FOR IMMEDIATE RELEASE:

TSCRA asks hard questions about Trans-Texas Corridor

FORT WORTH, Texas, April 27, 2005―Members of Texas and Southwestern Cattle Raisers Association packed the Legislative and Tax Committee meeting during their recent convention to participate in a dialog concerning the controversial Trans-Texas Corridor and its impact on private property rights.
      The $175 billion TTC project was proposed by Gov. Rick Perry in 2002 to handle traffic generated by the tremendous population growth in the state. Enabling legislation was passed by the Legislature and signed by Gov. Perry in 2003.
      On Dec. 16, 2004, the Texas Transportation Commission selected a proposal for building the corridor from a private Spanish company. Cintra, Concesiones de Infraestructuras, de Transporte, S.A. proposes to invest $6 billion in a toll road between Dallas and San Antonio, roughly paralleling I-35, by 2010.
      Plans for the megahighway system include six lanes for cars, four lanes for trucks, six rail tracks, utilities, pipelines and state concessions on 4,000 miles of toll roads up to a quarter-mile across.
      Some estimates indicate that that the corridor will consume more than a half million acres of private property, with ranches and farmland split up or lost through eminent domain.
      TSCRA and its attorney Ed Small have received numerous calls of concern and consternation over plans for the TTC and provisions in the enabling legislation.
      “There is a lot of misinformation out there,” said Small. “On the other hand, we think there are several areas of legitimate and serious concern.”
      Ric Williamson, chairman of the Texas Transportation Commission, presented the State’s position to TSCRA members.
      “I am a great believer that truth, common sense and a civilized process of thinking through things ultimately permits people to convince themselves about what is right and what is wrong, or what’s good or what’s bad, or what might work or might not work,” Williamson began.
      “So rather than me try to convince you of my viewpoint, let me just give you a few facts to chew on and then open up the floor to questions, accusations or dialog.
      “At the end of it, if you’ve got the information and you give yourself some time to apply some common sense to the dilemma the State faces, I think you’ll come to the same conclusion that [Gov. Perry] came to a couple of years ago.
      “He decided that somebody had to have the courage to propose to do something to solve our transportation problems before the problems became unsolvable.”

      TSCRA Attorney Ed Small initiated the dialog process by asking Williamson three questions: why now, why the corridor, why a private party?

      TSCRA: Why now?
      Williamson: Now because there are at least 24 million people in this state. Fifty percent of us live within 50 miles of Interstate 35. Seventy-five percent of us directly depend upon Interstate 35 for freight and commerce. It’s the most important single transportation route in the state of Texas.
      We’ve grown from 14 million to 21 million from 1980 to the year 2000. That’s a 40 percent population increase. During that same timeframe, our vehicle count has grown 60 percent, which indicates that we have a large undocumented population in our state. During that same 20 years we have added exactly 3 percent more actual road capacity.
      Forget NAFTA! I-35 is the single most important trade corridor to the citizens of THIS state. It is packed to the gills. It is dangerous. It is harmful to the environment. It is damaging to our economy. And it is not getting better―it’s getting worse!

