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Texas Department of Transportation Commission Meeting

Waco Convention Center
Bosque Theater
100 Washington Avenue
Waco, Texas

Thursday, April 29, 2004

COMMISSION MEMBERS:

CHAIRMAN RIC WILLIAMSON
JOHN W. JOHNSON
ROBERT L. NICHOLS
HOPE ANDRADE
TED HOUGHTON, JR.

STAFF:

MICHAEL W. BEHRENS, Executive Director
RICHARD MONROE, General Counsel
CHERYL M. WILLIAMS, Executive Assistant to the Deputy Executive Director
DEE HERNANDEZ, Minute Order Clerk

P R O C E E D I N G S

MR. WILLIAMSON: Good morning. It's 9:12 A.M., and I would like to call this meeting of the Texas Transportation Commission to order. I want to welcome all of you to our meeting today. It's a pleasure to have everyone in attendance, particularly those of you who have taken time to drive so far to be here with us.

This is the fourth time that the former Highway Department and now Transportation Commission has convened its monthly meeting in Waco. The first time was in October of 1958 ... I think that was about the time Kirby Pickett was born [laughter] ... in the midst of the interstate building project. The last time the Commission met in Waco was August of 1968. Let's hope that it's not another 36 years before we make it back to Waco.

I would like to note for the record that public notice of this meeting containing all of the items on the agenda was filed with the office of the Secretary of State at 2:01 P.M. on April the 20th, 2004. It is our tradition or our habit at the Commission to ask all of the Commissioners to offer remarks prior to beginning our business, and it is this Chairman's habit to ask for those remarks from the most recently appointed member first, working its way back to the Chair. And as Ms. Andrade has reminded me, Mr. Houghton by about two hours

is the most recently appointed Commissioner. We will ask Mr. Houghton to offer his remarks at this time. Ted.

MR. HOUGHTON: We have so many ways of calculating this thing, you know. We've gone Hope has gone first, I've gone first, age, beauty, looks, glamour, and if that were the case, then Robert Nichols would be going first. [Laughter.]

I want to thank the fine City of Waco and the District here for hosting this. This is a whole lot of fun. The first one I did out of town was my first meeting, which was in San Antonio, and equally as much fun to get out and see what's going on in the great state of Texas and get away from the center of power or the perceived center of power to out here where it really happens with you all.

And I know we have guests here from other parts than Waco, but it is -- it's refreshing to see what is happening in this great state, and I am privileged to see in my travel what is going on in Texas, especially in, as we call it, the boom era. We are a benefactor of other things going on in this country, the tremendous growth, and with that growth we have the opportunity and challenge to build systems to move services surrounding people, and that is our charge, and we hopefully can meet that challenge; but again thank you very, very much. I

look forward to a long relationship.

MR. WILLIAMSON: Mr. Houghton is from El Paso, and while we don't recognize -- or we don't represent regions of the state, we generally all take responsibility for advocating different regions of the state. Ted advocates for West Texas.

Ms. Andrade is next from San Antonio. Hope.

MS. ANDRADE: Thank you. And thank you for acknowledging that Ted Houghton is indeed the newest member. He always alludes to me as to speak first because I'm the youngest, and I say, "Look, Chairman, this is like twins. The Governor announced me first, and then he flew to El Paso and also announced him; so I was the first born and Ted was the second." But thank you all for hosting us. It's great to be in Waco instead of going through Waco.

Yesterday I arrived about a little after 3:00, and I was on the road for about 2-1/2 hours with 250 trucks, and I happen to know that there are some people here from Laredo, and welcome to those, but they reminded me that those trucks came from Laredo; so I now understand the truck problem that we have.

Thank you to the District. We had a wonderful evening last night, and it certainly confirmed that again we are so proud of our staff here. But this is a great

time for Texas, as I've been mentioning, and it's a great time for TxDOT. And thank you all for being interested in our transportation in Texas, and I look forward to doing business here. Thank you all so much.

MR. HOUGHTON: Thank you, Hope. Next in order would be John Johnson, our fifth Commission member. John is from Houston, tends to represent Houston and the coast area. John had unfortunately unexpected business at the very last moment and had to tend to that business. He extends his regrets again to the staff, to the locally elected officials, and particularly to the citizens of Waco. Everyone who has ever met John Johnson knows he's interested in all of Texas, and it's unlike him to miss a meeting. He would not have missed it had it not been important; so John sends his regrets.

My colleague and good friend in East Texas, the "East Texas Flash", Robert.

MR. NICHOLS: Thank you. It's good to be here in Waco. I will say that we've been given a very warm welcome. We had a very nice dinner last night with the employees of the District, and we had a nice reception yesterday afternoon with people from the community, and I will say I don't know how many people are running for Mayor in Waco, but there were at least three that were at the meeting, and I assure you we gave

them equal time.

When it comes to the argument about who's the youngest, I'm never included, but those of you who have never been to a Commission Meeting, we welcome you to our meeting. A lot of people think we're just going to be talking about highways today. There are a lot of issues for those of you who stay the entire meeting, and you'll see that we'll be touching international bridges, we'll be touching transit, we'll be touching railroads and a lot of range of things; so we appreciate your interest in being here, and drive safely after the meeting when we're done. Thank you.

MR. WILLIAMSON: Thank you, Robert. I'm Ric Williamson, and I'm from west of Fort Worth, and I generally try to speak for the northern half of the state, on issues what affect the northern half of the state.

Let's all take a moment and check our cell phones. This is embarrassing, but I really need for you to do it because there's nothing worse than for the phones to go off. Let's all check our phones and make sure they're on the silent mode, please. Take a moment. Don't assume they are. Check and be sure. I didn't do this for the District Meeting last night, and my phone embarrassingly went off during the meeting. Thank you

very much.

Our meetings are punctuated by breaks. We let people move in and out. We are an active Commission. We speak at great length with each other and with those in the audience who bring business to the Commission. We try mightily to recognize everyone of importance. Every Texan is important. There are some Texans who choose to serve publicly, and we receive the benefit of their time, and we try to recognize those Texans whenever they're here.

Having served with Mr. Phillips, I can't wait to start out with him. We have a House member. Representative Larry Phillips from the extreme north end of the state from my legislative district is with us today. It's always good to see you. You're a staunch advocate for transportation, a good partner, and we appreciate your being here.

We also have ... if I mispronounce the name, Bruce, you'll accept my apologize ahead of time ... Ron Parnell, Bruce Buchard. Is that right? Mark Watson, a friend of mine from the Temple area, and Russell Devorsky; is that correct? I won't mention our State staff unless you think it would be appropriate.

We have with the City of Waco Christopher Evilia. Close? Bill Falco, Barry Sullivan, Lynn

Passmore, of course Representative Phillips, Mary Gauer.

MS. GAUER: Gauer.

MR. WILLIAMSON: I'm sorry?

MS. GAUER: Gow'-er [phonetic].

MR. WILLIAMSON: "Gauer". Thank you. My longtime good buddy, Mark Tyrock, who I guess still serves the City, if you haven't left in the last month since I talked to you last. Mr. Jones, Bill Jones, and Shelly Terry. And from Grayson County, because they're fixing to become the, I guess, Third Army, Gene Shore and Tim McGraw, two good guys. Jon Burrows. Jon has been active in transportation matters from Bell County, County Judge. Richard Cortese. Dee Smith with Senator Averitt's office.

Senator Averitt was with us last night. I think he had some obligations today, but as is the case with Representative Phillips, you should know that Senator Averitt is one of the leaders of transportation policy in the state. He is a strong advocate for a modern transportation system. He's a great part of TxDOT. We would do anything within our power to help that guy out. He's just really, really good. We appreciate his contributions to transportation. Steve Alexander, Brady Diaz, and David Blackburn. David? And Judith Gutierrez. How are you?

MS. GUTIERREZ: I'm very well, sir.

MR. WILLIAMSON: Now, are you going to speak for Waco or for Webb County, or do you care?

MR. GUTIERREZ: Webb County.

MR. WILLIAMSON: Webb County. Okay.

MS. GUTIERREZ: Both, I guess.

MR. WILLIAMSON: Thank you for taking the time to be at our meeting.

I need to take a moment to share with you a story about a gentleman by the name of Robert J. Potts. Adjacent to our Waco District Office just north of here is the Potts Interchange. Now, as it turns out, Mr. Potts was born in my residential town of Weatherford, was born in 1877, and he's the son of Charles Brook and Elizabeth Matilda Potts. He attended that school, the other school in Brazos County ... What's the name of that, Kirby?

MR. BEHRENS: Texas A&M.

MR. WILLIAMSON: ... Texas A&M until 1907. You know, I was thinking that after he retired the number of Longhorns dropped by about 16 percent.

MR. BEHRENS: What a beautiful day, I'm telling you. [Laughter.]

MR. WILLIAMSON: He graduated from Texas A&M in 1907. He established the Highway Security

Department at Texas A&M in 1910, and he's either the first or the second Professor of Highway Engineering in the United States. There's some disagreement about who was first or who was second. And most importantly, he's responsible for writing the law that established the Texas Highway Department in 1917.

He was one of the early founders of Texas Good Roads Association and the Associated General Contractors of America, and he served as a member of the Highway Commission from 1949 to 1955. Upon his retirement, he was honored by having the Potts Interchange named for him. And I might add that early on Mr. Potts wrote the specification for highway engineers that we all read with amusement from time to time. The specification was that stumps of less than six inches are allowed to remain in the roadway. And I guess, Mike, that spec still exists, which accounts for all of the potholes. [Laughter.]

Okay. Anyway, Potts died in 1962 and was buried in the Oakwood Cemetery in Waco. It's appropriate that we return to the final resting place of truly one of the founding fathers of the Texas Transportation Commission. He was a man of national significance who deserves to be recognized today.

Before we begin the business portion of our meeting, I need to remind each of you that if you wish to

address the Commission, you need to fill a card out. The cards are in the lobby. We have two colors of cards. If you want to comment on a specific agenda item, you need to fill out the yellow card form, please, and identify the agenda item that you wish to speak upon. If you don't want to speak on a specific agenda item but you want to offer comments during our open comment section at the end of the meeting, then I need you to fill out a blue card. Regardless of the color of the card, we would ask that you try to hold your remarks to three minutes.

McLennan County Judge Jim Lewis ... Judge, where are you? I want to thank you for the hospitality. I've already recognized Bell County Judge Jon Burrows, who again has been a longtime activist on transportation matters in Central Texas and is well received by the Department. I've already tried to recognize as many of the other County Judges as I could. If I've left any out, I want to be sure I've covered all of my bases. Hill County, Kenneth Davis; from Limestone County, Eleanor Holmes; from Falls County, Thomas Sehon. Is that the correct pronunciation, "Sehon?" Coryell County, John Hall; from Hamilton County, Fred Cox; and Cole Word from Bosque County. I recognize each of you and thank you for your attendance.

To the Mayor of Waco, Linda Ethridge, who

couldn't be with us today ... I understand she's in DC raising money for the fair city ... we appreciate the hospitality. And if we've left anyone out, I apologize. I tried to do the best I can to cover them, but like all, I'm not perfect; so I apologize to you.

I want to extend a special thank you to Larry, the Waco City Manager, Larry Groth. There you are. It was very nice last night at the reception you put together, and we really appreciate it. We had a wonderful time here.

Kirby, do you want to stand up and take a bow, buddy?

KIRBY PICKETT: No.

MR. WILLIAMSON: The Commission will take the opportunity to especially recognize your presence. You know, we're a State agency. We have 14,150 or thereabouts employees and multiple thousands of retirees and multiple more thousands who at one time worked for the Texas Department of Transportation, and we consider every one an extended family.

Kirby was with the Department for many years. His roots are in Waco, and he returned to Waco when he retired, but we never miss a chance to say "hello" and "thank you" every time one of our longtimers shows up; so Kirby, hello. Thank you. I didn't have anything to do

with that joke last night. Sorry. [Laughter.]

Let's see. We have some District Engineers: Matt Dilihaney, Lynn Passmore, Mark Thomas, Maribel Chavez, my District Engineer, Rick Clark. Thank you, guys, for showing up. Where's Terry? Terry right in the back. We've got a majority of District Engineers, I think. We could have a DE Meeting, Mike.

And then finally I want to take the opportunity to thank the leadership of Waco for at least studying the prospect of holding new highway facilities and considering additional lanes added to existing roadways. We travel around the state, all five of us, and we try to be consistent in our message, whether it's El Paso or Fort Worth or Waco or Dallas or Houston or San Antonio or Austin.

If we in the state elected House and Senate members who ran on the campaign of "I want to raise your taxes" and if we sent those types of members to the House and Senate, we would no doubt be raising gas taxes, but the reality is when I served in the legislature I never campaigned on that platform, and I don't know of one successful elected official who has campaigned on the platform of "Elect me, and I will raise your taxes."

But the dilemma, as Mr. Phillips or as Mr. Averitt knows, is that someone's got to pay for the

infrastructure that is necessary to serve the tremendous growth of a growing state; and so our choices have become the slow road, which is the tax road that will be built 30 years from now if you're willing to wait, the slow road; or the toll road, which is the road that can be built real fast if you're willing to pay for it; or the no road, which is the road that will never be built because there's just not the money to build it.

The Governor of this state and the legislature of this state have attempted to give us the tools to let you and your city and your county and your region make a decision about which road you want. If you want the slow road, we'll get here eventually. You pay taxes every day. We don't waste very much pennies of it on things that don't matter. Almost all of it goes to roads, public transit, environmental concerns. We will eventually get to your road. It may be 30 years, maybe 35 years, but we will get to your road, and you have that option.

Or you have the option of helping us build a toll road, and we'll get to it real fast, faster than you can imagine, faster than the environmental can be done. Or you can make the decision that many communities have made, and that's no road, don't want any more roads, don't improve my roads, don't expand the lanes, leave me

alone. There are communities in Texas that prefer that road.

