Chapter 9: Transportation
Use the Texas Turnpike Authority to Obtain Greater Funding for TxDOT Projects
and Operations
Summary
The establishing legislation for the Texas Turnpike Authority (TTA), in
addition to setting tolling authority, provides for numerous avenues to
accelerate project delivery. The current Texas Department of Transportation
(TxDOT) strategy does not formally integrate TTA as an essential part of the
Department strategy for project evaluation and delivery. There are existing
restrictions for TxDOT participation that should be removed and improvements to
the powers and rights of TTA that would significantly enhance their ability to
effectively develop projects.
Background
Toll roads, bridges, and tunnels have always played a role in the
nation’s transportation network. The over 4,700 toll facilities in the
United States include urban interstate roads such as the New Jersey Turnpike,
over 500 urban expressways (such as President George Bush Turnpike, the Dallas
North Tollway, and the Sam Houston Tollway), and more than 150 bridges and
tunnels. The great majority of these facilities are publicly owned and operated.
Nationally, toll roads accounted for more than 4,400 miles of highway in 1999,
with 63 percent located on the Interstate Highway
System.[1]
Texas has toll roads in Dallas and Houston. There are also a number of
smaller bridge facilities, most associated with border crossings, such as the
Cameron County International Toll Bridge, Laredo Nuevo Laredo International
Bridge and McAllen International Toll Bridge.[2]
In 1953 the Legislature created the original Texas Turnpike Authority
(OTTA) as an independent entity, headquartered in Dallas, with statewide
authority to build toll roads and bridges. The toll roads were to be financed by
revenue bonds issued by the OTTA and supported entirely by tolls collected from
its projects. The OTTA’s efforts were primarily in the Dallas-Fort Worth
area, developing three major toll road projects, including the Dallas-Fort Worth
Turnpike, the Dallas North Tollway, and the President George Bush
Turnpike.[3]
In 1983, strong traffic demand, voter support, and strong local finances
allowed Harris County to create the Harris County Toll Road Authority to meet
transportation needs the OTTA could not address. The Harris County Toll Road
Authority proceeded with a 50-mile, $900 million toll road project that by all
accounts has been very successful. In fiscal year 1990, the authority’s
toll roads were used for 37.5 million vehicle
trips.[4] By July 1998, the authority’s
toll roads were used for one billion vehicle trips. In 1991, the Texas
Legislature instructed the Texas Sunset Advisory Commission to look into the
consolidation of the OTTA with the Texas Department of Transportation (TxDOT).
In 1996, the Sunset Commission recommended consolidating the two agencies, since
the operations of TxDOT and OTTA were very similar; both agencies build and
maintain highways, and with the only significant difference being the method of
financing construction.[5]
Enabling legislation
Senate Bill 370, passed by the 75th Legislature, abolished the old Texas
Turnpike Authority and created a turnpike division within TxDOT to develop toll
roads. The bill also established the regional North Texas Tollway Authority
(NTTA) and transferred to it all Texas Turnpike Authority assets, rights, and
other property located in Collin, Dallas, Denton, or Tarrant
counties.[6]
TxDOT’s Texas Turnpike Authority (TTA) division has statewide
jurisdiction for development of turnpikes and is not prohibited from pursuing
projects within the areas covered by the two regional toll authorities. The
objective of TTA is to consider the development of turnpike projects in any part
of the state where there is a demonstrated need and where a project has been
shown to be financially feasible.[7] The enabling
act also authorizes TTA to enter into an agreement with the government of Mexico
to cooperate on NAFTA and border-related
issues.[8]
Merging the original Texas Turnpike Authority with TxDOT, and the attendant
creation of the North Texas Tollway Authority, gives the state three independent
agencies responsible for planning and constructing toll roads—the Texas
Department of Transportation, the North Texas Tollway Authority, and the Harris
County Toll Road Authority. The two regional authorities are serving the largest
potential markets for toll roads in the state, and account for over 100 miles of
toll road. Harris County has a bridge and two highways; NTTA has one bridge, one
tunnel and two highways.[9] TTA does not
currently have any completed projects. TTA’s enabling legislation did not
change the Texas law that prohibits TxDOT from expending funds for the
construction, operation, and maintenance of a toll facility of a public or
private entity without a requirement for
repayment.[10] Furthermore, despite the fact
that TTA is a division of TxDOT, Section 52-b. Article III of the Texas
Constitution precludes advancing funds for turnpike project development without
an obligation for repayment.[11] Therefore, as
described below under Project Funding, these funds must be repaid at closing
which adds to the challenge of financing start-up toll roads
Governing Structure
TTA is unique within TxDOT in that it has its own enabling act; it operates
as a division of TxDOT, yet it has an independent board appointed by the
Governor.[12]
The Texas Turnpike Authority Board consists of seven members—six
directors appointed by the governor plus the chair of the Transportation
Commission, or a designee. The TTA director is selected by and serves at the
pleasure of the Texas Transportation
Commission.[13]
Transportation Code, §362.051 provides that certain governmental
entities may not begin construction of a toll road, toll bridge, or turnpike
without the approval of the commission if the project is to become part of the
state highway system.[14] In order to move
forward with the development of a project, the Texas Turnpike Authority Board
must approve the project, submit it for further approvals to the Transportation
Commission, which in turn prepares and issues a minute order authorizing the
project.[15] A minute order sets policy and
authorizes an action by the Texas Transportation Commission and is used any time
the Commission is required to make a decision.