      TSCRA: Why a separate parallel corridor?
      Williamson: Because we do not have the MONEY to expand the existing footprint―it’s that simple.
      There are 15 industrial states in America. The other 35 are either agriculture/livestock or small transit states.
      Hawaii would be an example of a small transit state. South Dakota would be an example of an agriculture/livestock state. Industrial states are California, Texas, Louisiana, Florida, Georgia, Pennsylvania, Michigan, Illinois and others. It doesn’t do any good to compare us to Hawaii or South Dakota; the comparisons don’t make any sense.
      Of the 15 industrial states, we are the ONLY industrial state that chose to build its interstate highways through the middle of its five largest cities-Interstate 35, Interstate 45, Interstate 10, Interstate 20. That plays a real critical role in the decisions we have to make today.
      Speaking of the Interstate, where have you heard this before? It’s going to divide my land. It’s going to destroy the value of my land. It’s going to keep me from getting to town with my products. They won’t provide for my livestock being transferred. All the cities in the state will die.
      That’s what certain unnamed agricultural and livestock associations said about the Interstate system in the late ’60s and early ’70s.
      We are the only industrial state to have built access roads along our Interstates. That plays a role in the position we’re in right now. Those access roads have the effect of having fenced us in for further growth inside our existing footprints.
      When you’re on the Interstate, look over at the frontage road and the urban development up against it. You’ll get a sense of the challenge the State faces in expanding these existing footprints.
      We’re one of only two industrial states that are also donor states. A donor state is one in which its citizens pay more federal gas taxes into the pot in Washington than we get back from the formulas passed every six years. We get back 83.5 cents for every dollar we send.
      Florida is the other donor state, and Florida doesn’t have its Interstates through the middle of its urban areas and access roads on all of its Interstates.
      We’re the only donor state whose population is distributed in five urban centers 200 miles apart-Dallas/Fort Worth, Houston/Galveston/Beaumont, San Antonio/Austin, El Paso and the Lower Rio Grande Valley. We’re like five separate states. No other state has that problem.
      We’re the only industrial state that’s also a donor state whose state transportation taxes are diluted by 40 percent for something other than transportation.
      If we were all willing to pay a $1 gasoline tax, this wouldn’t be a problem. How do I know it needs to be a dollar? In 1985 the Legislature started transferring money from the State’s highway fund for non-transportation purposes. Since 1985 the Legislature’s transferred $8.9 billion.
      If each dollar transferred since 1985 had instead been spent on the contract that was then proposed for TxDOT, that $8.9 billion would have bought $11 billion in transportation assets-highways, bridges, interchanges, farm-to-market roads.
      We have a 12-year plan for every highway in the state of Texas. If the transfers from 1985 to 2000 had not occurred, every project in that 12-year plan right now would be built, including purchasing additional right-of-way on Interstate 35 15 years ago and expanding then while we still could. That’s the impact of the transfer.
      I told you earlier that we’re out of money and I just explained to you why we’re out of money. We’ll spend $5.2 billion total next year in our department. About $600 million of that is internals―administration, environmental, taxes, retirement, things of that nature. The rest goes out to other agencies and then goes to our preservation and construction business.
      Next year 60 percent of that remainder will be spent on maintaining the existing roads we have. Forty percent of the remaining residue will be spent on trying to expand the existing footprints where we can.

      TSCRA: Why a private party? Why take in a Spanish company?
      Williamson: We don’t have the money! Historically, the way we’ve built roads in this state is that we have depended on the collection of your gasoline taxes and your motor vehicle registration fees to create a pool of capital to get a project started. Then we execute a contract with a private sector company because we don’t build roads.
      We pay them out of that pool of capital a little bit over time as they build the roads―six, eight or 10 years. And we continue to collect taxes from everybody in the state to replenish the pool and get ready to do the next road.
      We call it pay as you go. Everybody in Texas throws their money into one pot, the Highway Department picks the next road on the list, and the pool pays for it.
      Well, that pot doesn’t have enough money to build roads any more. Inevitably we’re going to have to take in somebody from the private sector who’s willing to front the cash and get their money back as you and I decide to use that road or not and pay a toll for it.
      We knew those companies were out there because three years ago we sent employees of the Texas Department of Transportation across the world to look at what was happening in Australia, France, Spain, England, Germany and, I think, Japan. We wanted to figure out how other countries and other cultures have dealt with this problem.
      When they came back and compiled all this information, it became clear to us that there were people in the private sector―perhaps not in this country yet, but in the world―that would front the money to build roads and take the chance that, in time, the tolls would pay them back plus their profit.
      When the governor decided to convert his vision to reality, he had some concerns. He expressed them clearly to us and they were reflected in the legislation that began this journey.
      One concern was that if we were going to attract private sector folks to build these things, the law needed a broad permission approach, not a narrow one. The law permits us to contract with just about anybody to build this road and collect tolls. TSCRA, the Sierra Club, The University of Texas or Bank One could have submitted proposals.
      The notion that this legislation was created to benefit a select few people is just [nonsense]. The law is very clear-anybody could have proposed to build this road. We asked UT and Texas A&M to consider building this road out of the Permanent University Fund and make money by collecting the tolls. They weren’t interested.
      We asked the General Land Office if they would like the Permanent School Fund to build this road and collect all this money that a few in this audience have said we’ve given to the private sector. They weren’t interested.
      If this is such a great deal, why do you think we couldn’t find anyone to propose to build the road?
      The second thing Gov. Perry was concerned about was that the people displaced from their land who didn’t want to be would have a chance to do this differently.
      It’s never been done before in the United States of America, the notion that state government would tell the private property owner, if you don’t want your land bought, you can participate in the cash flow of the asset. If you want to reserve the right to negotiate what occurs on that corridor on your land, that’s fine with us.
      We’re not in the hotel business. We’re not in the water business. We’re in the business of trying to get this road built. We have no interest in anything else, no matter what you’ve been told.