The Governor and the legislature have given us all of the tools to deliver those three: the slow road, toll road, or no road. All we ask is that you communicate to us honestly about what it is you really want, and then we'll help you get there. And if it's the slow road, we're okay with that, Robert. We don't mind waiting. We've got plenty of places to go build. But if it's the toll road, we've got the tools, and we're ready to rock and roll, and we appreciate the communities that are at least willing to consider it.

Okay. We'll start the business portion. I need to approve -- we need to approve the minutes of our last meeting. Do I have a motion?

MS. ANDRADE: So moved.

MR. NICHOLS: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor say "aye". All opposed, "no". The minutes are approved.

Yes, Mike? He tells me I can turn the meeting over to you. I've lost my gavel. Most of you in the room know Mr. Skopik. I probably don't need to say it, but I will. We have a bunch of good District Engineers, but amongst the Districts Engineers we have, we have some

really outstanding District Engineers, and you are and we are blessed with one of the outstanding District Engineers. Richard, the meeting's yours.

MR. SKOPIK: Thank you, sir. Good morning. Chairman Williamson, Mr. Houghton, Ms. Andrade, Mr. Nichols and Mr. Behrens, we appreciate you all being here this morning and giving us this opportunity to host the meeting. And for the record, I am Richard Skopik, District Engineer for the Waco District of TxDOT and the Waco District employees, the City of Waco and really Central Texans throughout our eight-county area, many of which are here today, as Mr. Williamson so ably recognized and others that are following in their wings to represent all Central Texas today. We welcome you and appreciate the opportunity once again to host your meeting today.

My report to you this morning will be a joint effort of the City of Waco and the District's two (inaudible) planning organizations, the Waco MPO and the Killeen/Temple MPO. I begin with a few statistics from our District. You know, last time I couldn't even recall a few of them; so I did go back and check for a matter of record that what I recall is when I stepped on foot of this District in 1998, and that number has changed a bit. But no, we're not going to go through those figures, but

I did want to make just a comment about one of them.

It's interesting to note that -- and this may be somewhat typical of urban areas, some of our size across the state, but over the past five years in terms of daily vehicle mileage traveled each year, that number is increasing at about three-and-a-half percent per year in our district, while population growth and number of registered vehicles is near the two percent range, maybe slightly less, per year, this meaning we're either driving more in this area or there are more people traveling through our district or maybe a little bit of both.

When studying these statistics, you can easily see we're like many other districts in the state with steady increases in traffic growth. As such, our district has to change our thinking in the way we do our job in order to  better address the challenges we face and to address this growth. We think we're up to the challenge.

As a result of steady growth through various funding programs that the Commission has approved, our construction letting in this district and our construction work underway has been steadily increasing each year since 1998. Even though some of the increases can be attributed to a few large projects on I-35, the

District has really only mildly experienced the impact of I-35's construction as compared to what is expected over the next five to 10 years.

The US-190 corridor between I-35 and Copperas Cove, as well as the I-35 corridor throughout the district, are both experiencing more frequent periods of heavy congestion. With population well exceeding 200,000 within each of our two major urban areas, better coordinated planning is a must in order to succeed in addressing mobility issues. The value of thinking regionally and developing cooperative partnerships among local entities is becoming evident to the leaders in these two areas.

Lastly, Fort Hood continues to dramatically affect our transportation facilities through their activities. Recent and current military deployment efforts as well as new security measures entering and leaving the post create a whole new set of transportation challenges to ease congestion on US-190. The future is unclear as to what to expect in the near future with the new round of base realignments forthcoming. My sense is Fort Hood stands a significant chance to grow even more.

A quick look at our letting volume since 1997 indicates how dramatically we have stepped up to the challenge to produce the design work, acquiring

right-of-way and adjusting utilities from about 30 million dollars per year to 150 million dollars a year. We expect to see 200 million over the next two to three years by being in a position to accelerate projects on State Highway 6, the road to the "promised land", and I-35 with bonds and the District Mobility Fund.

Correspondingly, construction volumes are following the same pattern, as you might expect. With an increase in volume by over four times, the challenge lies in realigning our resources coupled with implementing new ways to inspect the work in order to ensure proper quality.

Similar to Department goals, the District's concerns are centered on three things: the safety of the system, preserving our investment, and addressing mobility. It's pretty common for the Department, and I would say that's probably very similar, if not identical, to most districts.

While safety and preservation must continue to be at the top of our list, mobility seems to get the most attention, particularly from the public. The focus of our presentation this morning will target mobility in our two urban areas, taking a look at the accomplishments and future challenges we face in those two growing areas, and then later I will provide you a quick look at the rural

area mobility activities we have going on.

First let's look at the Waco MPO area, which now encompasses all of McLennan County. The map indicates in blue the mobility improvements needed on the major urban corridors over the next 20 to 25-year period. Through traditional funding methods under Category 3, for example, only a portion of the real needs can be met. In addition, the earliest most of the projects can be funded will be the year 2015.

The MPO has prioritized these projects, but yet there is almost a 200-million-dollar shortfall, meaning that projects in red cannot be addressed until about 2025 if traditional funding methods are used. That's not saying we're going to do all of it in 2025. That's the earliest we could begin considering some of those in red.

MR. HOUGHTON: Would that fall under the category of the "slow road"?

MR. SKOPIK: Yes, sir, absolutely.

In so doing, the Waco MPO is actually considering the TxDOT Policy Board Subcommittee recommendations to at least take a look at the viability of the toll. This slide indicates the corridors where planning is underway by TxDOT on existing or controlled access facilities that we must look at for possible tolling.

With more details regarding the Waco area mobility issues, I'll turn the podium over to Mr. Larry Groth, the City Manager, who will provide the local perspective on mobility. Larry.

MR. GROTH: Commissioners, welcome again. We do consider it a great honor with you-all being here and giving us an opportunity to host this meeting.

Again I would like to, as just a matter of personal pride, thank you so much for the recognition of Jack Jeffries this morning with the Rohan Award as a former City Manager. I really appreciate that recognition for him.

We do have -- You've recognized two people, but I would like to recognize again Russell Devorsky as the Chair of our MPO Policy Board and Chris Evilia as our MPO Director. They're here with us today.

We know that the needs are tremendous that you-all face each day. We also understand the resource issue, and we are committed to doing whatever it takes, using whatever funding mechanisms that are available to us, to get the needs met in our county, and we do appreciate the opportunity to look at different ways of financing.

We've come before you many times in delegation asking for this or that, and what we'd like to do today,

we have our video that we would like to show because it does it a whole lot better than me talking, and it has some nice pictures; so we're going to go through this real quickly.

And this is really more of a "thank you" than asking for things this morning. We want to recognize the fact that we have a wonderful relationship that we've developed with TxDOT locally and with the State over the years, and we're accomplishing great things together. With that in mind, we know that we can tackle the future with the same kind of partnership, and we appreciate what you so; so if we can show the video and encourage you to look through there and pick out those points of cooperation particularly, Commissioners, not just growth, as you mentioned, you'll see all types of transportation methods. Thank you.

[Playing Videotape.]

NARRATOR: "The City of Waco and Texas Department of Transportation have a long history of working together to meet the mobility needs of Central Texas. From the construction of a Federal aided highway system in the 1920s to the development of Interstate 35 to our modern transportation challenges, the City and TxDOT have been effective partners to ensure that people and goods move efficiently and safely through our region.

Both the City of Waco and TxDOT are active participants within the Waco Metropolitan Planning Organization. Through this participation, the MPO has identified the long-term mobility needs of both Waco and McLennan County. With close cooperation between the two agencies, numerous important regional projects have recently been completed or are now under construction.

South Loop 340 is being widened to a four-lane freeway. In addition to being an alternative to I-35 around downtown Waco, Loop 340 carries traffic following State Highway 6 to Bryan-College Station and Houston. With significant traffic increases forecasted, the Waco MPO identified these improvements as the second most important regional priority.

FM 1637, also known as China Spring Road, is the only major thoroughfare through one of the fastest growing sections of Waco. With existing traffic well in excess of the designed capacity, the City has worked extensively with the Waco District to clear any hurdles in widening the facility. Phase 1 was completed last year, and Phase 2 is scheduled for construction in the near future.

Spur 298, also known as Franklin Avenue, is a maze of main lanes and frontage roads originally designed in the 1950s for industrial development. Although

vestiges of this development still exist, the area has transitioned into a fast-paced commercial area requiring a different set of roadway designs. Waco and TxDOT have worked with adjacent property owners to design a facility that meets the area's access needs while improving the capacity of the facility. The first phase of construction began earlier this year, with additional phases planned for the next several years.

In 1999 the Transportation Commission identified State Highway 6 and State Highway 31 corridors as high priorities for widening to a divided four-lane facility. Both corridors are on a fast track on work completed. Work on State Highway 6 is part of the Texas Truck System which connects Waco to Houston has either been completed or is under construction. Improvements to State Highway 31, also part of the Texas Truck System connecting Waco to Tyler, should be underway within the next several years.

Another project highlighting the cooperation between TxDOT and our local governments is the extension of FM 2837. The project, which is nearing completion, extends a dead-end Farm to Market Road to provide an important connection between Interstate 35 and the westernmost portion of Waco. This connection is part of a long-term vision of a western loop around Waco

connecting several high-growth areas to the south, west and north of Waco. This project could not have occurred without significant contributions of finances and effort on the part of McLennan County.

In 1999 Waco Transit opened the new Intermodal Transfer Center in downtown Waco. This facility serves as a transfer point of Waco Transit (inaudible) and provides inner city bus connections via Greyhound to all parts of Texas. Next-door, the new maintenance and administration facility for Waco Transit is under construction. This state-of-the-art facility will permit Waco Transit to significantly expand operations during the next decade as well as permit Waco Transit to convert to ultra low sulphur diesel fuel. For each facility toll credits approved by the Transportation Commission were used to match the Federal earmarks provided for construction.

Waco has also been awarded funds for several projects under the Statewide Enhancement Program. Three separate phases of the Brazos River were funded through this program which when complete will provide a continuous pedestrian facility between Cameron Park and Baylor University. One phase was completed in 1999, and the second phase is currently under construction. Phase 3 currently under development will extend the Riverwalk

through the Baylor campus, thus connecting the university with downtown Waco.

The City also received funds through the enhancement program to refurbish the historic Waco Suspension Bridge. Built in 1873, the bridge was critical to the development of Waco as a regional center of commerce and trade. This facility, Waco's first major transportation project, was developed and financed as a toll bridge.

Waco also received funds through the Safe Routes to Schools program to provide pedestrian facilities in the vicinity of several schools in the economically disadvantaged section of Waco. The approximately 300,000-dollar grant should significantly improve conditions for children walking to school in an area where one in four families have no access to an automobile.

The partnership between the City of Waco and TxDOT has successfully addressed many of the transportation challenges facing this region; however, many future challenges await Central Texas and will require considerable ingenuity, innovation and cooperation. Perhaps the most challenging and important need is addressing the deficiencies of the Interstate 35 corridor.

Through the Baylor campus, thus connecting the university with downtown Waco.

The City also received funds through the enhancement program to refurbish the historic Waco Suspension Bridge. Built in 1873, the bridge was critical to the development of Waco as a regional center of commerce and trade. This facility, Waco's first major transportation project, was developed and financed as a toll bridge.

Waco also received funds through the Safe Routes to Schools program to provide pedestrian facilities in the vicinity of several schools in the economically disadvantaged section of Waco. The approximately 300,000-dollar grant should significantly improve conditions for children walking to school in an area where one in four families have no access to an automobile.

The partnership between the City of Waco and TxDOT has successfully addressed many of the transportation challenges facing this region; however, many future challenges await Central Texas and will require considerable ingenuity, innovation and cooperation. Perhaps the most challenging and important need is addressing the deficiencies of the Interstate 35 corridor.

Through adoption of the Statewide Mobility Plan, the Transportation Commission has supported improvements to widen the corridor to six continuous main lanes and continuous one-way frontage roads. These improvements, however, do not address the long-term needs of the corridor, such as the possibility of tolling the additional capacity, the construction of new facilities, and the incorporation of other transportation modes. The City of Waco has been working closely with the Waco District to identify the best methods to address these needs.

Another important regional challenge that remains unfunded is the Business Highway 6 concept through downtown Waco. The only missing lane in this concept is the proposed Loop 574. Loop 574 would directly connect downtown Waco to State Highway 6 as it enters Waco from Houston and Bryan-College Station. With environmental studies complete, an approved schematic design and a substantial portion of the right-of-way donated, utility relocation and construction are the only things remaining to complete this vital link.

A critical part of the Business Highway 6 concept is improving the existing interchange of State Highway 6 and Loop 340. As improvements continue along the remainder of Highway 6 and Loop 340, traffic is

expected to increase significantly over the next 20 years. The current interstate will need to accommodate additional traffic.

The Waco MPO and TxDOT have identified a three-phase project that will define the necessary capacity to handle the projected traffic. Phase 1, however, is not scheduled until the year 2015 and Phase 2 not until 2025. Phase 3 remains unfunded. The City and the MPO will be working with TxDOT to identify innovative methods to accelerate development of the third most important regional priority within metropolitan Waco.

Within the next several years Waco Transit will be looking to replace their fixed route bus fleet. The current fleet is 12 years old and has reached the end of its useful life. Although Federal funds are anticipated to cover much of the cost, the City can't afford to cover the entire (inaudible) mass at once. They anticipate requesting a toll bridge to help meet some of its mass requirements.

Although much progress has occurred in developing the Brazos Riverwalk, much of it through the Transportation Enhancement Program, the sections completed or under development only represent about one-third of the ultimate corridor. McLennan Community College, the City's softball, tennis and aquatic

facilities, the Heart of Texas Soccer Complex, Cameron Park East, and the Lake Waco Dam Hike and Bike Trail presently have no pedestrian connection. To provide these important connections, Waco will be pursuing additional enhancement funds to further extend the Brazos Riverwalk.

The population in Texas is anticipated to double within the next 30 years. With much of this growth occurring in the Dallas-San Antonio corridor, Waco is in the middle of one of the most substantial transportation challenges facing our country. With the successful partnership developed between the City of Waco, TxDOT and the Waco MPO, we're confident we can meet many of these challenges confronting our nation."