Operations Structure
The TTA has only 12 employees, with a currently authorized level of 20.
Because TTA is a division of TxDOT, employees fall within the salary structure
and overall FTE cap at TxDOT. The turnpike division staff operates in an
entrepreneurial fashion by limiting the number of internal employees and instead
relying upon outsourced contracts for the majority of their design and planning
functions.[16]
Since its inception, TTA has procured engineering, design, technical, legal
and financial advisory services from outside sources, as authorized under the
enabling legislation. TTA uses a private general counsel firm, a financial
advisor, and bond counsel.[17]
Before conducting an initial feasibility study, TTA must have commission
approval.[18] TTA staff believe they are able
to respond quickly to needs at least in part because they can use outside
consulting firms. While the division is authorized almost twice the current
staff, the TTA Director would like to keep the organization as small and focused
as possible. Because their initial development work (design, planning, toll
feasibility studies, and so forth) is funded by TxDOT, TTA competes with all the
other TxDOT districts for consultant funding. So far, this has not created any
significant problems.[19]
Operations Funding
The enabling legislation provided for a gradual transfer of funds from the
regional NTTA to the new TTA.[20] In the
1999-2000 biennium, TTA received about $17.5 million from the NTTA, to help fund
its initial operations.[21]
TTA has been using these transfer funds to pay operating costs. For the
2001-2002 biennium, TTA will request TxDOT funds for certain operating costs.
Any remaining balance of NTTA transfer funds will then be available for such
work as initial assessments of potential
projects.[22] TTA projects a funding shortfall
of about $5 million unless they can finance that amount when they complete the
first project financing based on toll
revenues.[23]
In the near future, TTA will rely on advances from TxDOT for operating costs
and development work (such as planning, design, and feasibility studies) related
to specific turnpike projects as its primary source of funding. TTA will use
proceeds from revenue bonds for project construction when the pre-development
work for the project is complete, including necessary approvals, and bonds can
be issued based on the forecast toll
revenues.[24] (See further details under
Project Funding.)
Project Development
TTA is required to encourage public and private participation in turnpike
projects and has adopted formal rules to promote fairness, involve private
participants in turnpike projects, and promote confidence among project
participants.[25] Consistent with these
requirements, the TTA board adopted rules (effective November 1, 1998) to
encourage private involvement with a fair and efficient process. Entitled
Private Involvement in TTA Projects, Chapter 54 covers issues such as policies
on private involvement, solicited proposals and unsolicited
proposals.[26] The objectives of this policy
are: a) expand the scope of turnpike projects studied; (b) accelerate the
construction and completion of turnpike projects; (c) reduce the overall costs
of turnpike projects; and (d) maximize the benefits to be derived from turnpike
project facilities.[27]
Under these rules, TTA is allowed to enter into exclusive development
agreement negotiations and negotiate with the proposers without being bound by
any provision in the submitted proposal, whether solicited or
unsolicited.[28] Section 361 of the
Transportation Code also allows TTA to “use an exclusive development
agreement with a private entity to construct, maintain, repair, operate, extend,
or expand a turnpike project by invested private funding or by public and
private funding.”[29] Such an agreement
allows negotiating a contract with a single private sector entity for everything
from initial design through operations, including financing.
The exclusive development agreement approach differs significantly from the
traditional lowest bidder approach used by TxDOT for construction contracts.