      TSCRA: Why can’t we develop the I-69 corridor? If you take a ruler and put one end on Chicago and the other end on Mexico City, that line goes right through Corpus Christi. I think we ought to pursue with eagerness the development of the I-69 corridor, which will be the second north-south corridor in Texas.
      A huge amount of the traffic that’s causing the problem that everybody’s so concerned about in Austin, San Antonio and Waco would be relieved when that Interstate over there on a straight line to Mexico is brought up to speed.
      Williamson: I-69 was supposed to address exactly that. It was going to pull traffic off of I-35 and give some relief in the center part of the state.
      The problem is, the federal government doesn’t explain how highways are paid for well enough for the average citizen to understand it. I’m going to give you a short course.
      Every six years they estimate how much interest is going to be earned off the Federal Highway Trust Fund for the next six years. If, for example, the interest is estimated at $300 billion, they take that $300 billion and then go back and estimate population, vehicle miles and a couple of other things and apply it to each state.
      And they say, based on these easy-to-understand concepts, the state of Texas is going to get its piece of the $300 billion; the state of Pennsylvania is going to get its piece and so on. They cut the pie. That’s your six-year apportionment.
      If you’re a donor state like Texas, the percentage you receive ends up reducing what you pay in by 17.5 percent. So whatever we pay in over that six-year period, we’re only going to get at most 83.5 percent back.
      Then they decide what they’re going to designate as the next Interstate Highway.
      The federal government has not set aside $1 to construct Interstate 69. What they give us is the apportionment―our share of the $300 billion.
      And they say, if you want to quit spending money on Interstate 37 in Corpus Christi, on 59 in Sugar Land, on 620 and 820 and 410 and all the major loops in the state, and farm roads, then you can go build I-69.
      They’ve given us about $60 million to study I-69, but they took it out of our apportionment.
      I-69, as most of the citizens of this state envision it, is a tax-supported road, not a toll road. We’ve been able to do the work we’ve done in part of the state out of the cash flow that we have, but we have not had to do it to toll road standards.
      I-69 will never happen unless it’s a toll road; the federal government is never going to send us the money.

      TSCRA: Will you consider a change in the unprecedented powers the bill gives to the State in terms of private property rights?
      I don’t think many of the lawmakers read the 335-page bill that produced the issues that we’re struggling with here today. I finally read it; it’s an incredibly complex bill.
      In my view it gives the State unprecedented powers in a whole range of areas in terms of private property rights that they didn’ t need to do what Mr. Williamson so rightly says needs to be done in terms of getting new roads built.
      My concerns relate to condemnation―condemning private land for other private purposes, road use and other uses and easements that really aren’t necessary, prospective condemnation without alignments, liability for fence maintenance and so on.
      There’s a whole range of these issues that in my view if [the person] who wrote this bill had spent some time with us, we wouldn’t have all these problems.
      We should all be ashamed that we’re in the position we’re in now with the mechanical problems we have with the legislation. I’m not debating you at all about your need for toll roads and how you finance them. I just think the powers within that 335-page bill in terms of how they relate to the rights of property owners and other issues are unprecedented.
      Those are the issues that I think that had we had a chance to work on a session ago, we wouldn’t all be here upset about the bill today. We’re fighting about issues that could have been resolved beforehand. But I keep hearing the House and the governor will not consider a change.
      Williamson: I can’t speak for the House but I can speak for the governor. Of course we’ll consider a change. We weren’t sure how to word things in a way that we could accomplish our goal and protect everybody that needed protecting at the same time. Less than 10 pages of that 335-page bill is focused on private property. A good hundred pages is just financing debt.
      It was never anyone’s intention to confiscate private property for purposes other than transportation or utilities. It is JUST NOT TRUE that we can condemn outside of a route; it would be illegal. All of these routes have to have national environmental approval. You have to go through the environmental process and the route has to be selected before you buy your right-of-way.