[End of Video Presentation.]

MR. GROTH: Okay. Continuing with our look at urban mobility issues, I turn my focus on the Killeen/Temple MPO area. The map before you indicates the mobility improvements needed on the major urban corridors over the next 20 to 25-year period.

You can see that the entire portion of the US-190 corridor within the MPO has identified expansion needs. This four-lane freeway has similar traffic problems to I-35 but without the high-volume truck traffic. Much like the Waco area, you can see the areas

of red along these identifying corridors that cannot be funded until after 2025 if traditional funding methods are used. These areas amount to a shortfall of over -- well over 100 million dollars.

The next slide indicates those corridors the District must look at in terms of toll fees building. Planning work is already ongoing on portions of these access facilities. In terms of tolling, Copperas Cove is working with the District, as well as Coryell and Lampasas County officials, to support exploring toll alternatives as a possible way to advance the US-190 relief route.

A conceptual toll analysis was completed last fall indicating that tolls would at least pay for operations and maintenance. An intermediate toll analysis is being performed at the present time. Likewise, Temple approved TxDOT moving forward with the conceptual toll analysis for Northwest Loop 363. Local officials plan to assemble the work route, to review the details of the study with TxDOT, and become better informed on the formation of a Regional Mobility Authority, once again taking a look at what the alternatives may be in terms of the schedule.

The Loop study is analyzing various scenarios, including the effects on the route with and without

improvements to I-35 and with and without the Trans-Texas Corridor in place. This particular study is quite a bit more complex than some because of the various alternatives and "what if's", as it really will serve as a parallel to I-35 at least in that portion of Temple, the Temple section of I-35.

With more details regarding the Killeen/Temple area mobility issues, here is Mary Gauer, Mayor of Harker Heights, who also serves as the Chair of the Killeen/Temple MPO Policy Board. Mary.

MS. GAUER: Welcome to Central Texas. Thanks to each of you for allowing the Killeen/Temple local transportation study, locally known as K-TUTS, to come before you with our transportation project. My name, as he stated, is Mary Gauer, and I am the Mayor of the City of Harker Heights and Chair of the K-TUTS Quality Board. And I've had the pleasure of meeting a few of you in Austin and, sir, when you came to visit us at Fort Hood, our crown jewel.

Several of our region's elected officials and appointed officials are also present today. In addition to those who were introduced, how about the rest of you stand and be recognized, or at least wave your hands, please, everyone from K-TUTS. They're very shy.

K-TUTS covers an area of 543 square miles in

Bell, Coryell and Lampasas Counties. We encompass 11 cities, the five largest being Killeen, Temple, Copperas Cove, Harker Heights and Belton. Our region is the fifth largest in the state, with a population of 277,000, more or less. And by the way, that's a 33-percent increase since 1998 when I was first elected Mayor.

As we continue to grow, our region works cohesively to solve transportation issues throughout our entire region. TxDOT and the Transportation Commission have been staunch supporters and advisors as we move towards our regional goals. We appreciate your cooperation and your confidence in our ability to plan our mutual transportation needs in line with the needs and resources of the state and the needs of our nation.

It is my privilege to invite Jim Reed, our K-TUTS MPO Director, to give you an overview of our projects and goals. And please feel free to stop us at any time as we move through our presentation. Our MPO projects are vital to us, to Texas, and to our nation. Here's Jim.

MR. REED: Commissioners, we're honored to have you in Central Texas, and we welcome you to what we think is one of the largest growth areas in the state, one of the areas that is facing transportation issues not unlike the rest of the state.

We have some unique projects that we'd like to highlight for you very briefly, and we'll be glad to answer any of your questions on any of our projects and the partnership that we honor and have with TxDOT at this time.

The first project we'd like to talk to you about a little bit is Loop 363. In keeping with some of the challenges that the Commissioner talked about as far as leveraging private and public dollars together, Loop 363 is a project that runs through the City of Temple. It is an alternate to US-190, and is currently working on an expansion project with some toll liability on the northwest corridor and is also a very strong partnership on a frontage road realignment and realigning all of those frontage roads from one-way carrying and one-way work throughout the city.

That Loop 363 project, the toll liability study is well underway and is a very complicated study, and we appreciate the partnership that we have with the Commission on working through that.

A second project we'd like to highlight is the State Highway 36 bridge project. It currently is approximately halfway complete. We anticipate completion of that bridge project within the next 11 months. That bridge -- the existing bridge has been demolished and a

new bridge going up in its place. This is a northern gateway to the K-TUTS area and State Highway 36 coming in from our northern counties and coming down in the urbanized corridor.

This has been a very unique project for us in that it's the major bridge over Lake Belton in the north. The existing bridge had no shoulders and was only two lanes and when completed will have a modern design -- up to modern design standard bridge project with four complete lanes and all of the proper shouldering. This has been a very interesting project to work for -- to work through for the last several years with TxDOT.

The State Highway 195 project is vital to the growth of Central Texas as a four-phase project currently in its first phase of construction to widen that two-lane facility that goes from our southern border of the Killeen and Fort Hood area down towards Georgetown. The project was funded by a legislative set-aside back in 1995, and nine years later I would say, Commissioners, this is definitely a "slow road" project, but we are grateful for the progress that has been made. We are now 30 percent complete on that project, and it is very vital to the next two projects that link to it that I would draw your attention to.

The State Highway 195 comes into the southern

part of K-TUTS, again linking it to I-35 back in Georgetown. It is used heavily by Fort Hood soldiers, used heavily by the Fort Hood community and Killeen community as they enter into the urbanized area from the south. It also ties to the State Highway 201 project, which we're very proud that the Commission chose to fund to support the Killeen -- the new Killeen Regional Airport that is a joint use airport project with Fort Hood that I know many of you have heard reports from.

We're proud to say that this project began in 2002, and I would say this is definitely the "fast road" project. The City did a significant amount of the design work and right-of-way work in partnership with TxDOT, and as a result, that project that was started in 2002 is ready to drive on today; and so we appreciate the commitment of the Commission to making that project a reality. It was a unique partnership between the City, TxDOT and Fort Hood, and it serves our new Regional Airport that I'd like to highlight next for you.

This airport project has been called the most significant economic development project in Central Texas since Fort Hood came to this area. The airport will open in the third quarter of this year. It will be fully capable of landing regional jet service and is a tremendous economic development engine for Central Texas.

It is projected that 824 new jobs and over 2.8 billion dollars of impact will be realized from this project within the next 10 years, and TxDOT's partnership and the commitment that you as the Commission made to the roads servicing this project are vitally important to the success of this project, and we thank you again.

Finally, we'd like to talk a little bit about the same project that we seem to come to many times, and that's I-35. I-35 is vitally important to Waco, it's vitally important to K-TUTS, but we also believe it's also vitally important to not only Central Texas but Texas and the nation.

We would suggest to you that what is interesting about this project is that it can, in essence, hold hostage every other I-35 dollar that is spent in this nation. If we have a congestion issue, on our two-lane section if we have one of the many accidents that we've experienced, we see delays that are significant that impact the entire corridor.

Billions of dollars can be spent in Dallas, can be spent in Austin, but if the weakest link is in Central Texas, then those dollars are held hostage when those roadways shut down and mobility is impacted; so we encourage your continued growth on I-35 and our continued support of alternates to I-35, and that brings us to the

Trans-Texas Corridor.

We just wanted to thank you on behalf of the residents of Temple, Texas for taking what we think is a very bold initiative and partnership with the Governor. We're partnering with TxDOT on the connection from this corridor back to the urban centers that it will service. We believe this model of leveraging public and private funding has been embraced by every member within the K-TUTS body. As a result, we're investigating toll projects in three projects of significance in our region, and we are currently investigating the formation of an RMA in hopes of one day coming before you for recognition and approval of that RMA concept.

Commissioners, you once told us at a delegation presentation to you that TxDOT is open for business. We're here today to tell you that we embrace that concept and are here to tell you that Central Texas is open for business, as well. We are leveraging our private funding, we are leveraging public funding from our cities and counties with TxDOT dollars to move on that fast road that you spoke of. And we appreciate the opportunity to appear before you and to thank you for the partnership that we so much value in Central Texas.

With that, I'll turn that back over to Mayor Gauer or to Richard Skopik, whoever is appropriate.

Thank you for being in Central Texas.

MR. WILLIAMSON: Thank you.

MR. SKOPIK: We're going to move for just a moment to our district's rural corridor, and I think both the Waco MPO and the Killeen/Temple MPO touched on all three of them that I was going to touch on. And I knew that, but one thing I will say, and as Ken brings up the PowerPoint, both State Highway 31 which runs from Waco to Corsicana and our portion is about half that length between Waco and Corsicana just north of Hubbard, and we touch Bill Hale's District at the Navarro-Hill County line, and as Waco mentioned, we have much planning work underway.

We have not gotten any segments of our portion, which is about 20 miles -- we do not have any of it under construction, but it is all in sync with a grand plan of bringing in still under the time frames, Commissioner Nichols, that we committed to several years ago.

One of the things that is not a matter of excuses, but we really have had some ... what I'm going to say -- or we have met more than our expected share of challenges trying to work out the various alternatives that we could reach some sort of consensus on to figure out how to get through or around or whatever it would take to get -- make a connection through Hubbard, and I

think we have found that; and so I feel confident we are moving forward.

In fact, we are going to move forward with a pretty substantially large project of road construction. We have not accelerated it yet, but we are contemplating that, which will get us all the way almost to Hubbard, and then we'll have to take a little bit more time to actually finish up the Hubbard segment, but we will get the majority of the corridor to a full four-lane divided status as we're all committed to.

The other corridor, State Highway 6 that the Waco MPO mentioned, certainly it is complete, virtually complete through McLennan County. We still have segments remaining in Falls County we just let, and the Commission subsequently approved the contract in March, a sizeable contract to close the gap from the McLennan County line all the way to the south side of Marlin; so we have one remaining segment left, and that will take us from Marlin to the Bryan District line. And we have committed to accelerate that project in order to possibly finance that with bonds if you and the administration deem that appropriate.

Another rural corridor, and the Killeen -- and Bill just mentioned that, is State Highway 195. I think it's pretty well said there's been a lot of effort put

into that. The Waco District, if you'll recall, took the lead on the entire corridor. Back in 1999 we took the lead to develop that entire corridor, one district. I had two districts really that were to expedite the project and provide one focal point in terms of TxDOT to all folks, particularly Fort Hood and interested legislative officials that -- there were a lot of issues related to that corridor, and it seems to have quieted down quite a bit. There's a lot of activity, a lot of work, we've got completed work, and folks can see that we mean business and we are doing all we can with the funds that are available.

Moving to our last major rural corridor, and there again Mr. Reed so ably discussed I-35, it takes a little explanation to convince folks that this corridor is of statewide as well as regional and local interest. Our planning, of course, to remind some of you, began in 1999 on this corridor. It's not that old. We really did not have anything running at all on our 94-mile segment between the Williamson County Line and the I-35 split north of Hillsboro, but since then we've settled on a plan for the most part, and that plan is the first to address safety.

In so doing, you approved the contract that we let in December to complete the various gaps in barriers.

Work is underway in the Salado area in southern Bell County. That is where the contractor has begun work and will make his way filling in the gaps between there and Hillsboro. And my goal is to have all of those barriers in place prior to the Thanksgiving rush, and that's a lofty goal, but I think the Area Engineer is here in the audience, and I'm sure he's already heard this, but he's heard my commitment to you; so that will make it maybe even a little better.

In terms of expanding to six lanes, our plan in the rural areas is to use the center median to add a fast unit for cars (inaudible) in the existing right-of-way. Within those other areas we're going to utilize the same approach, but we're going to consider the long-term needs for addressing local mobility and traffic needs, not regional or statewide needs.

One other point on the I-35 corridor in our plan is to address the rest area needs for the corridor link between Austin and the Dallas/Fort Worth area. That plan provides for replacing the rest area at Salado and constructing a new location in Hill County near Hillsboro.

The left photo -- we've gotten just a little bit out of sequence here, but the left photo just reinforces how we're addressing this immediate safety

concern on I-35 with the installation of concrete traffic barrier near the shoulder on one of the two roadways, depending on what direction we're going and which side we feel is best at least for this interim safety measure.

The other problem kind of goes without saying. Any time -- it's unfortunately what happens almost routinely along the corridor. It doesn't matter if it's rural or urban. This happens to be a rural segment of the corridor where this picture was taken. When an incident causes freeway lanes to -- main lanes to be closed from one direction or both, sometimes both, this is what happens. And it kind of is a no-brainer at this day in time, but I guess this picture, one thing I always point out for folks that I'm trying to convince about one-way frontage roads when we get to a corridor like this that has the amount of congestion, the amount of volume that we're dealing with, it's an illustration of why engineers want to see one-way frontage roads. This would help certainly in this kind of congestion right here if we could have two of the lanes at least trying to move some of that traffic.

Although the next map may be difficult to follow and it's not intended to try to read it, but it is the District's planning document to provide an orderly sequence of projects with alternating terms of letting,

to provide some relief to drivers with continuous construction activities on I-35. Even though we're committed to accelerating segments in Bell and Hill Counties in 2005 and 2006, the overall plan for expansion to six lanes is not projected to be complete until about 2015.

Although we hope to let the last project in 2010-2011, these are big projects we're trying to let and build, and even with accelerated techniques it's still going to take us three to four years on the type of projects that we're looking at.

I've also included along with the I-35 discussion an artist's rendition of two rest areas that I mentioned for the I-35 corridor, the top one for Salado and the bottom one for Hill County. I will say that the Salado one is off the drawing board, and actually we are in the line to put it into the letting. We are waiting on some major right-of-way issues that we're tackling. Mainly it's really utility driven type issues that we're trying to deal with, a major pipeline serving water from, I guess, the Belton area to Georgetown; and so we've got to get that out of the way because one of these rest areas is right on top of it right now.