Under the current TxDOT process, projects are normally broken into small pieces,
the department issues detailed plans and specifications, unit-price bids are
submitted and opened on a set dates and awarded based on mathematical
calculation of the lowest overall cost.
Project Programming and Selection
TTA is still developing new toll road project development and selection
criteria, and has not yet established a long-range strategic plan of specific
goals. The current TxDOT project programming and selection process does not
fully integrate the TTA into the statewide transportation planning process,
although the TxDOT commission must approve TTA projects.
The current TTA project selection process begins with local entities (such as
counties, cities, metropolitan planning organizations) and or the TxDOT district
offices identifying and proposing projects to TTA. TTA then conducts a
preliminary feasibility study to assess the toll viability, whether or not the
project will generate sufficient revenue to pay for construction and
maintenance. If a project is assessed to be financially viable and/or of
significant importance to TxDOT, the Texas Transportation Commission and the TTA
board can direct the TTA to continue studies and project
development.[30]
For a solicited proposal, TTA prepares and issues a Request for
Qualifications to determine vendor interest in developing the project. TTA
reviews the submittals to identify qualified firms who will receive a detailed
Request for Proposal (RFP). Based on responses to the RFP, TTA select one or
more contractors with which to negotiate an exclusive development
agreement.[31]
Unsolicited proposals follow a different path. Private entities may submit
directly to TTA a proposal requesting participation in a turnpike project. Such
proposals must be designated as either a “Conceptual Proposal” or
“Detailed Proposal” following the guidelines in TTA rules. TTA
charges $5,000 to review an unsolicited conceptual proposal and $20,000 for an
unsolicited detailed proposal.[32] These fees
serve to provide some funding for review and ensure that the proposers have
completed at least preliminary analysis of their ideas. Studies that TTA deems
necessary to continue project analysis are conducted and paid for as negotiated
between TTA and the successful proposer and designated in the exclusive
development agreement.[33]
While current project selection process has not been formalized, TTA is
developing incentives to encourage communities and TxDOT districts to become
more active in recommending projects. Identifying potential projects early would
maximize the potential time savings as well as allow for the use of innovative
financing options.[34]
Project Funding
For any project to be financed with revenue bond proceeds there must be a
traffic and revenue study which demonstrates traffic volumes and toll revenues
will be sufficient to pay off the bonds. As the toll projects currently underway
are not expected by TTA to be capable of 100 percent toll funding, they expect
federal, state, and local participation.
TxDOT is allowed to expend funds for the construction, operation, and
maintenance of a toll facility only if requirements for repayment are included
in the project authorization.[35] Furthermore,
despite the fact that TTA is a division of TxDOT, Section 52-b, Article III,
Texas Constitution precludes advancing funds for development of turnpike
projects without an obligation for repayment.
The Texas Transportation Commission has issued minute orders structuring
advance TxDOT funding of up-front work for TTA
projects.[36] The three key elements of such
advance funding include (1) repayment from the bond issue for that portion of
the project; (2) all work products will go to the district that constructs the
project, if the project does not become a toll road; and (3) specific minute
orders will be passed for each project.[37]
TTA is concerned that although its long-term objective is to be
self-sustaining, short-term funding issues may present a significant
challenge.[38] Specifically, the requirements
for immediate repayment severely restrict the ability of TTA to proceed with
these projects; a project cannot proceed until full repayment to TxDOT can be
refinanced along with other project costs. This requirement also affects the
ultimate cost of the bonds, because a lower ratio of revenue to expenses results
in a higher interest rate. Long-term repayment obligations also make financing
of projects more difficult. The ability of TxDOT to contribute money without a
repayment obligation (i.e., “toll equity,” see Recommendations E and
F) would greatly enhance project financing.