      TSCRA: What’s the approximate acreage that’s going to be needed to complete the corridor?
      Williamson: I can’t give you the acres because it’s shrinking all the time. We made the governor aware that it would be difficult to accurately predict how wide the path would be. He said the worst thing we can do would be to tell them a little and it wind up being a lot.
      The best thing is to tell them a lot and be able to reduce it. That was a good way to generate this kind of hostility, but it’s better to start with the worst and then as it gets refined, narrow it down and it won’t be so bad.
      Centra made their proposal to us and we saw their footprint. And we’re talking to the LCRA about a large utility line, which by the way, if they don’t put it in the same corridor as the 35 corridor, it’s going to go straight across somebody else’s land. They’ll condemn and they’ll get the right to lay their lines.
      If you didn’t plan ahead and did a road here, a truck line here, a railroad expansion there, and a utility line and the inevitable water line when we figure out how to transport water in this state, all these lines would be crisscrossed within about 30 miles of each other on either side of a line from San Antonio up to Denison, Texas.
      They could have all been in one place and saved the totality of condemned acreage and loss of private property if we’d just all thought ahead.
      I can’t tell you the exact number of acres, but I can tell you it will not be 1,200 feet wide. We know now that was the worst-case scenario.

      TSCRA: Where will mitigation be?
      Williamson: It wouldn’t surprise me if we ended up mitigating a whole lot on the same property.
      And then we’ve got a couple of other angles we’re trying to work if we can talk the United States government into it. There’s some fallow land that we own title to that doesn’t fall under their restrictions that says you can’t use that for mitigation We’re negotiating with them now.

      TSCRA: Do you anticipate a 1:1 mitigation or 2:1?
      Williamson: It will be 2:1.

      TSCRA: Will large landowners have access to their property across the corridor?
      Williamson: Absolutely. The governor’s message was clear. In every printed document that we’ve released we’ve said we will guarantee access if we can’t reach a commercial transaction. If we can’t convince you to sell the other side, or find some land that we can swap you, it will be there.
      TSCRA: That’s not crystal clear in the law.
      Williamson: Then we need to figure out language that makes us all feel better, because we’re not opposed to that.

      TSCRA: What about development rights?
      Williamson: We’re not interested in golf courses or hotels. We’re interested in asphalt or concrete roads―whichever’s the cheapest―steel tracks, overhead cables, water lines, telephones. If you want to retain development rights on your property that you’ve sold to the state for the corridor, that’s fine with us.

      TSCRA: The law gives [the builders of the corridor], in this case the Spanish company, the right of condemnation to take property and build those things. 
      Williamson: That is a perfect example of a statement made by honorable and decent men that if unchallenged you would leave here thinking that.
      Let me be very plain. The law does not permit any private entity to condemn your land. That is not true! Only the State of Texas can condemn your land. And only the State of Texas can own your land. We can’t give condemnation to Bank One. It’s not in the law. I don’t know where anyone would start that nonsense.
      TSCRA: Exxon Oil Co. has the right to condemn; they get that from TXU. They get that from and through the State. Your concessionaire, because of the law that passed, will get the right to condemn through and by the State. We can argue that point.
      Whoever has the power of condemnation on this right-of-way, will certainly have the power to condemn to build the roadway. I believe the law says that they also have the right to condemn for ancillary activity, which is the gas stations and hotels.
      If you don’t agree with that then we certainly have a disagreement. I think you will agree that whoever has the power to condemn, has the power to condemn the ancillary private business-type activity.
      Williamson: I agree that under the Transportation Code, the Texas Department of Transportation has the right to condemn.
      TSCRA: Will you allow us to amend this bill so that the ancillary activity can be owned by the private sector landowner and not have that land condemned for that purpose?
      Williamson: In just about three seconds! But I don’t want anybody to think we intended that. We’ll get the language that makes sense.