In terms of challenges for the District, there are many. I'm not going to go through these at this

point. They're pretty typical that you're going to see throughout the Department, anything from realigning the organization to being more efficient to issues related to educating the public on tolls and better jobs and educating the public and informing the public on anything we're doing, whether it be public meetings, public hearings, step out of the box and look at more conventional ways, think of -- a lot of our projects and products, think of them more in a marketing sense rather than meeting some minimum requirement. And I think we've tried to do that pretty well in the Waco District, and I think we're going to see us step out even more as we target some of these challenges and goals for the District.

I will move to my last point, and that has to do with some District initiatives. Ken, if you'll advance that. We've got two or three things that we've been doing that you may or may not have heard about. This first one has to do with a term called "perpetual pavement", and I don't intend to give you a one-on-one pavement design test here, but what the Waco District did, and this actually started on Mr. Pickett's watch, and I've tried to do my best to carry it through, and we did get a project done; but the Waco District was the first district to really work with the construction

industry, the asphalt pavement experts at the state and national level and university pavement researchers to develop a new asphalt pavement structure.

The intent of the District was to design a pavement structure that would be equivalent to concrete pavement, particularly in terms of embankments. It would match up against concrete and be a design that would be intended for a heavy-duty heavy-volume surface much like what we have on I-35.

The result of that endeavor plus development of stone-on-stone type of asphalt pavement specifications at the state level provided for inclusion of the full-depth asphalt pavement design that we jointly developed with industry and academia into an I-35 reconstruction project, expansion project north of Waco in Lacy-Lakeview. The lower left photo shows that. That project was recently completed.

What you see in this slide on the top left is a close-up of the surface. The most noticeable element, of course, of any design is usually the riding surface, and this particular riding surface is termed as a PFC. That's a TxDOT acronym, of course. In looking at the definition of that, it is a porous friction course. That's about as deep as I'm going to get, but the bottom line is this surface produces a very quiet ride, it's

very noticed by the public, and it minimizes tire spray in wet weather, and you can readily notice that. I can give you some excellent video to show and illustrate that, but the best illustration is just drive it when we've got a wet period. These two things become an advantage not only to the safety but to the environment in terms of noise.

Two other closing points that I want to make in terms of initiatives. Ken, if you'll advance that. We have -- There was a mention of this in the Killeen/Temple presentation a few minutes ago. This is the State Highway 36 bridge, the biggest -- largest construction project in terms of a bridge replacement that we've undertaken in many years in the District working over 30 or 40 foot of water, a reservoir -- drinking water reservoir controlled by the Corps of Engineers, a lot of restrictions, a lot of rules and regulations, but we were able to get this project pretty much moved through, and really it was attributed to the fine cooperation between our staff, the Environmental Affairs Division, as well as the local Corps group.

All of our folks, including the Division, worked so closely hand in hand to develop this project, it went off pretty much without a hitch. I know the staff would probably say that's not quite right, but it

really was smooth because we didn't have to delay the project because of those issues. I know they had to work down to the wire, but normally those kinds of things that we have to take a month or two and delay it we did not on this project.

One of the other things that really helped us was this District Initiative. And I can't take all of the credit, the District cannot. We have to give a lot of that credit to the Bridge Division. Marilou's group came to the challenge. We wanted to experiment with the precast bent cap system. The Houston District in a section through downtown Houston did a version of this, but this was kind of a step up.

Actually, this had to be somewhat of a research project because of the size and magnitude of the bent cap. That's the supporting structure that sits on top of the columns, and it's a portion of the structure between the columns and the riding surface, the beams and the girders. And the magnitude of this cap was such that we had never undertaken a precast type of a design under our wing and never really had one to design or look at to see how it would perform; so this is what they went into for several reasons because we needed to minimize the work that we were doing over the water, not only from an environmental standpoint but also from a safety

standpoint, being we were not only about 30 to 40-foot down below the water surface, but we were about that same amount above the water surface.

And if you'll go through the next series of slides, I'm just going to take you through this system very, very quickly. These bent caps -- this is a bent cap. It doesn't look that large sitting on that trailer, but it is, in fact, probably in the neighborhood of about 45 feet wide or long. And these bent caps were produced off site, actually in San Antonio, Texas at a fabricator and hauled to Bell County, and there's about 60-some-odd of these.

Ken, if you'll just go through the process. You're getting a little bit ahead of me, but ... [Laughter.] They get to the water, and folks, check them out. We keep going. They're transported out, and it's really almost this fast. It really is. I mean keep going. I need to run this thing. We're almost there. Keep on going. The cap is lifted up, and one more and we're there. And if everything lines up, it is that simple.

It's worked -- this portion of the project has worked beautifully. There's been a lot of effort put into it, but we did all of this for one reason, and that's the next slide, and that is to get ready for what

we're going to try to do on I-35.

We've talked a lot about I-35 and all of the issues that we have, and we've tried to do as much work as we can. We can build a road off to the side somewhere and all of a sudden put it in place overnight while everybody's pretty much in bed except the trucks, and they get a little notice ahead of time so they might stay away for at least a day or two. If we could do that with a bridge, and we think we're going to be able to get real close, instead of building a bridge in a conventional manner in a matter of months, I think that we're going to be able to do it in a matter of days, if not a week or two, less than a month from start to finish. And if we can pull that off, that's where we're headed.

That was the reason to kind of get started with at least the cap part of the bridge element, and we're going to put this whole thing together in a project that we hope to let this summer in August, and it will be just not far down the road, kind of a guinea pig project. It will be a revamp of the Interstate-35 - South Loop 340 interchange here south of Waco.

So those are a few of the things that we're doing. We do appreciate your time here today, taking the time out of your schedules to not only come to Waco to host the meeting, but giving us the opportunity to do

this. And lastly, I want to thank all of the employees of the Waco District. Could you please stand up for me, please? All of the work ... [Applause.] And last, but certainly not least, to the City of Waco, Larry, I think we made it happen, and we appreciate your work and cooperation.

With that, Mr. Williamson, I'll turn it back over to you.

MR. WILLIAMSON: Well, great job. Great job, but we're not through with you.

Okay, Commissioners. You've got the best that the Waco District's got to offer. Do you have questions for Mr. Skopik, comments? Ted?

MR. HOUGHTON: How big is the economic impact of Fort Hood on this issue in dollars? Does anybody know?

MR. SKOPIK: The question being the effect that Fort Hood has on the -- in terms of impact economically on the region?

MR. HOUGHTON: Right.

MR. SKOPIK: I'm getting a number of three billion, but I did not have a feel for that number. I know when I talked to --

MS. GAUER: It's four --

MR. SKOPIK: Four? Okay.

MS. GAUER: -- billion.

MR. SKOPIK: Four billion.

MR. HOUGHTON: Are they actively involved in the MPO's?

MR. SKOPIK: Not directly. They're not on the Policy Board. We do -- I thought we had at one time a member or two on the Technical Committee, but they have not been involved much since we've deployed to Iraq and before that for Desert Storm --

MR. HOUGHTON: From a planning standpoint of the infrastructure needed from their mission statement and a proposed expansion of that mission statement on the system, are they involved as to their needs to meet that mission?

MR. SKOPIK: Yes, sir. That's how -- by being on the Technical Committee, on the MPO's Technical Committee, that is the base level group to produce recommendations to the Policy Board as to not only the short-term but the long-term needs of the region in terms of transportation.

And I know in addition to that, not only the planning needs, but our staff, particularly our Director of Traffic Operations, Larry Colclasure, has well established contacts because particularly I mentioned in my presentation earlier about the issues that we had

confident that you will be successful in meeting the challenges.

Richard, I was glad to see rest areas on your list. I'll remind you to keep them family friendly and reflective of the region, but thank you very much, and I look forward to working with you.

MR. NICHOLS: Richard, a very good presentation, and you covered all of the bases there. Obviously, the Waco District is very progressive, and it looks like your numbers have been going up, and we want to make sure the numbers continue to go up.

And I know particularly from some of the comments from yesterday in meeting with some of the people from the community, the biggest question and most unusual thing that's in front of them has to do with tolls and some of the other tools, and I know they'll be going over a period of months or next year having to weigh all of those things.

And if it would be helpful to you or some of them, I think you might even get one or more of the folks to volunteer to come to the area at some time and put them all together and talk about and show some of the things that we see why the legislature and Governor are heading that way and put it in a different light, look at it a different way. It might be helpful. I would

certainly volunteer to do that.

MR. SKOPIK: Appreciate that, appreciate the offer, and I'm sure I will be taking you up on it if I can convince some takers. I'm kind of getting some head shakes.

MR. NICHOLS: Were they shaking "no" --

MR. SKOPIK: Yes  --

MR. NICHOLS: -- or "yes"?

MR. SKOPIK: -- as I looked at one.

MR. HOUGHTON: Well, any time you have the need, Richard, I invited Mr. Nichols to El Paso to make a presentation to the MPO, and as Commissioner Nichols has aptly done, he has personalized the issues to communities, what it really means, what's happening, what's going to happen. And as Chairman Williams said, tolls roads, no roads or slow roads, you've got a choice and here are your choices. And we did that to the Executive Committee of the MPO and to the military base, Fort Bliss, and it was like a deer in the headlights when they saw what's facing communities if you don't do anything, continue to slice and dice.

But I will advocate one other way of disseminating information is we also went after that meeting to the editorial board of "The El Paso Times", and they turned 180 degrees as to the issues and again

personalized to the region, to the area, and I would stand ready as Mr. Nichols would take it on the road; we're going to take our act on the road, and we won't charge much for it, but it's a great song and dance. And Hope and I will be in San Antonio in a couple of weeks, but it's got to be personalized to the region as to the daunting tasks that face us, both financially and technically.

MR. SKOPIK: Appreciate that.

MR. HOUGHTON: You're very welcome.

MR. WILLIAMSON: Richard, thank you. It was a good presentation. I just want to echo what the other Commissioners said. We are all -- every one of the Commission members have had some experience in politics and government service prior to the Commission. We're not insensitive to the difficulties that County Judge Burrows and mayors and House members and Senate members -- we're not insensitive to the difficulties each of those men and women face in talking to their community about tolls in Texas, and we understand that, but we operate from this basis: We have a Governor who understands this problem needs to be solved one way or the other, and it's not popular sometimes to advance ideas to solve problems. And I guess it would be safe to say we're seeing that in the legislature right now, but

at least he has the courage to advance ideas.

If we were going to increase our gasoline tax, as so many people always say we ought to do, we would have done that 15 years ago; so for 15 years while I was in the legislature we waited for a majority to develop support for raising the gasoline taxes. And guess what? It ain't raised.

Meanwhile the roads get older, more people move to Texas, the problems get worse, and finally we have a Governor that looks around and says "We've got to do something. And if it's not going to be gas taxes, then it's going to be toll roads. That's what we're going to do. And we're not going to force any community to build them. If you don't want them in Laredo, don't build them. If you don't want them in Waco, don't build them. If you don't want them in El Paso, don't build them. But no longer say that you don't have an alternative. We've got a way to address the problem now if communities want to do that."

No one's fooling themselves. You don't see us with bells on dancing about how we want to give you toll roads. We all realize that it's painful, but it's the slow road, it's the toll road, or it's the no road, straight out. Those are our choices. That's kind of the way it is in life.

Good presentation. We look forward to that first toll road project.

We're going to take a seven-and-a-half-minute break. [Laughter.] We have -- our agenda is very full. We have a lot of statewide issues.

(Recess taken from 10:35 to 10:56 a.m.).

MR. WILLIAMSON: I noticed earlier in the first phase of our meeting one of our very good friends neglected to put his cell phone on silent; so I'll remind everybody once again to please show some respect by putting your phones and personal communication devices on silent mode. It's very disruptive to have those go off.

Mike, before I turn the agenda over to you I would like to bring to the audience's attention the American Traffic Safety Services Association Work Zone Safety Memorial that is on display in the lobby of the Convention Center. I hope that each of you will take a moment to view the memorial that honors those who have died in work zone accidents. The memorial includes not just highway workers but motorists and children and first responders such as law enforcement officers and emergency medical personnel.

Since the 1930s when the Department started keeping records of their employees who were killed in the line of duty, 268 employees of our department have paid

the ultimate sacrifice while serving the public. Very few people know that we've lost that many men and women. Of the names on the memorial there is one TxDOT employee, Gregory Jares, who died here in Waco in October of 2001 while setting barricades on State Highway 6.

The Commission would like to recognize the work that ATSSA is doing to make everyone aware of the importance of work zone safety and the incredibly dangerous nature of the work many of our employees are involved with every day. I hope you have a chance to view the memorial before they pack it up until their next stop on a nationwide tour.

Mike, I noticed that there were two routine minute orders where we will be approving donations from the Association of General Contractors along with the American Traffic Safety Services Association. We're very grateful for these donations and for this public service campaign aimed at reducing highway work zone accidents and fatalities. I would like to take the prerogative of the Chair and move those items up in the agenda to be considered at this time.

MR. BEHRENS: Thank you, Mr. Chairman. As you mentioned, these donations are very important to help bring public attention to work zone hazards that are out there when we or the contractors are trying to do work on

our transportation system. And more awareness by the people that are driving through these work zones will, of course, help protect the contractors' employees as well as our employees that are out there.

And both of these minute orders reflect an outstanding commitment from two of our transportation partners that we work with, the AGC and also ATSSA. At this time I would like to ask Carlos Lopez to come forward and present these two minute orders. They'll be on the agenda, Minute Orders 11(a)(2) and 11(a)(3). And at this time I'll turn it over to Carlos.

MR. LOPEZ: Thank you, Mike. Good morning, Commissioners. My name is Carlos Lopez. I'm Director of the Traffic Operations Division.

The minute order that's before you is for our department to accept donations from the American Traffic Safety Services Association and the Associated General Contractors of Texas that participate in the statewide public information campaign promoting work on safety.

With recent lettings surpassing 3 billion dollars annually and all of the funding mechanisms that are given to us by the legislature, the common thread is that motorists are going to see more and more work zones. We believe that it's important to educate the public about navigating through work zones safely, and we have a

sample TV spot that we used in the mid-nineties that might give you an example of what a new work zone site might look like; so with that I'd like to go ahead and roll the tape.