In the 76th Legislature, Senate Bill 925 was designed to authorize
TxDOT to expend funds for toll projects including TTA and Senate Joint
Resolution 3 addressed the constitutionality of such funding. Neither of these
passed.[39]
Current Projects
The focus of TTA’s efforts has been developing four projects that were
already under study by the former independent agency. Those projects, all in the
Austin area, are State Highway 45, the extension of Loop 1 northward, State
Highway 130 from north of Georgetown south to Seguin, and US 183-A, from
Lakeline Boulevard to north of Leander.[40] The
Transportation Commission approved and issued minute orders providing
development funding for State Highway 45, $82 million; US 183-A, $36 million;
and Loop 1, $30 million.[41]
Two of these projects are to be completed via exclusive development
agreements which can use methods such as design-build otherwise not currently
allowed for TxDOT projects. While a developer can use design-build under
exclusive development agreements, TTA does not decide what method they will use
to develop a project. One of the exclusive development projects is State Highway
130; estimated at $916 million (not including right-of-way costs) it is the
largest of the four projects under consideration. The other exclusive
development agreement project is State Highway 183-A, with an estimated
construction cost of $190 million. TTA anticipates ground breaking on all
projects in 2002.[42]
Design-Build
TTA has been seeking legislation that would permit them to use design-build
in contracts for turnpike improvement projects. Design-build projects are those
where the detailed design and the construction are included in one
contract.[43] The TTA director is part of a
working group established by the Senate Committee on Intergovernmental Affairs
to address design/build legislation. The working group includes representatives
from a variety of contractor, engineer and architect associations, as well as
TxDOT, TTA, and the Texas Department of Criminal Justice.
There continues to be opposition from some members of the Associated General
Contractors who are concerned about fairness in selection in a non-low bid
environment and pressure for more and more design-build projects.
There is an inferred concern that smaller construction companies will have
less opportunities for highway contracts if design-build is allowed. The
discussions center on assuring a fair, equitable procedure without giving an
unfair advantage to large, out-of-state construction firms. The proponents of
design-build agree that this is not a method that is generally applicable to the
majority of the construction performed by
TxDOT.[44]
One tag for all roads
As noted above, Texas has three different toll authorities with separate
legal authority to build and operate toll roads. At first, toll roads needed
employees in booths to collect tolls. Later, automatic coin machines were added
as an additional payment option. Recently, new technology has made it possible
for the electronic payment of tolls with electronic toll tags that are read by
scanners at collection points. Harris County Toll Road Authority has branded
their version of electronic toll collection “EZ Tag” while NTTA
calls theirs “TOLLTAG.”[45]
By setting up a prepaid account with a toll road agency, a customer can
attach the toll tag to their windshield so that payment is automatically debited
from their account. If the account is set up with a credit card, the prepaid
balance is automatically replenished when a certain dollar level is reached.
The benefits of electronic toll collection (“ETC”) include
reduced labor costs and increased customer convenience. Most toll roads with ETC
provide dedicated lanes for toll tag customers and the most modern facilities
have special lanes allowing the tag to be scanned at highway speeds. These
dedicated toll lanes greatly increase the number of vehicles served during peak
load times.
When drivers use toll roads run by more than one agency, the benefits are
even greater if they can use a single toll tag and account for all of the roads.
This “interoperability” means that there is no difference to the
driver which entity is operating the road.
Because TTA and the two regional toll authorities in Texas operate
independently, each agency handles ETC differently. Without statewide standards,
TTA must still determine their toll collection standards. Harris County Toll
Road Authority and NTTA use the same tag vendor but use different tags. Once TTA
opens their toll roads, there might be three different toll tags for three
separate Texas toll roads, leading to confusion and delays. The border-crossing
bridges will further complicate the situation when they automate their toll
collections.
If toll systems were interoperable, drivers could purchase one ETC tag and
use it for all Texas tolls. This would be particularly important for truckers
and other cross-state travelers, and could encourage use of toll roads.
The interoperability aspects go beyond tolls to include probes for traffic
management systems, weigh stations, border crossings and airport parking. Once
there are common transponders and the different authorities’ data systems
are networked, there is further potential for a number of other e-Commerce
revenue streams such as fast food purchases. Interoperability can both increase
the efficiency of collecting funds and provide additional revenue sources.
Automated Toll Enforcement
In order for electronic toll collection to work effectively, particularly in
high speed collection lanes, toll roads use automated vehicle enforcement
systems to ensure equal treatment of all customers. These enforcement systems
take a digital picture of the license plate of any vehicle which does not pay
the proper toll.
If the proper legislative authority is in place, the agency can then use this
information to send a citation to the violator and collect a fine. Currently,
the TTA’s ability to utilize video enforcement for toll violators is
questionable. TTA has identified the need to clarify its statutory rights in
this regard as a high legislative priority. Under the Regional Toll Authority
legislation, those entities can use video surveillance or any other reasonable
evidence to enforce toll violations.[46]
Recommendations
The Texas Department of Transportation’s (TxDOT) ability to meet
demands for construction of roads and highways can be improved by making better
use of the Texas Turnpike Authority (TTA). TTA’s flexibility and
responsiveness in project development—in contrast with the significant
procurement and staffing limitations that apply to the remainder of
TxDOT—mean that TTA should have a larger role in the department’s
operations.
