transportation delivery model for the North Texas area may not be the same one that will be crafted for the Houston area. "Primacy" for one agency leads to unnecessary project delays, and unbalanced and inefficient methods of project delivery. Primacy is the death of competition.
2.) Repeal the provision in SB 792 that restricts the amount of revenue that a tolling authority can expend on non-tolled projects. All excess revenues from both privately and publicly financed toll projects should be sent to directly to the Metropolitan Planning Organization.
Excess revenue received by a toll project over contracted amounts should be required to be used for non-toll projects approved by the MPO.
3.) Repeal the sunset provisions affecting Comprehensive Development Agreements (CDAs) and allow private-sector CDAs with upfront payments. Replace the market valuation process described in SB 792 with the public sector comparator model described in Attachment A, Description of the Public Comparator Model For Market Valuation, to determine a true market value, rather than a negotiated price.
Allow market competition to determine the value of toll facilities. The negotiated market valuation process provided for in SB 792 hinders the project delivery process and pits one public agency against another. Free market competition, not monopoly, offers the best result for the public.
Through competition, TxDOT received a proposal to construct, finance and operate SH 121 from Cintra, which was then topped by NTTA. Fund 6 now has an additional $3.2 billion to be used for projects (non-toll, rail and managed lanes) in this district as selected by the RTC.
4.) If the MPO decides in favor of a revenue sharing solution for a project rather than requiring an upfront payment, allow the MPO, TxDOT and the tolling entity to waive the market valuation process and enter into a revenue sharing agreement. Revenue should be sent directly to the MPO.
Collaboration and cooperation between the RTC, TxDOT and NTTA resulted in a revenue sharing agreement for the Eastern Extension of the PGBT. TxDOT provided a Toll Equity Grant to NTTA in the amount of $160 million for right of way costs and utility adjustments. TxDOT will fund and construct the $175 million PGBT EE/l-30 interchange and Lake Ray Hubbard crossing. NTTA will fund and construct the remainder of the project. TxDOT is funding 30-35% of this $1 billion project. In return NTTA will share 20% of gross toll revenues to be used for transportation projects as selected by the RTC. Collaborative partnerships provide for the most efficient project delivery solutions.
5.) Prohibit a project from being conveyed to another entity in perpetuity. All toll projects, after the term of agreement, should become the property of the state.
6.) To assure transparency and accountability, require full management audits, as well as project specific audits, annually of the entity that constructs or operates the toll facility.