      TSCRA: The law that passed subordinates a participation payment to a landowner who accepted a participation payment in lieu of a cash condemnation award.
      If landowners decide they’d rather participate in these activities of the toll road than receive a payment, I believe that payment, by law, is subordinate to bond holder’s. Will you agree that we can amend the bill to make ours a superior position since it was our land that was used to start the highway in the first place?
      Williamson: I don’t think that it was the commission’s intent to ask the Legislature to adopt a law that sold people’s land. I think the problem might be that if the State of Texas goes out for bond debt as opposed to Centra putting their equity in, it may be that the only way we can embark on that is if it’s subordinate.
      I think philosophically the State wouldn’t be opposed to that. I think it’s a matter of being sure that we’re not putting the State of Texas in an uncomfortable position that’s avoidable. For example, when I say avoidable, maybe there could be a penalty written into the transaction whereby we acquire the property that says, if this is subordinate to a mortgage issue and I’m not paid, then the penalty is a certain value.
      There’s got to be a way to work it out and still finance the deal. In Centra’s case, they don’t anticipate borrowing any money. They’re going to put in the equity to build the road, which by the way, we own.
      Centra does not own the land; they don’t own any piece of the right-of-way; they don’t even own the road. They build it and give us title to it and we concede back to them the ability to operate it for 50 years.
      As a taxpayer, you get a piece of that. Sometime in the 26th, 27th or 28th year, depending on how it goes, the State starts getting money out of it also.

      TSCRA: What about access? You have indicated that large tracts, if they’re cut in two, have access over and back. What if that tract isn’t cut in two or if it is cut in two, what if it isn’t large enough? Will you agree that the evidence of lost value can include the loss of access?
      Williamson: Yes. I don’t think we have any problem at all with including the loss of access. I think the dilemma was where you draw the line―a tract of more than 50 acres divided, a tract of more than 100, or more than a 1,000. Where do you have some sort of logical limit? The State doesn’t have that restriction now
      It’s a special kind of asset. We’re trying to be especially positive with the citizens of the state. The best of all worlds for us would be for 10,000 landowners to be 10,000 partners in TTC 35. It’s incumbent upon us to agree to do almost anything that people feel comfortable with that doesn’t impede the construction of the asset.
      TSCRA: The problem is, I’ve heard the excuse that you can’t do that because it impedes progress.
      Williamson: I think that’s the case for a normal, non-TTC state road. The whole reason for asking the Legislature for a special statute for this approach was because we have some flexibility in this approach that we wouldn’t have with a traditional state road.

      TSCRA: What about water rights in the thousand-foot right-of-way? Could you agree that the water rights would be severed and left with the landowner?
      Williamson: We can do that one in two seconds!

      TSCRA: Do they have to have quick take?
      Williamson: I didn’t think we put quick take in the corridor law, I think it’s in the RMA law. But, generally, we have always had a version of quick take for any right-of-way the State owns.
      TSCRA: I know you’ve got to have a little bit of quick take because you can’t be blocked by some small parcel. But it’s my impression in reading the bill that the scope is much broader than it needs to be.
      Williamson: I don’t think we care anything about our quick take authority being any more than what it was before the corridor bill was passed. If it got inadvertently expanded, that’s easy enough to correct.

      TSCRA: Can we work out conservation easements? We were hoping to use this as an opportunity to say, don’t go condemn some other tract of land to mitigate this tract of land; go work out a conservation easement with a private landowner, leave it in private hands and pay that private landowner.
      Williamson: I think you’ll see us being very receptive to that.