Besides setting tolling authority, the establishing legislation for TTA
provides numerous ways to accelerate project delivery. Existing restrictions for
TxDOT participation in toll road projects should be removed and the powers and
rights of TTA should be improved to significantly enhance their ability to
effectively develop projects.
Finally, to maximize the ability of TTA to develop toll projects, several
legislative changes are recommended. The most important are authorization for
TxDOT to invest in possible turnpike projects without a requirement for
repayment, and providing for automated toll enforcement.
- Texas Department of Transportation’s
(TxDOT’s) project selection process should be modified to first review all
projects to determine those that are likely candidates for innovative approaches
and revenue production and include a structured process for recommendations of
projects to be placed on the Texas Turnpike Authority (TTA) project
list.
This requirement would include consideration of when it is cost effective to
aggregate projects that otherwise would be divided into smaller projects to meet
TxDOT project selection criteria.
By integrating the analysis of roadways into the project selection process,
the best decisions can be made about which projects make the most sense to
develop on a user-fee basis. Since TxDOT estimates that a large percentage of
the transportation needs of the state of Texas are going unmet, the appropriate
use of toll roads can be a very cost-effective tool to meet the overall
demand.
- TxDOT should fully integrate and take
maximum advantage of TTA’s ability to deliver projects more quickly and
use innovative practices such as the exclusive development agreement with the
private sector.
TTA’s approach of involving the private sector in project development
allows multiple activities to proceed simultaneously. Because of significant
pressure to meet a wide variety of needs while assuring that no errors are made,
TxDOT has put in place very detailed and sequential procedures. While these
measures may be effective, they are not efficient, resulting in lengthy delays
and continued unmet needs.
- TTA should be used as a test bed for
implementing new, innovative strategies such as design-build that are not
currently used by TxDOT.
As these new strategies are developed, a structured process should be put in
place to identify those that might be used in TxDOT districts for non-toll
projects. To facilitate the use of innovative approaches in TxDOT, TTA staff
should administer complex or unusual projects (with or without tolls) using
non-traditional methods such as design-build.
New, innovative approaches have the best results when they are directed by a
group who understands these methods and is committed to their success. Rather
than create another group within TxDOT to foster these new approaches, TTA can
be the leaders for successful implementation. With an entrepreneurial attitude,
fewer restrictions and rules, and flexible staffing based on outsourcing, TTA is
in the best position to manage these initial efforts and refine the approaches
and processes. To be effective, TTA must maintain a streamlined approach to
their projects, while emphasizing innovation and speed. If the new approaches
show promise, they can be integrated into the toolbox of available contracting
methods for the department as a whole.
- State law should be amended to allow TxDOT
and TTA to use the design-build approach on appropriate
projects.
The Texas Transportation Code requires competitive bids on all highway
construction projects.[47]
The design/build approach should be considered by TxDOT when any of these
conditions exist:
- strict selection based on low bid not practicable
or advantageous;
- cost not the sole award criteria;
- financial considerations, such as revenue bonds
(which should include all toll-financed projects);
- large, complex project to be completed in a
relatively short time; and,
- specialty project, such as Intelligent
Transportation Systems.
TTA should have the authority to use design-build for any turnpike projects
it deems necessary. The solicitation process should include competitive sealed
proposals from pre-qualified respondents, with contract awards based on overall
best value for the state of Texas. (A full discussion of the design-build
approach is contained in the paper on Alternative Bidding Methods to Speed
Construction Projects.)
The authority to use design-build should ultimately be extended to
non-turnpike TxDOT projects. There should be dedicated staff for design-build
implementation, and TTA should pilot the overall design-build program.
- State law should be amended to allow TxDOT
to financially participate in the development of toll roads without a
requirement for repayment.
TTA should move forward with requesting a legislative change to section
222.103 of the Transportation Code to make repayment permissible rather than
required.
This will also require a constitutional amendment to provide for an exception
to Section 52-b, Article III, Texas Constitution that would allow for
construction, maintenance, and operation by the department, an agency of the
state, or a political subdivision of this state, of turnpikes, toll road, or
toll bridges without the repayment requirement.
- State law should be amended to add a new
title that provides that a person commits an offense if a vehicle is on a state
highway facility without paying the proper toll.