[Playing Videotape.]

NARRATOR: "Most of us feel pretty safe while we're at our work, but every year highway and utility workers are injured or killed on the job. That's because drivers aren't careful and don't slow down when they approach work zones. Think about it. How would you like it if someone drove through your workplace at 65 miles an hour? Work zone employees are just doing their job. Give us a break. It's our lives."

[End of Video Presentation.] MR. WILLIAMSON: That's great.

MR. LOPEZ: I think that brings it home. You heard a reference to 65 miles per hour. We do have a statewide limit of 70; so we're going to freshen it up a little bit, and hopefully by the August time frame we'll be seeing some commercials in all of the different areas of Texas.

MR. WILLIAMSON: If you do that enough, that will compete with "Don't Mess with Texas". That is great. That's a good ad.

MR. LOPEZ: Thank you. Both ATSSA and AGC

represent a number of companies involving the many aspects of highway construction and maintenance. The organizations have a substantial interest in improving safety in work zones for their members and the traveling public. We appreciate AGC's and ATSSA's involvement and participation and recommend approval of these minute orders.

MR. WILLIAMSON: We're going to take the minute orders singularly, Members. Minute Order 11(a)(2) ... Is that correct, Mike?

MR. BEHRENS: That's correct.

MR. WILLIAMSON: ... is before you. Do I have a motion?

MS. ANDRADE: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: I've got a motion and a second. All in favor will signify by saying "aye". Opposed, "no". Motion carries.

Minute Order 11(a)(3) concerns the American Traffic Safety Services Association, and we have with us today Dane Alsabrook. Dane.

The entire Commission will speak to you in a moment, but let me say at the outset how much we appreciate your work on this.

MR. ALSABROOK: Thank you, Mr. Commissioner, Mr. Behrens and my fellow friends with TxDOT that I've had the privilege of working with over the years. My name is Dane Alsabrook. I am a board member of ATSSA, and I'm also a subcontractor member of the AGC of Texas.

Through our partnership with TxDOT in the new work zone safety campaign, we gladly support the upcoming efforts to kick off this campaign statewide in August. Though equipment, training and implementation have improved greatly this last decade, the work zone fatality rate continues to rise at 190 Texans dead in 2002 from 140 in 2001. This is a statistic we would rather be last than first.

We cannot accept any loss of life of motorists, pedestrians, enforcement officers or work zone workers. We must raise awareness that work zones are not unnecessary aggravations. Those work areas are designed specifically for the public's benefit and quality of life.

Texas highways are vital to our economy, security and mobility. These work zone projects protect our most valuable assets, men like Waco District's Gregory Jeff Jares, DIJ Construction's Bob Phillips, (inaudible) Jose Hernandez and (inaudible), whose young

lives were tragically shortened while trying to improve Texas roads. Just a split second of driver distractions and unsafe speed changed a normal workday into unfulfilled dreams for the families, friends and co-workers who will never forget, and neither will we. We hope their value and their (inaudible) will be better recognized when the motoring public can sense what it is like to work within inches of 70-mile-per-hour traffic both day and night.

In a day when bravery and facing danger is recognized for those fighting for our way of life dressed in camos, we must also revere and protect those who are working to preserve our way of life that are dressed in reflective orange and yellow-green.

In closing, we thank TxDOT for proposing this much needed campaign, and we applaud the Commission for allocating precious limited funding for our cause of safer roads that truly saves lives. Thank you.

MR. WILLIAMSON: Members of the Commission, questions or comments? Thank you, Dane. We appreciate you, and we appreciate your comments.

Members, before you is Item 11(a)(3) to acknowledge a donation from the ATSSA. Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. NICHOLS: Second.

MR. WILLIAMSON: All in favor will signify by saying "aye". All opposed, "no". Motion carries.

Mike, let's return to the agenda.

MR. HOUGHTON: Thank you, Mr. Chairman. We'll go to Agenda Item Number 2, which is on public transportation. And we have a minute order to award the discretionary and flexible funds to urban and rural transportation operations, and Sue Bryant will speak on that.

MS. BRYANT: Thank you, Mr. Behrens, and good morning, Commissioners. My name is Susan Bryant, and I'm Director of the Public Transportation Division.

The minute order for your consideration covers the last year of a four-year program for fiscal years 2001 through 2004 to provide funding to purchase public transportation replacement vehicles for both small urban and rural transit systems. The program was established in 2001 by minute order 108.412 and approved flexing funds from the surface transportation program through the minute order approved flexing 5 million dollars each year.

At the Commission's direction, all of the vehicles that will be purchased under this program will

be alternatively fueled and will be wheelchair accessible. Under this program so far, 253 vehicles have been replaced in the state, and at least 87 vehicles are expected to be replaced with approval of this new order, and your consideration is appreciated.

MR. WILLIAMSON: Okay. Members, the floor is open for questions.

MR. NICHOLS: This is an issue that has statewide significance, and I know there's been a lot of work by a lot of people over an extended period of time. I think it might be helpful if you would back up maybe a year or 18 months and kind of go through some of the public hearings around the state that the Department and the Commission had and kind of all the way up to the time you got here and some of that work that's been done to try to touch on these areas.

MS. BRYANT: Okay. Very briefly, then, what we're asking about touches upon all of the transportation issues as to the whole series of public meetings. We have called them "listening sessions" because we -- TxDOT comes to listen, and we have heard from the transportation providers around the state. This will be -- notes will also be included because you have some rules to be considered this morning, also.

And one -- in addition to the six listening

sessions that we've held, we also held one video listening session that was broadcast from Austin by -- it addressed or covered all 25 districts of the TxDOT service area; so it actually covered the entire state of Texas. We received many, many comments about -- I think the first and foremost comment was very consistent, regardless of what part of the country the person or what part of the state the person was talking from, and that is that the need in the state for public transportation is extremely great and that we all together need to look at many alternatives for resources. The State alone cannot provide the answer alone, and we need to work very much in partnership.

Every part of the state brought its own perspective, whether it was El Paso and the distances that must be covered, whether it was the Valley and the increase in population and the need of the citizens there, or East Texas and the needs that need to be met there, or North Texas and the more populated areas in terms of moving people where they need to go.

That's a very quick summary, and if I can address any more items on that, I'd glad to.

MR. NICHOLS: Okay. This particular issue that's in the minute order gets into the replacement part, and a few more items down we're going to get into

the statewide funding.

MS. BRYANT: Yes, sir.

MR. NICHOLS: And I had asked you a question by e-mail which I'm going to ask you publicly, and that is this action as being a replacement, it's not necessarily dependent on this other funding?

MS. BRYANT: That's correct.

MR. NICHOLS: Because I have a question concerning this other point, and your answer was ...

MS. BRYANT: The answer is, first of all, these are very great programs, but the anticipation in considering the formula of funds is that there will not be any significant at least decline in service so that the need for replacement vehicles will not change. The replacement vehicles are those that need to be taken out of service. They are the older vehicles, and it is to upgrade the entire fleet across the state.

MR. NICHOLS: That's all.

MR. WILLIAMSON: Any other questions, Members, on this matter? Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. NICHOLS: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor will signify by saying "aye".

Opposed, "no". Motion carried.

MS. BRYANT: Thank you.

MR. BEHRENS: We'll go to Item Number 3, which is our proposed rules for (inaudible), Agenda Item 3(a)(1) concerning our rules for turnpike projects. It allows for private involvement in turnpike projects. Mr. Phil Russell.

MR. RUSSELL: Thanks, Mike. Good morning, Commissioners. For the record, I'm Phillip Russell, Director of the Turnpike Division.

The minute order before you would propose the adoption of Amendment to Section 27, which describes the requirements for alternate forms of security for those private entities entering into a competency development agreement with the Department. The ultimate form of security would take the shape or form of cashiers checks, bonds or notes, letters of credit, and guarantees.

These ultimate forms of security will, of course, be in addition to our normal performance and payment funds, and it really is due to the current conditions in the surety bond market which are making bonding more difficult. And to the extent that bonds in excess of 250- or 300 million dollars would apply, it really makes it impossible to get bonds at that amount; so this minute order would allow us to -- as we propose,

these rules would allow us to have a little more flexibility to ensure the Department and the State is made whole in case of a default or other problems with our developers.

I'll be happy to address any questions you might have.

MR. WILLIAMSON: Questions, Members?

Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Second?

MR. NICHOLS: Second.

MR. WILLIAMSON: All in favor will signify by saying "aye". All opposed, "no". Motion carries.

MR. RUSSELL: Thank you, Commissioners.

MR. BEHRENS: Minute Order 3(1)(2) is regarding rules that deal with the State Formula Program and Discretionary Program and also the Section 5311 Grant Program. Sue.

MS. BRYANT: Thank you again, Mr. Behrens. And good morning again, Commissioners. For the record, my name is Susan Bryant, and I'm Director of the Public Transportation Division.

For your consideration this morning, our proposed public transportation funding formula is regarding rules for State funding for small urban

transportation systems, State funding for rural transportation systems, and Federal funding for rural public transportation systems.

Before I highlight the proposed rules, I would like to recognize the members of the Public Transportation Advisory Committee that worked very, very hard to reach the consensus that you have before you. These members include Fred Gilliam, who is the Chair; Paulette Shelton. And Paulette, if you would raise your hand. Stand up, please. She doesn't want to stand. She's being very shy. Vice Chair Vastine Olier, Don Halstead, Oscar Trevino, Tom King, who is also here ... Tom, thank you ... Bob Geyer, Mark Maddy, and Vinsen Faris.

These individuals bring an incredible amount of expertise and commitment to TxDOT, and we are truly blessed to have their involvement and participation. These individuals have been meeting and deliberating with TxDOT staff for the past couple of months considering a vast amount of public input from the internet, written comments, the six listening sessions that I mentioned earlier, and the statewide video conference that I mentioned earlier, and talking to their peers about how to create a better system of funding for public transportation, a system that considers performance,

local needs, coordination and acceptance, meets the intent of the legislature which authorizes the Commission to establish funding formulas, and at the same time provides transition mechanisms to balance the need for stability and the need for change. It is a considerable challenge, and they have definitely risen to that challenge.

The draft rules represent the recommendations of the Advisory Committee and call for allocation of funds based on the following: State funds to be allocated between urban and rural transportation systems with 75 percent of the funding based on population and 25 based on land area; further allocation of these funds among the small urban systems to be based on an 80/20 split with 80 percent based on general population, 20 percent to be used at the Commission's discretion for strategic priorities to address funding anomalies and/or as the Commission directed to be based on performance measures, to include the following: Local funds per capita, operating expenses per mile inverted such that lower expenses are to a system's advantage in receiving funds compared to the system's performance from the previous year, ridership per capita compared to the system's performance from the previous year, vehicle driven miles compared to the system's performance from

the previous year, such that if the system performs that much better, then it does have an advantage in receiving the funds under the proposed formula.

Further allocations of the State funds for rural transportation systems mirror that for the urban systems with 80 percent of the total allocation to determine a claim to a 75/25 split with 75 percent based on population and 25 percent based on land area and 20 percent of the total allocation determined by the same performance measures.

The allocation formula for the rural Federal funds mirrors the formula for rural State funds with an 80/20 split between need as defined by population and land area and performance, again as defined by the same performance measures.

Transition measures are proposed which include a five-year phasing process in which no entity would receive less than 90 percent or more than 120 percent of the award that it received in the previous fiscal year. This transition provides five years in which to make adjustments. It happens to indicate that 90 percent to 120 percent is intended to provide both protection from severe cuts and ease in growth.

The Advisory Committee also recommended that the funding formula be further evaluated with

consideration of a graduated split that would increase over time the proportion of weight on performance measures from 80/20 in FY '05 to 70/30 for FY '06 to 60/20 for FY '07, and 50/50 for FY '08; that further criteria be considered to include administrative expense as compared to total budget, local contribution as compared with total budget, and ridership compared to eligible population.

And the Committee also recommended that TxDOT begin to collect data associated with administrative costs and coordination efforts per system for the Committee to consider for possible inclusion in the formula in future years. That data per system is not available at this time.

Due to time constraints of their meeting, the Committee did defer any additional comments, but based on the funding needs recommendations, we do recommend approval of the minute order which would allow the proposed rules to be further considered by the public.

May I answer any questions?

MR. WILLIAMSON: Members, questions?

MR. HOUGHTON: Was the vote unanimous? Was the Committee unanimous?

MS. BRYANT: It depends on the motion. I believe there was one member who was absent. The

remainder of the votes on the performance measures were unanimous with one abstention. And I believe the motion on the additional recommendations for further consideration, if I remember correctly, and I will -- Paulette or Tom can correct me if my memory is not as good as it ought to be -- I believe that motion was passed unanimously, also. Is that correct? Yes.

MR. NICHOLS: I'm going to reserve my comments or questions until -- I think you've got some other people signed up. I'm going to wait until I hear from them.

MR. WILLIAMSON: Okay. So, Sue, if you will, take a seat. We've got three witnesses or three persons who have signed up with comments on the agenda item. I think I want to start with Amy Foerster to show my great affection for my former hometown, Abilene, Texas.

MS. FOERSTER: I'm Amy Foerster, representing the City of Lampasas and the City of Abilene, Texas.

In reference to the State formula, I do understand the urgency of decision for you, and I recognize there is a need for change; however, there are some concerns. I do appreciate definitely the consideration to draw up any proposed cuts over the

five-year period; however, there is worry about the cuts being proposed. I represent poor communities who cannot afford to lose 25/50 percent of our funding. This is a dire situation for these longstanding transit providers.

In addition, when looking at the funding options, the most beneficial for these are core providers and longstanding communities in the transit industry like mine were those with additional weight given to performance measures. I believe that this says -- performance measure says that we are making transit work. And we would like consideration to be given to these future measures if that would raise the performance measures up to a 50/50 funding level.

I thank you for your time, as I know you will attempt in every way possible to hold our funding steady and as harmless as possible. Thank you.

MR. WILLIAMSON: Thank you, Amy.

Mark Sweeney.