      TSCRA: What about reconveyance opportunities? If there is purchase under threat of condemnation, can we have a time limit and you reconvey that, if it’s not used?
      Williamson: That can probably be worked out. Or maybe a time limit, wherein you either lay the telephone lines you claim you’re going to, or you pay me additional.

      Williamson: As Texans, we have to be cognizant of the fact that almost 80 percent of our population lives in the triangle from Denison to Brownsville, Corpus Christi to Beaumont and back It is not going to get easier to do things; it’s going to get harder.
      The wise farmer, rancher or natural gas producer should take an opportunity to collectively step back and say, can we work together to reserve a corridor and then every time Exxon comes to me and says, I want to lay a line, I can say lay it over there.
      When LCRA wants to lay that big, high-tension line that I guarantee you is coming, point over there and say, oh by the way, I want to get a payment from you because I negotiated for that.
      When the Union Pacific finally breaks down and decides it’s going to start condemning for high-speed freight―which it will―we can all point and say go do it over there.
      That’s what the State collectively decided was in everyone’s best interest. None of us likes this, but the fact is, this growth is happening.

      TSCRA: What are you going to do about the railroad? When we were in Austin a few weeks ago, we learned that highways can go up to a 12 percent grade; railroads can only go to a 3 percent grade. Therefore, there’s no way that they’re going to be able to stay together and parallel in one corridor spot. The railroad is going to have to trek around to stay on that 3 percent grade. Are these other pipelines, electrical lines and other things that are going to be allowed in the corridor going to be able to stay parallel to the highway?
      Williamson: We’re probably not going to put the railroads into the corridor unless it can be built parallel. And our grade on the highways is not going to be 12 percent.
      This whole thing is predicated on the private sector paying most of the freight. Accordingly, the private sector is not going to cough up the money if it’s going to cost so much that they won’t see a return out of it.
      In other words, UP’s probably not going to agree to move their line if the moving of it is so expensive that they could never recover their initial capital investment.
      And we certainly don’t have the money to move it by ourselves, even with the $1.2 billion Centra has agreed to pay us for the first leg of the corridor. That’s only enough to get UP out of south San Antonio up to Austin; it’s not going to get them completely out of Texas.
      The honest answer to your question is, your facts are correct. We can get by on a 12 percent grade; they need three. But I’m not sure it’s necessary to build a 12 percent grade just because we can, particularly if Centra decides from a marketing perspective to ask for permission for larger trucks and faster speed.
      We think Centra is going to ask for maybe 90 miles per hour for cars, and you can’t have 12 percent grade at that speed. Why would they want 90 miles per hour? Because they believe people would be more willing to pay the toll if they could go 90 miles and hour and cut their travel time.
      Similarly they believe there may be a market for 100,000-pound axle-rate trucks. A 100,000-pound axle-rate truck traveling 80 miles per hour can’t stay on 12 percent grade.
      TSCRA: How are you going to keep the road up for that weight?
      Williamson: It will be up to Centra, the company that’s putting up the money, to build the road for that weight in the first place. That’s part of the beauty of the deal. It’s their money, so they’ve got to think through how they build it in a way that they can attract market share on the road.
      If you can figure out how to get one 100,000-pound axle-rate truck onto that toll road, that is two 60,000-pound axle-rate trucks that are not on Interstate 35. One of the greatest difficulties we’ve had in putting all this together was figuring out how to quantify so we can convince you of value that we can’t measure with dollars.
      The reality is that if we can design a system that will take two trucks off Interstate 35, that benefits those who use 35 because those trucks are out of the way.

      Williamson: Rather than criticizing Rick Perry for doing this, you should be saying, somebody had to do something. The question is, do we do it in a way that we can all live with and benefit from and it makes sense, or do we just let events happen?
      The easy way out is the guy who comes to you and tells you what you want to hear or sends you a letter saying he’d do it another way. The hard way is to say, here are my choices; none of them are good; this one seems the best, and move on.

TSCRA-18-2005