A first step would be legislation similar to last session’s Senate Bill
1487, which would have implemented an automated enforcement system on toll
facilities on the state highway system, and make it an offense to operate a
vehicle on a state highway without paying the proper
toll.[48] The amended statute also needs to
provide that an offense is a misdemeanor punishable by a fine not to exceed
$250. It should further amend Section 224.157 to provide that prosecution of a
violation under Section 224.156 can be based upon proof of non-payment of toll
by video, photographic, or electronic recording, together with proof that the
defendant was the registered owner of the vehicle when the offense occurred
establishes the commission of the offense.
Section 224 should be further amended to authorize the Texas Transportation
Commission to use such technology as it deems necessary, including but not
limited to automatic vehicle license tag identification photography and video
surveillance, to aid in the collection of tolls and the enforcement of toll
violations.
Sections 361.253 and 254 of the Transportation Code should also be amended to
provide that a person commits an offense if the proper toll is not paid and that
offense is punishable by a fine not to exceed $250, using the same prosecution
proof as described for Section 224 above.
- TxDOT and TTA should, in conjunction with
the regional toll authorities, develop interoperability standards for statewide
electronic toll collection.
A statewide interoperability standard should be addressed and the toll
collection issues resolved before construction begins on the first toll road in
the Austin area. Otherwise, TTA may face additional costs if the technical
aspects (tags, computer hardware and software) must change to accommodate a
different standard. TTA should take the lead to form a working group
representing all interested parties to establish short- and long-term solutions
for interoperability and interagency cooperation.
Fiscal Impact
The direct fiscal impact on the state’s finances of relying more
heavily on toll financing cannot be estimated. This depends on the specific
financial arrangements involved in each project.
Roads, whether they are toll facilities or free facilities, have a large
effect on productivity in our economy with one comprehensive study indicating
that every dollar spent on road construction yields 29 cents in increased
productivity.[49] Increased productivity
represents real monetary savings to businesses which can, in turn, increase
investment and other business spending in the state, resulting in an even more
profound economic effect.
The full economic effects of toll roads are more difficult to model than are
the effects of free roads by the fact that toll facilities are largely financed
through bond issues and that the bond service is paid through tolls.
Construction speed-ups and the incentives of toll facility administrators to
operate efficiently are also difficult to predict and model. Nevertheless, some
general benefits can be calculated assuming that a toll facility takes the place
of a free facility that would otherwise be built with the current tax and fee
revenue stream, but 15 years into the future.
The TTA plans to construct 122 miles of toll roads for $2 billion, with
approximately 75 percent of the construction costs to be financed with borrowed
funds–bond issues and federal loans. That is, each mile of tollroad (four
or six-lane facilities with support facilities) will cost about $16 million.
If a toll facility 20 miles in length is constructed over two years, the
total cost of construction will be $320 million. (Inflation costs are not
considered.) It is assumed that 75 percent of construction, bond issuance costs,
and the first two years’ debt payments are financed through 30-year bonds
at 5.75 percent and are completely paid through toll revenues. Taking into
account the fact that the construction of the project will result in general
economic benefits, that 25 percent of the construction cost is financed by
sacrificing some free facilities that would have been built, and that a free
facility would be eventually completed in 15 years, the toll facility is still a
wise investment. This also accounts for the fact that toll revenues represent
monies that toll facility patrons could otherwise spend and circulate in the
economy.
The economic benefit brought about by the construction project itself is
outweighed by that economic activity sacrificed from free-road construction
projects not being pursued as well as the lost economic benefit that would have
accrued had road users not had to pay tolls in order to service the debt.
Despite this cost, the productivity effects of roads are such that savings to
businesses as well as non-monetary, but measurable, benefits to drivers in
general result in a net present value of building the toll facility of $411
million over 30 years. In economic terms, even if the net present value of such
a facility is $1, a positive result indicates that the project should be
undertaken.
While the $411 million net present value figure is very rough and may seem
high, it should be noted that experience in Harris County indicates that this is
a realistic assessment of the value of toll roads. The Harris County Toll Road
Authority spent $1.6 billion on toll projects entirely financed through 30-year
bonds at a time when interest rates were considerably higher than today. The
toll roads in Harris County have been financial successes to the point that
currently the Harris County Toll Road Authority runs a $45 million yearly
surplus that can, in turn, be used to construct additional toll
facilities.[50] Given the fact that drivers in
Harris County are willing to pay these tolls in addition to state and federal
gasoline taxes, federal tire taxes, state license and registration fees, as well
as other taxes to support roads, the obvious success of the Harris County Toll
Road Authority illustrates the immense economic value of toll facilities.