MR. SWEENEY: I am Mark Sweeney, and I represent the East Texas Council of Governments. And for the record, for the Commissioners, I'd like to read a resolution that was passed on April 1st, 2004 by the Executive Committee of the East Texas Council of Governments:

"Whereas the East Texas Council of Governments

has been designated the East Texas Rural Transit District and has been providing rural public transportation since 1990, and whereas the Texas Department of Transportation is drafting a proposed rural Federal allocation formula, and whereas based on population and population density ETCOG has been underfunded, and whereas based on population and population density ETCOG is the second largest rural public transportation operator, and whereas the Texas Transportation Commission has been tasked with developing a new formula for rural public transportation operators, now therefore let it be resolved that the Executive Committee of the East Texas Council of Governments recommends that the Texas Transportation Commission use population and population density as major parts in the new funding formula."

And we hope that you will seriously consider this resolution. As a matter of record, and I've said this before, we -- for the most part, ETCOG is the poster child of the underfunded in East -- in Texas, and we desperately do need more funding in order to provide the kind of service in our region, and we hope that this change in the funding formula will be done in such a fashion that will improve the funding and to improve the service to our citizens of our region.

Thank you very much.

MR. WILLIAMSON: Thank you, Mark. Old friend, Tom King.

MR. KING: I'm Tom King. I represent several groups for and in East Texas, Texas (inaudible) Transportation Alliance, which is a coalition of ALCU service agencies for transportation stakeholders. I'm also Executive Director of Generations Together, the Generation Day Care Center, and I sit on PTAC.

Our work was very difficult, Michael, because of time constraints, not because the PTAC was not willing to take it on. One concern that I have is that we were unable to fold coordination into the performance measures in a way that we would like to have. That is something that I urge the Commission to look hard at for the future.

MR. WILLIAMSON: How do you mean? Coordination with the health and human service agencies?

MR. KING: Not just with the health and human service agencies, but between transit providers, between providers and County Commissioners and mayors and local citizen groups.

MR. WILLIAMSON: In other words, coordination between any public transit program?

MR. KING: Yeah. Well, we transfer them to the people they serve to better utilize equipment, to

better utilize local resources so that large groups of people who are using vehicles can get better use out of them. That was very difficult to quantify, and it's something that's going to be our task over the next year, I think, as a PTAC, to come up with recommendations for that; but I feel very strongly that the Commission has to take the leadership in showing the regions how -- what coordination needs to look like and how much it's worth in terms of performance measures.

This year we've got a formula that starts us moving in a direction we want to go, but for the future please consider folding coordination into that.

MR. WILLIAMSON: Questions for Tom, Members? Thank you, Tom.

Okay. Susan. Members, I know this has been a very contentious and emotional topic for all of us; so let's take our time and satisfy ourselves before we vote. As we've done in the past on these matters, the floor is open to members.

MR. HOUGHTON: Go ahead, Hope.

MR. NICHOLS: Are we going to have youngest  --

MS. ANDRADE: No. We're going to have maturity.

MR. NICHOLS: Oh, maturity. All right. I

formula, but I think they recognized that it was important that we were responsible for that; and so once they gave us that authority, as the Chairman said, it is a tough issue. And you could say there's winners and there's losers -- going to be losers, but at least we've given a good faith effort ... and I think the people on the Advisory Committee have, also ... to try to be fair, objective and have something of a measurable basis to this thing.

You know, the comment -- I'm going to make a couple of comments, and if I'm misstating, please correct me because it's my understanding that the Committee is going to continue to stay in place and work.

MS. BRYANT: Yes, very much so.

MR. NICHOLS: Okay. And so even though we're adopting these formulas today which lay out a formula academically -- or it will academically, it will be technically for the next five years in a proportion in there, we recognize that very shortly we're also going to be tackling the transportation portion of health and human services  --

MS. BRYANT: That's correct.

MR. NICHOLS: -- which is another huge issue. Our intent is to try to make this not only efficient but user friendly; and so as we tackle right

now, for people that don't understand, in each service area in many situations we have two different agencies in the state running services on the same streets to some of the same people but with different equipment and different dispatchers, and the legislature says, you know, we want this coordinated. So as we begin to tackle over the next 12 months the coordination of that particular issue, it is very likely to impact our existing providers that are affected by this formula; so as we get into that ... and I know it sounds complicated, and it is ... some of this -- some of these recommendations may change over the next year.

MS. BRYANT: That's very possible.

MR. NICHOLS: And as they change or if they change, we'll be looking to the Advisory Committee and we'll be commissioned -- I know I will be -- we'll be looking to the Commission for that advice and recommendations. And I think we may even be hiring some outside help on this thing. But before we make any of those changes we will go back out to the public statewide and have some of these hearings and input and all of that.

MS. BRYANT: That's correct.

MR. NICHOLS: Okay. So this doesn't end it is what my point is.

MS. BRYANT: This is only the beginning. And the minute order today is to allow proposed rules to go out to the public and will allow us to set and conduct public hearings and have then the formal public input process; so there will be then an additional opportunity for the Commission then to determine if they -- if you want to actually adopt the rules.

MR. NICHOLS: So concerns I see, and I have a letter from Lubbock expressing concerns or Abilene expressing concerns, this is not necessarily the end of it, this is just going to be the beginning.

MS. BRYANT: It is just the beginning.

MR. NICHOLS: Thank you.

MS. BRYANT: Thank you.

MR. NICHOLS: You've answered all of my questions.

MR. WILLIAMSON: Members?

MS. ANDRADE: You see, Mr. Chairman, why I always let Commissioner Nichols speak first? He brings up such important points.

Susan, I also want to thank you and the Committee for all of the work that you did and realizing the time constraint that we were under, which does concern me when I hear that we were making recommendations but still based on rush of time.

However, as you've said, this is the beginning; so we will remain flexible to change as need be to better serve the people that need this service; is that correct?

MS. BRYANT: Yes, ma'am.

MS. ANDRADE: Okay.

MR. HOUGHTON: A work in progress, right?

MS. BRYANT: Oh, absolutely.

MR. HOUGHTON: Where is the East Texas Council of Governments? Where are you?

MS. BRYANT: That was Mark Sweeney.

MR. HOUGHTON: I was looking at the funding formulas and the allocation this year under the new Federal is 274, and you talk about being underfunded. I mean everybody wants more money, sure, and the proposed in 2009 is 580,000. That's double what you're getting today. And if you just struck underneath that in the County of El Paso which goes down, is there a dire need of that, all these rule changes?

I'm not finished yet. My point is  --

MS. BRYANT: The answer is you voted in February on the recommendations from PTAC.

MR. HOUGHTON: Well, that was a key. My question is what was the vote and what was the vote count of the group? And East Texas under the State funding goes from 325 this year -- 325,000 thousand to 809,000

for 2009, and underneath that El Paso went down the other way; so I understand everyone wants more money, but  --

MR. SWEENEY: Sure.

MR. HOUGHTON: -- I just wanted to point that out.

MR. WILLIAMSON: He wanted to know why you came up here and complained.

MR. HOUGHTON: I'm wondering, now, what's wrong with this picture? Was that --

MR. SWEENEY: Sure.

MR. HOUGHTON: And again thanks for the input, but at the same time I think it's critical that we look at personalizing these things, and the input of Sue's Committee is -- that's important, very, very important.

MR. SWEENEY: Well, I just appreciate the Commission looking into this and trying to pursue a path to correct the inequities. I know there's a lot of areas in the state; Alamo COG area, like us, is underfunded, and we know there's a need for some adjustment. We realize this requires a lot of team work here, and we're willing to work as a team member here to make this thing in a way that is workable for everybody; so thank you.

MR. HOUGHTON: Great.

MR. WILLIAMSON: Are we done, Members?

Okay. We've reached the -- You're aware that even on the Commission there's a vast difference in members' view of how much should be allocated to performance and how much should be allocated to the process from the beginning.

MS. BRYANT: Yes, sir.

MR. WILLIAMSON: Some of us believe 100 percent ought to be performance.

MS. BRYANT: Yes, sir.

MR. WILLIAMSON: And some of us believe 100 percent ought to be process. But our willingness to accept the work of the Committee is an indication of how the Commission approaches problem solving. We recognize that there are middle grounds and consensus to that.

I will venture to tell you and your Committee members, you know, in my years in the legislature I sort of divided members into three categories. There is the member on any given issue that's important to him or her that is simply concerned with satisfying his community needs. It doesn't matter what the cost is, doesn't matter what the penalties are. He or she is not concerned about that. He or she wants to get as much public transit funding into Jacksonville as he or she can.

Then there's the member who's primarily

concerned with the amount of taxes his constituents are paying for all of government. And he doesn't really or she doesn't really object to public service; that doesn't matter to him or her. What matters is how much are my constituents having to pay in taxes to support all of this, and is it too much for El Paso, Texas?

And then there's a third kind of member who is sort of a minority that is out there, and we will hear from that member in six months, and that's the member that understands that public transit is important to San Antonio and that the tax load is important in Weatherford, but what's really important is what is being purchased with the taxes that's extracted. That's performance.

Now, just from the Chair's view, numbers of people is not performance. I know it's used to define it as that. That's not really performance. That's process. We can fully expect that these members who took a chance, whether it was from East Texas or from Ranger, that these members who took a chance on their own political career hand over to us responsibility for recutting the pie, Tom. They need to be able to justify their decision to their constituents, and the one way every member can justify that decision is to point ultimately to a performance based system and say, "Well, we gave it to

the Commission, and they gave it to PTAC so that they could focus on rewarding performance and not process."

Now, I'm only one of five, and we always work through the consensus, but I'm just telling you we'll have an Appropriations and a Senate Finance member asking those questions in six months about "Well, what is it the citizens of Mesquite are getting for the money they pay in taxes?"

And my view of government is every year more and more politicians are going to ask ... Larry Phillips is there; he might confirm this ... not so much what's going on in my community or what my tax load is, but what am I getting for my money. So as you rework the formulas, just bear that in mind. We are all creatures of the political process, and to the extent that we can achieve this by performance, we're all better off.

You-all did a marvelous job. I can't tell you how pleased ... in fact, "pleasant" is probably a good word ... how pleasantly surprised we were with you, with the product, very pleasantly surprised.

Okay, Members. Is there a motion?

MS. ANDRADE: So moved.

MR. WILLIAMSON: Is there a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: All those in favor will

signify by saying "aye". All opposed, "no". Motion carries. Thank you, Sue.

MS. BRYANT: Thank you very much.

MR. BEHRENS: We'll go to Item 3(b), which is concerning the Memorandum of Understanding with the Texas Historical Commission.

MR. WILLIAMSON: Mike, it looks like we're going to have some transition; so this would be a really good time to take a three-minute break. Everybody take a three-minute break.

(Recess taken from 11:40 to 11:50 a.m.).

MR. WILLIAMSON: Okay, Mike.

MR. BEHRENS: Okay. We're at Agenda Item 3(b)(1), which will be the presented by Diana Noble.

MS. NOBLE: Thank you, Mr. Behrens. Good morning, Commissioners. For the record, my name is Diana Noble, Director of Environmental Affairs.

Item 3(b)(1) proposes adoption of amendments to 2.21 relating to the requirement for and purpose of the Memorandum of Understanding of the State Resource Agencies, and the simultaneous repeal of Section 2.24 and adoption of new Section 2.24 relating to the Memorandum of Understanding with the Texas Historical Commission providing for the review of transportation projects.

Section 201.607 of the Transportation Code

requires the Texas Department of Transportation to adopt a Memorandum of Understanding of each State agency that has a responsibility for the protection of the natural environment and the preservation of historic and archeological resources.

Section 201.607 also requires the Department to adopt these memoranda and all revisions by rule and to evaluate and revise the MOU's every five years. The last amendment to the Memorandum of Understanding with the Texas Historical Commission was in 1998. The proposed amendment to 2.21, the repeal of the current 2.24 and the new 2.24 were presented to the Commission on January 29th, 2004.

The proposed amendment to 2.21 and repeal of 2.24 and the new for 2.24 were published in the Texas Register on February the 13th, 2004 in order to solicit public comment and input. No comments were received.

The new Memorandum of Understanding with the Texas Historical Commission will streamline the environmental review of TxDOT process and the product delivery process by reducing the volume of project submission to the Texas Historical Commission and reducing the review time to those proposed projects that require individual review by the Historical Commission.

It focuses attention on those projects most

likely to have adverse impacts on significant historic and archeological properties. The new Memorandum of Understanding was developed jointly by TxDOT and the Texas Historical Commission staff.

I'll be glad to answer any questions.

MR. WILLIAMSON: Members, the floor is open to yourself to ask questions now.

There being no questions, do I have a motion?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor will signify by saying "aye". All opposed, "no". Motion carried.

How is your son?

MS. NOBLE: He's doing very well. Thank you so much for asking, Commissioner.

MR. WILLIAMSON: Everyone in this department thinks about your son.

MS. NOBLE: Well, it was said to us the only reason that he survived was the fact that he was the most brave teenager in the state of Texas, but he's doing great. Thank you so much for asking.

MR. BEHRENS: Agenda Item 3(b)(2) is concerning Contracts. Richard Monroe.

MR. MONROE: Good morning, Commissioners.

My name is Richard Monroe. I am General Counsel for the Texas Department of Transportation.

The minute order before you is for the final adoption of the rule addressing open contracts with a certain type of contractor, scientific, real estate appraisal, right-of-way acquisition, and landscape architectural services. By this we would increase the amount of those contracts in the initial award. These -- This new rule was published in the Texas Register. No comments have been received. I would urge that the minute order be approved.

MR. WILLIAMSON: Members, the floor is open for questions directed to Mr. Monroe or comments.

Do I have a motion?

MR. NICHOLS: Let me go ahead and ask a question. In your opinion, one of the concerns I had was losing opportunities for small firms. I expressed that via communication. In your opinion, do you feel like this is necessary to officially do business and it in effect does not reduce opportunity for those small businesses?

MR. MONROE: Well, of course, being a small business reminds me of the old saying that it's always better to be rich and healthy than poor and

sick --

MR. NICHOLS: Wait a minute.