By leveraging TTA to the maximum level, major projects can be moved forward
on a much faster timeline. Not all projects that are needed can be supported 100
percent by tolls. However, tolls can accelerate development by reducing the
costs that must be paid out of traditional tax and fee revenue streams. As a
result, certain benefits accrue.
By building them sooner and faster, the overall construction cost is reduced.
For example, the projected cost for the combined State Highway 45/Loop 1 is $730
million. If, by developing the project as a toll road it is completed 5 years
sooner, a 5 percent construction cost inflation factor means that
construction costs would be reduced by over $200 million.
[1 ]Office of Highway Policy
Information, Federal Highway Administration, “Toll Facilities in the
United States: Bridges - Roads - Tunnels - Ferries,” February 1999,
Publication No. FHWA-PL-97-008
(http://www.fhwa.dot.gov/ohim/toll99.pdf). (Internet
document.)
[2] Office of Highway Policy
Information, Federal Highway Administration, “Toll Facilities in the
United States: Bridges - Roads - Tunnels - Ferries,” February 1999,
Publication No. FHWA-PL-97-008
(http://www.fhwa.dot.gov/ohim/toll99.pdf). (Internet
document.)
[3] North Texas Tollway
Authority, “About the NTTA,”
(http://www.ntta.dst.tx.us,html). (Internet document.)
[4] Harris County Toll Road
Authority, “HCTRA History,” (http://
www.co.harris.tx.us/tollroad/history.html).
(Internet document.)
[5] Texas Sunset Advisory
Commission, Texas Department of Transportation Staff Report,
pp. 138-140.
[6] Texas S.B. 370,
75th Leg. Reg. Sess., Chapter 361, Subchapter H on transfers and
Section 7.26 creating North Texas Tollway Authority, (1997).
[7] A turnpike project is a
toll highway constructed, maintained, or operated under Chapter 361 of the Texas
Transportation Code as a part of the state highway system. It also includes any
improvement, extension, or expansion to the highway.
[8] Texas S.B. 370,
75th Leg. Reg. Sess., Section 361.042 (1997).
[9] North Texas Tollway
Authority, "About the NTTA," and Harris County Toll Road Authority, “HCTRA
History,”
(http://www.ntta.dst.tx.us/body-about.html)
and (http://www.co.harris.tx.us/tollroad/history.html). (Internet
documents.)
[10] V.T.C.A., Transportation
Code §222.103.
[11] Testimony by David M.
Laney, Texas Transportation Commission, to the Texas Senate Committees on Border
Affairs and State Affairs, Laredo, Texas, January 11, 2000.
[12] V.T.C.A., Transportation
Code §361.031 and 032; and testimony by David Laney, Texas Transportation
Commission, to the Texas Senate Committees on Border Affairs and State Affairs,
Laredo, Texas, January 11, 2000.
[13] V.T.C.A., Transportation
Code §361.031(g).
[14] V.T.C.A., Transportation
Code §361.101 authorizes the authority to construct, maintain, repair, and
operate turnpike projects within the state as may be determined by the authority
subject to approval as to location by the commission. Transportation Code
§361.043 authorizes the authority to designate the location, and establish,
limit, and control such points of ingress and egress, for each project as may be
necessary and desirable in the judgment of the authority and the department to
ensure the proper operation and maintenance of the project.
[15] Interview with Robert B.
Daigh, director, Turnpike Planning and Development, Texas Turnpike Authority,
Austin, Texas, May 25, 2000.
[16] Interview with Phillip
Russell, director, Texas Turnpike Authority, Austin, Texas, January 26,
2000.
[17] Texas Turnpike Authority
organizational chart.
[18] V.T.C.A., Transportation
Code §361.182 (d).
[19] Interview with Phillip
Russell, director, Texas Turnpike Authority, Austin, Texas, January 26,
2000.
[20] Texas S.B. 370,
75th Leg. Reg. Sess. (1997).
[21] Texas Turnpike Authority
Board Meeting Minutes of March 9, 1999.
[22] Interview with Robert B.
Daigh, director, Turnpike Planning and Development, Texas Turnpike Authority,
Austin, Texas, May 25, 2000; and memorandum from Phillip E. Russell,
director, Texas Turnpike Authority, to Jefferson Grimes, manager, State
Legislative Affairs, Texas Department of Transportation, “Requested
Information for Business Practices Project,” June 6, 2000.
[23] Texas Turnpike Authority
Board Meeting Minutes of March 9, 1999.
[24] Testimony by David M.
Laney and Robert L Nichols, Texas Transportation Commission, before the Texas
House Committee on Transportation, Austin, Texas, February 2, 2000.
[25] V.T.C.A., Transportation
Code §361, subchapter 1, which provides for public and private
participation in turnpike projects, and §361.306 requires that rules be
adopted to encourage private participation and promote fairness and confidence
in the process by which private participants are chosen.
[26] T.A.C., Chapter 54,
Subchapter A.
[27] T.A.C., Title 43, Part
2, Chapter 54, Private Involvement in Texas Turnpike Authority
Projects.
[28] T.A.C., Title 43, Part
2, Chapter 54, Private Involvement in Texas Turnpike Authority
Projects.
[29] V.T.C.A., Texas
Transportation Code §361.302 Exclusive Development Agreements with Public
or Private Entities.
[30] Memorandum from Phillip
E. Russell, director, Texas Turnpike Authority, to Jefferson Grimes, manager,
State Legislative Affairs, Texas Department of Transportation, “Requested
Information for Business Practices Project,” June 6, 2000.
[31] T.A.C., Transportation,
Chapter 54, §54.4.
[32] T.A.C., Transportation,
Chapter 54, §54.5.
[33] T.A.C., Transportation,
Chapter 54, §54.5 (F) (ii).
[34] Memorandum from Phillip
E. Russell, director, Texas Turnpike Authority, to Jefferson Grimes, manager,
State Legislative Affairs, Texas Department of Transportation, “Requested
Information for Business Practices Project,” June 6, 2000.
[35] V.T.C.A., Transportation
Code §222.103.
[36] Texas Turnpike Authority
Board Meeting Minutes of February 15, 2000, Minute Order #108052.
[37] Texas Turnpike Authority
Board Meeting Minutes of February 15, 2000.
[38] Interview with Robert B.
Daigh, director, Turnpike Planning and Development, Texas Turnpike Authority,
Austin, Texas, May 25, 2000.
[39] Testimony by David M.
Laney, Texas Transportation Commission, to the Texas Senate Committees on Border
Affairs and State Affairs, Laredo, Texas, January 11, 2000.
[40] Texas Turnpike Authority
Board Meeting Minutes of February 15, 2000.
[41] Texas Turnpike Authority
Board Meeting Minutes of February 15, 2000. Minute orders
#10853-108055.
[42] Texas Turnpike Authority
Board Meeting Minutes of February 15, 2000, and "Influx of Design-Build Plans
Enter Texas Highway Future,” Engineering News Record, April 24,
2000, p. 16.
[43] An additional issue
paper entitled “Alternative Construction Selection Practices”
discusses design-build in detail.
[44] Minutes of the Senate
Committee on Intergovernmental Relations Design-Build Work Group, April 5,
2000 and April 19, 2000.
[45] United States Toll
Facilities, "ETTM On The Web,"
(http://www.ettm.com/).
(Internet document.)
[46] V.T.C.A., Transportation
Code §366.178, Failure or Refusal to Pay Toll: (f) In the prosecution of a
violation for nonpayment, proof that the vehicle passed through a toll
collection facility without payment of the proper toll together with proof that
the defendant was the registered owner or the driver of the vehicle when the
failure to pay occurred, establishes the nonpayment of the registered owner. The
proof may be by testimony of a peace officer or authority employee, video
surveillance, or any other reasonable evidence.
[47] V.T.C.A., Transportation
Code, Chapter 223, Subchapter F, and Chapter 361.
[48] Texas S.B. 1487,
76th Leg., Reg. Sess. (1999).
[49] M. Ishaq Nadiri and
Theofanis Mamuneas, “Contributions of Highway Capital to Output and
Productivity Growth in the U.S. Economy and Industries,” Federal Highway
Administration, August 1998, (http://www.
fhwa.dot.gov//////policy/gro98cvr.htm). (Internet document.) A summary is
also available at (http://www.fhwa.dot.gov//////policy/nadiri2.htm).
(Internet document.)
[50] Telephone Interview with
Wesley Frieze, president and CEO, W. P. Engineering and Consulting, Inc., former
executive director, Harris County Toll Road Authority, November 11,
2000.
|