MR. MONROE: -- but I really don't believe that would be the case, and certainly this will contribute to the efficiency of the operation of the Department. The experience our field people tell me is that under the lower levels that we were -- we simply had too much work on some of these jobs. The contract would run out, and we'd have to go out and find a contractor to go through all of that rigmarole again; so it certainly is conducive to efficient operation.

MR. NICHOLS: Okay. Well, maybe I'll direct that to you. In your opinion, is this necessary?

MR. BEHRENS: We feel it's necessary concerning the small firms. You know, we have probably about 400 firms that we do business with at one time or another, and a big majority of those are smaller firms. Like Richard was alluding to, we've had contracts out there in the area of right-of-way acquisition where we're outsourcing it now, and we go along buying parcels and things like that, and then all of a sudden we get to this limitation. We have to stop everything, negotiate with them, go through the process, and lose a lot of valuable time in moving a project forward; so we feel this is just another tool to help us in our right-of-way acquisition and also in our project development process.

MR. NICHOLS: All right. And you-all are actively encouraging small firms to participate  --

MR. BEHRENS: Absolutely.

MR. NICHOLS: -- and to try to give them opportunities? And we can show track record where we have added new firms like this?

MR. BEHRENS: Yes.

MR. NICHOLS: All right.

MR. WILLIAMSON: Do I have a motion?

MR. NICHOLS: I'll make a motion.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor will signify by saying "aye". All opposed, "no". Motion carries.

MR. MONROE: Thank you.

MR. BEHRENS: Agenda Item 3(b)(3) is final adoption of rules pertaining to rail facilities and TxDOT's involvement in the rail.

MR. RANDALL: Good afternoon, Commissioners. My name is Jim Randall, Director of Transportation Planning and Programming Division.

This minute order adopts amendments to Sections 15.150 and 15.151, the new sessions, 15.154 and 15.155 being codified under Title 43 of the Texas Administrative Code, Part 1 concerning the Department's acquisition,

construction, maintenance and operation of rail facilities.

Transportation Code, Chapter 91 authorizes the Department to acquire, finance, construct, maintain and operate a pasture or straight rail facility or system, including the acquisition of abandoned rail facilities. Section 91.051 provides that a contract made by the Department must be let by a competitive bidding procedure in which the contract is awarded to the lowest responsible bidder that complies with the Department's requirements.

Section 91.102 authorizes the Department to lease all or part of a rail facility or a system to a rail operator and to contract with the rail operator for the use or operation of all or part of a rail facility or system.

Section 91.052 authorizes the Department to enter into an agreement with a public entity, including a political subdivision of the state, independently or jointly with the Department, to acquire, construct, maintain or operate a rail facility or system.

Minute Order 109.56 dated January 29, 2004 proposed amendments and exceptions. A public hearing was held March 16th, 2004, and no comments were received. The vendor presented for consideration authorizes the

final adoption of amendments to Section 15.150, 15.151 and new Sections 15.154 and 15.155.

The staff recommends approval of this minute order.

MR. WILLIAMSON: Members, the floor is open for questions or comments. No questions. Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Second?

MS. ANDRADE: Second.

MR. WILLIAMSON: All in favor will signify by saying "aye". All opposed, "no". Motion carried.

MR. RANDALL: Thank you.

MR. BEHRENS: Agenda Item 3(b)(4) is concerning Traffic Operations and Congestion Mitigation Facilities. Carlos Lopez.

MR. LOPEZ: Good afternoon, Commissioners.

MR. WILLIAMSON: Carlos ...

MR. LOPEZ: Yes.

MR. WILLIAMSON: ... for those in the audience who are less than well versed in TxDOT lexicon, can you explain what is a "congestion mitigation facility"?

MR. LOPEZ: A road that makes traffic flow better.

MR. WILLIAMSON: Thank you. Go ahead. I saw people's eyes crossing out there.

MR. LOPEZ: I think it's a legal term.

MR. WILLIAMSON: Blame it on the lawyers.

MR. LOPEZ: My name is Carlos Lopez. I'm Director of the Traffic Operations Division.

The minute order before you proposes adoption of Minute Sections 25.40 to 25.42 and new Sections 25.44 through 25.47 concerning roads that make traffic flow better. [Laughter.]

House Bill 1208 expanded and further defined the existing authority of the Department in regards to high operated vehicle lanes, toll lanes, and exclusive lanes. The legislation also allows the Department to authorize the use of HOV lanes by low emission vehicles and motorcycles regardless of the number of occupants of these vehicles unless this would jeopardize receipt of Federal funds.

The proposed rules were published in the February 13th, 2004 issue of the Texas Register, and written comments were received from two parties. Some of the comments dealt with provisions that were already included within other Department rules. Section 25.43 was revised in response to one comment to allow the Commission the flexibility to delegate the setting of the

amount of toll charges to Department officials so that the Department is the entity setting the charges. These proposed rules are necessary for the Department to implement this legislation, and we recommend approval.

MR. WILLIAMSON: Members, the floor is open to you for questions or comments directed to Carlos.

MR. HOUGHTON: So moved.

MR. WILLIAMSON: I have a motion. Do I have a second?

MR. NICHOLS: Second.

MR. WILLIAMSON: All those in favor will signify by saying "aye". All opposed, "no". Motion carries.

MR. LOPEZ: Thank you, Commissioners.

MR. BEHRENS: Agenda Item 3(c) is an item called Rural Review, and Richard Monroe will go over what rules we're required to review.

MR. MONROE: Thank you, Mike.

Commissioners, the Texas Government Code requires agencies to periodically review the rules they already have on the books and to determine whether or not they are still needed. That's what this minute order says here.

No comments were received when we published these rules for comment. The Department has determined

that these rules are still required. Obviously, when you have questions of vehicle title registration, motor carrier, oversized and overweight vehicle permits, those needs do not go away. By this minute order you would reaffirm that those rules be kept in our section of the Texas Administrative Code. I would recommend approval of the minute order.

MR. WILLIAMSON: Members, the floor is open for your questions or comments directed to Richard.

Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Second?

MS. ANDRADE: Second.

MR. WILLIAMSON: I've got a motion and a second. Those in favor signify by saying "aye". All opposed, "no".

MR. MONROE: May I also say for the record that in all of my years of being a lawyer I never heard the phrase "congestion mitigation facilities" until I came here.

MR. WILLIAMSON: That motion carried.

MR. BEHRENS: Agenda Item 4 is a discussion item. As we have during the last couple of months, we've brought some discussion items to the Commission that is discussing some things where we're

going to have some upcoming rule changes. Now, this particular one will be some rules that we're going to be bringing in a month or two concerning contractor sanctions; so Tom will lead that discussion.

MR. WILLIAMSON: And, Mike, for the benefit of the audience of Waco who doesn't perhaps get to see us in Austin, the purpose of the discussion item is to give way, way advanced notice to those who are interested in the transportation world about those important topics that we intend to address legally in the future so that no one's caught off guard. In this case anyone who's a contractor or does business with the Department might want to take issue and be forewarned that we're going to do some things differently in the next few months concerning contractor sanctions.

MR. BOHUSLOV: Thank you, Commissioners. My name is Thomas Bohuslov. I'm the Director of the Construction Division. Agenda Item 4 is a discussion for Amendments to Title 43, Texas Administrative Code, Chapter 9, Subchapter G, relating to contractor sanctions.

First of all, I'd like to talk a little bit about why we have contractor sanctions. Of course, we have one of the largest programs in the state; so we don't have everyone under contract. We're letting over

100 contracts a month; so in that regard, how we deal with our contractors and the type of contractors we have is important.

The contracting industry here is a service to the State as well as what we do for the State, and the key to our work or service they provide is we want to have a good relationship. We want to have a good partner out there as far as contractors go. Sometimes that goes sour. In the case of our contractors here in the state of Texas, we really have a good -- a large amount of good contractors that provide a good service. There are occasions when things don't go right or we don't get good bids or we don't get good service out there.

An example might be, for instance, on a picnic area contract we might have. If a contractor were to default on it or not execute that contract, it means that we've got to pick up that work some other way, and usually that means our State forces have to go out there and do the work in the interim until we get another contractor out there. And that pulls our forces away from doing other work that they would have been scheduled to do in the county. And because in some counties we have minimal crews, it means that they probably can't do that crew work that would take several people, and they've got to go do some other work out there.

So it increases the cost to the State, increases the cost to the public, and increases time that the service is provided, and that's a very small contract. And on large contracts it significantly increases the costs. It can also affect safety to the traveling public out there, especially when we have a defaulted contractor and in the interim between them and the bonding company getting another contractor out there we've got to maintain traffic out there sometimes for an extended period of time.

So again, the basic purpose of sanctions is to see that we have good business partners out there as far as contractors go. Currently we can do three things with our contractors: We can suspend them from bidding, we can debar them from bidding, or we can reduce their bidding capacity. And in that regard, the Commission and Executive Director for routine maintenance contracts, they have the authority up to a certain level. In other words, they have a lot of discretion in regard to how they apply those sanctions.

We can sanction for failure to execute a contract and to follow through on a bid guarantee, we can sanction for bid rejection due to bidders if they do that twice in a three-year period, failure to notify that they have been debarred by another agency or the Federal

Government. If they fail to perform, we can sanction them for that. If they've been convicted of any crime, if they have been convicted of an offense such as bribery or payment of a kickback, we can also sanction them for acts indicating lack of moral or ethical integrity reflecting on the business practices of a contractor if you have probable cause to believe that the acts have been committed.

Here's what we're proposing for changes: Currently the Executive Director has the authority over routine maintenance contracts, and they are the ones that act upon the sanctions of the contractor. We would like to have the Executive Director have the authority to take the initial actions for all contracts because if we have some issue with whether they can't do a routine maintenance contract but they can still do a construction contract and we have to bring those in here, we feel like it's an appropriate level for the Executive Director for that reason.

In addition, the appeals process would be handled much in the same way we do our claims. It's handled by the Department staff, and then they have an appeal process whereby they can go to SOAH, and then SOAH -- that final decision by the judge would come back to the Commission for final approval.

And finally the way we had laid out the sanctions previously, it was such that if you had an offense in this area, here is the "up to" sanction that we can put on you. We want to change that a little bit and say if you're currently sanctioned, that would take you up to the next level of sanction as opposed to just parallel with the same type of infraction that occurred; so we kind of combined -- if a contractor were again sanctioned, it would go up to a higher level of sanction. And that's kind of the new changes that we have, and we're here for your comments and questions.

MR. WILLIAMSON: Members and staff would benefit greatly from any initial instructions or discussion that any of us would care to offer in the terms of a form of guidance as the Department staff develops their proposals. The floor is open.

MR. NICHOLS: Let me throw a couple out. I certainly think that the sanction should be commensurate with whatever the level or degree for which a problem occurred. I have seen a few that it seemed like it wasn't fair on our part, you know, because the penalty was so great because of the infraction that you've got to draw a line somewhere; so I'm glad you're going to approach that.

In looking toward that, I'm sure you-all in

working with other contractors and stuff also could come up with something that's going to protect the State but not damage our construction ability. Our construction in the state is uppermost in our mind, and I think it's important that -- and I think it would be important for the members of the audience that one of the things that I was very impressed with when I got on the Commission was we deal with billions of dollars every year, and when you hear some states, you know, somebody is thrown in jail for a scandal related to a construction contract or something like that, you hear these things in other states, but the integrity of the process that has been put in place by this department is basically beyond reproach. You have not seen examples of those type of things in this state.

So the system we have, although it may have some faults and certainly we need to improve it wherever we can, that integrity needs to stay in place, and I don't want us to do something that would disrupt that. So I think all of us can be very proud of the system that has been put in place before us, and it's our responsibility to improve them but also to protect the Department of Transportation.

MS. ANDRADE: Tom, I just want to urge that we remain a business friendly department, but I also

think that with the sanctions, that what you're proposing is that we will only find the best contractors, and at the end it will be good for them because other people will know that if they've been a TxDOT contractor they've got to be good.

My concern and what I'm hearing is we also need to streamline the process of what happens when a contractor defaults. I've had some calls about the delay that it causes and the effect that it has on businesses by the time we replace the contractor; so I'd like to make sure that we look at that.

Hopefully, in the future with the sanctions we won't have these problems occurring, but in the meantime what do we do, and how do we improve that? Because if we deny access to businesses, that's what I hear a lot about -- not a lot, but I hear some of it when it does happen. Thank you.

MR. HOUGHTON: Yeah. Tom, when was the last time we imposed a punishment on a contractor, either one year to three years or a 50-percent reduction? What are the sanctions?

MR. BOHUSLOV: Well, we certainly have several contractor sanctions in the maintenance contract area. The Commission is not aware unless it was back in the '80s, and they may have taken some action on some

there was a problem and brought this into the picture where we needed to look at our rules, and I think we've been operating pretty well since then.

MR. BOHUSLOV: What you may see come is -- we talked about this. When you've simply gone to bid bonds and we ask a contractor when they default for a bid error -- or for -- they default for execution. This is not related to bid errors, but when they default for execution they forfeit their bid bond. And we have some difficulty sometimes in getting that cash on that bid bond, and that's where this may come into play on construction contracts where we have to go through the sanction process to address that, and that's one area in construction contracts that we might see some actions.

MR. WILLIAMSON: Are we done, Members?

Tom, just a few things. The discussion documents directed towards highway improvement are very complex. I am curious if we can expand the discussion or if you can expand your research to include all forms of contracts, not just highway improvement contracts. I can think of one example, software contracts, whether or not we need to adopt some sort of sanctions. If the answer is "no", that's fine.

And then I have a question. If we debar someone, who do we notify out there in the world? Do we

notify the Grayson County Commissioner's Court that we've sanctioned or debarred a particular corporation?

MR. BOHUSLOV: We do not, not that I'm aware of. If they're on prequalification process, they may ask if a contractor's been currently debarred, but we don't notify --

MR. WILLIAMSON: With the growing dependence on partnerships with cities and counties, let's look at whether or not it would not be good public service for us to adopt some sort of public notification process that tells Mike Helgenstein in Grayson County and Tom Greenwell and whomever that for whatever reason we have had some cause to sanction Peter Kiewit Sons, who won't be doing business with us.

MR. BOHUSLOV: Yes, there are some cities that are interested in actually using -- they reference our prequalification list of contractors so they can say "If you're prequalified with TxDOT, you can do  --"

MR. WILLIAMSON: One of the things that comes to mind, Carlos, is the red light problem we had two years ago and whether or not our decisions were negatively impacting the company on one hand and whether or not cities and counties deserve to know that we were having a problem. And the whole state acknowledges that they look to us anyway for guidance on some of these

things, and perhaps as long as we're going to look at changing our rules we might want to consider can they apply to things besides highway contracts, and do we have an opportunity to assist our partners and let them know what we've found in some of our dealings?

I also echo Mr. Nichols' concerns. Although we do get to hear from time to time gossip, the truth is we are pretty much immune. Our rules put us in a position of impeccable integrity in our contracting processes, and we want to maintain that, but at the same time we do want to be -- we say we're open for business; so we want to be a business friendly partner. We don't want to punish businesses who make forgivable mistakes, and there are in life forgivable mistakes.

Okay. Other directions to give the staff, Members?

MR. BEHRENS: We'll look at some of those other contracts and see what we have and see if we need to put something in the provisions in those other types of contracts.

MR. WILLIAMSON: Mike, I may want to exercise the prerogative of the Chair and ask the Grayson County guys something. If I put the Peter Kiewit discussion in front of you -- Well, if I were to move Item 9 in front of you, it would be for you to benefit

from the discussion at this time. If, however, you intend to stay through the Grayson County RMA or care to listen to the discussion on ... I hope it's Item 9 ... I think you might benefit from -- assuming the Commission is fixing to adopt this, you might benefit from the discussion. Do you intend to stay throughout the day?

MR. BOHUSLOV: We will.

MR. WILLIAMSON: Well, then let's stay on the issue.

MR. BEHRENS: Okay. Talking about moving, we're going to defer Item Number 5 on Transportation Planning ... this would be the Webb County International Bridge Application ... until we come out of executive session. The same would be true for Agenda Item 9(b) concerning the Camino Colombia Toll Road. Those two will be taken up after the Commission comes out of executive session.

MR. WILLIAMSON: Which will occur today.

MR. BEHRENS: Later in the week. So that means we'll go to Item Number 6, and this will be to accept the Quality Investment Report concerning our investing of funds. James Bass.

MR. BASS: Good afternoon, Commissioners. For the record, I'm James Bass, Director of the Finance Commission.

Item 6 presents the Quarterly Investment Report for the Central Texas Turnpike System for the second quarter of fiscal year 2004 covering the period December 1, 2003 through February 29th, 2004. One brief highlight from the report is that the book value of our investments declined by just under 114 million dollars during the second quarter. This is simply the net of cash flows, in-flows comprised of receipts from additional local contributions and interest on our investments compared to the cash out-flows, which were the payments to the contractors, landowners and bondholders.

As the construction progresses over the life of the contract, we would expect the book value of our investments to decline, as well, as we make those progress payments.

The last item that I'll point out is that at the end of the second quarter we had an unrealized gain in our investments of almost 2.6 million dollars. What this means is that the market value of our investments on that one day was 2.6 million higher than the book value of our investments.

And having said all of that, I would recommend your acceptance of the report.

MR. NICHOLS: I just want to ask, I know you're using -- I'm sure you're using proper accounting

terms, but when you tell people that our value of our book value dropped 114 million dollars, you know, the first thing I want to do is get back in my chair; but in fact, our book value did not go down from a practical standpoint, the investment went from an account in cash to a road system?

MR. WILLIAMSON: You know, Robert, you were reading my mind, because I was fixing to ask James if he could define our investments.

MR. BASS: Well, fortunately or unfortunately, the Public Funds Investment Act, even though it is an investment report, not an overall asset allocation or asset report, you're exactly right; we're really just transferring the funds from one asset investment to another asset, which is the construction in progress, but for this report we're merely reporting on the status of the investments.

MR. NICHOLS: I just want to make sure everybody understood that. So the 114 million you said went down actually became a road system?

MR. BASS: Correct, or right-of-way.

MR. NICHOLS: But the 2.6 million was actually an increase in value in our investment that we had temporarily holding our money?

MR. BASS: Well, it was an unrealized

gain, meaning that on that one last day of the quarter our investments, our securities, the market value of those was 2.6 million higher than the historic value, which might lead to the question of why did we not make that unrealized gain a realized gain, sell the investments on that day and come out 2.6 million ahead? The reason being is if we did that, we would have 2.6 million dollars that we would then invest at a lower interest rate, and at the end of the project we'd end up at the same point we were. If you believe the market is efficient, that's what the theories would tell you.

MR. HOUGHTON: If you believe that.

MR. BASS: Some do, some don't.

MR. WILLIAMSON: This is your opportunity to ask James about financial advice, if you care to.

MR. HOUGHTON: Yeah, I'd like to. Are we currently using a financial advisor?

MR. BASS: We are. We recently went through an RFB in a selection process, and it was just late last week that the purchase order was issued, and the selected firm was RBC Dain Rauscher. They will serve as the financial advisor for all financial programs of the Department, whether it be mobility fund, proposition 14 or Ogden bonds, toll roads or Trans-Texas Corridor.

MR. WILLIAMSON: Have they previously

worked for us?

MR. BASS: They were the financial advisor on the Central Texas Turnpike System.

MR. WILLIAMSON: So the same contractor we had before became the contractor for the future?

MR. BASS: Correct.

MR. WILLIAMSON: And who were the other finalists? Who were the other short list?

MR. BASS: The other short list was PFM, Public Financial Management. Those two firms came and provided oral presentations. There were three other firms that submitted proposals, but they did not make it to the oral presentation round.

MR. WILLIAMSON: And the process you used would give comfort to the rest of those in this process  --

MR. BASS: Yes.

MR. WILLIAMSON: -- designed to give everybody the opportunity?

MR. BASS: Yes, sir.

MR. WILLIAMSON: I had the same reaction Robert had when you said that had increased, although I realized what you meant. We transferred cash from a savings account to asphalting the road and right-of-way?

MR. BASS: Correct.

MR. WILLIAMSON: Other questions on this discussion? Got a motion?

MR. NICHOLS: I so move.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I've got a motion and a second. All those in favor of the motion will signify by saying "aye". All opposed, "no". Motion carries.

MR. BEHRENS: And, James, if you would, continue on Agenda Item Number 7, the State Infrastructure Bank. We had two applications for loans.

MR. BASS: Agenda Item 7(a) seeks the preliminary approval of a loan to the City of Atlanta in the amount of $1,000,000.00 to pay for the relocation of utilities made necessary by the reconstruction of Farm to Market 249. This is a Priority 1 Truck System Project and will take the road from a two-lane highway to a four-lane divided highway. The staff recommends your approval so that we may begin negotiations.

MR. WILLIAMSON: Members, discussion or questions with James?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: I have a motion. Do I have a second?

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a

second. All those in favor signify by saying "aye". All opposed, "no". Motion carries.

MR. BASS: Agenda Item 7(b) seeks preliminary approval of a loan to the City of Linden in the amount of $400,000.00 to pay for the relocation of utilities made necessary by the reconstruction of US-59. This, as well, is a Priority 1 Truck System Project that will take the existing facility from a two-lane highway to a four-lane divided highway, and the staff would recommend your approval so that we may begin negotiations with the City.

MR. WILLIAMSON: Members, do you have questions about or comments directed to Mr. Bass in this regard?

MR. NICHOLS: I have a comment. I will tell you on this I have no problem with it. I think it's great. My comment has to do with the State Infrastructure Bank, and particularly since we have a transportation member from the House in the audience, and something the Commission needs to remember while we're working on the State Infrastructure Bank, and that is our money is almost gone in that bank. I think current applications for that money actually exceeds the amount that we have in our funds; so as we move further into the year we're going to get to where we're going to have

requests and there's no money there. So, now, we can replenish that money, but we have to do that in effect with construction funds. Is that right?

MR. BASS: Correct.

MR. NICHOLS: Okay. And the reason this has been going down that we have not put those funds back in there as we did when we set the program up in '97 or '98 was that in the previous six-year Federal authorization we had very favorable returns, but the next -- the one that we're currently in, the Federal reorganization deal which expired last October, the rules changed. And if we use Federal highway funds and put it into the State Infrastructure Bank, under the current existing rules all of a sudden we get a whole basket of strings that are attached to our money that weren't there before when we set up the system.

And we are -- I know Governor Perry and some -- has written our Texas delegation and others to encourage them not only to get Texas' fair share of it but to also straighten out some of these complaints regarding Federal authorization, but it's something that we're going to have to address if they don't fix it this year. We are going to have to make a decision on whether or not we keep waiting to replenish that or replenish it and take all of the strings, or hopefully they'll get soft, but

it's coming, and it's become an issue; so that's really an awareness comment.

And was I pretty well correct in what I said?

MR. BASS: Correct. Right now the pending applications are about one million less than what's currently in the bank. The only thing I would add to what you've stated is that, of course, every month or every other month we're receiving loan repayments that help to increase that balance, but it will depend upon the size of the applications or assistance that is requested as to whether or not we have funds currently available to address those when they become -- they come through.

We are looking at one other potential option to address this, and hopefully we'll be able to share that with you shortly.

MR. HOUGHTON: Can a bank issue bonds?

MR. BASS: The State Infrastructure Bank can issue revenue bonds. We looked at that a year ago in very brief preliminary discussions, and there was some reluctance on the Department issuing that that would then be backed by others who owed their debt to us; and so there was some reluctance on their part a year ago, and we didn't go forward with that, but the State does have the legal authority to do that.

MR. WILLIAMSON: It was John Johnson (inaudible). You know John's not here today; so what we could probably do is talk about him  --

MR. BASS: Agenda Item 7(c).

MR. WILLIAMSON: We could probably talk Robert into a motion requiring John to replenish the fund.

MR. NICHOLS: Well, anyway, it's a real problem. The State Infrastructure Bank program that the legislature approved a few years ago has been great. I mean it has advanced projects in large areas, it has advanced projects in small communities, counties and such, that it would really disrupt their budget to move a utility or buy a piece of right-of-way for a project; so it has been very helpful and, you know, I just want to make -- with that, I'll so move, not on your suggestion, but on the motion that's currently on the agenda.

MR. WILLIAMSON: Was there other discussion about it? Do I have a motion?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor signify by saying "aye". All opposed, "no". Motion carries.

MR. BASS: Thank you.

MR. BEHRENS: Okay. Going on to Agenda Number 8 concerning Regional Mobility Authorities. Phil Russell will present the application of Grayson County to form a Regional Mobility Authority.

MR. RUSSELL: Again for the record, I'm Phillip Russell, Director of the Turnpike Division for TxDOT.

In February of this year Grayson County filed a petition for authorization to form a Regional Mobility Authority. The petition identified State Highway 289 as their initial project for development. This project would extend 289 from the area of State Highway 56 in Sherman and end at FM 120 in Pottsboro.

The Department held a public hearing on April 6th to -- or pursuant to the RMA rules to receive public comments on this proposed RMA formation. Notice was posted in the Texas Register as well as local newspapers. At the hearing we received a number of both oral and written comments. All of those were in support of the creation of an RMA. We received no comments in the subsequent 10-day comment period. We did, however, receive a resolution from Grayson County Commissioner's Court in support of the Regional Mobility Authority.

By approving this minute order, you would authorize the creation of a Regional Mobility Authority

that would set the area of the RMA to be the entire geographic area of Grayson County. It would also define the initial project to be developed State Highway 289, and it would allow the initial board composition to be three members. Two members would be appointed by the Grayson County Commissioners Court.

I'd be happy to address any questions you have. I know Vice Chairman Phillips is here as well as Judge McGraw and Commissioner Short.

MR. WILLIAMSON: We'll allow Commissioners to ask questions of Mr. Russell first if you so choose, or we'll go ahead and hear from Mr. Phillips and  --

MR. HOUGHTON: What's the value of construction for State Highway 289?

MR. RUSSELL: I believe the turnkey cost -- I don't have it in front of me, but I think it was in the neighborhood of about 20- 25 million dollars.

MR. WILLIAMSON: Any other questions for Phillip? Phillip, stand by for a moment.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: The Chair at this time will recognize -- I think we'll go to Mr. Phillips first. I've already said it six times, and I'll say it a seventh, a true champion of transportation issues.

MR. PHLLIPS: Thank you, Mr. Chairman and

Commission members. It's good to be here in Waco, and I applaud you for going to the State and also the Commission's staff and TxDOT. I know it's not easy to move what you do each month at your Commission Meetings, but I applaud you for doing that to let the state of Texas know what is going on in Austin; so I was pleased to be there in Bexar County where the two newest members of the Commission had their first meeting, and it was an honor to be there, and then it's an honor to be here in Waco where I had four wonderful years at Baylor University, met my wife, and I tell you Waco since that time has certainly grown in amazing ways. Baylor has, as well, and I'm just real proud of this community. And I'm glad to be a here with County Judge Tim McGraw, who I think is going to speak just briefly asking that this request be granted, and County Commissioner Gene Short, who is also Chairman of our local MPO.

But this is about local control and Grayson County RMA, which we're pleased to be the third applicant and really will be on a small size of the RMA's out there, but through our experience in trying to get some projects developed we realize that in the law it's helpful for us to have an RMA. Not only will that help us in the future, but there are certain things that RMA's can do that our local county cannot do. And I would

certainly encourage McLennan and Bell Counties and all of the counties around here to think about moving quickly to this RMA to develop some of this transportation and take advantage of the tools that were created.

I would also want to thank Phillip Russell and Doug Woodall for coming up and holding the public hearing. That was a very positive experience. We had huge representation from our community leaders, mayors, City Council members, Chamber board members, transportation MPO members, just different stakeholders in the community coming and saying "We are supportive of becoming masters of our own destiny". That was kind of the thing that we heard, that we can partner with TxDOT, we can partner with the different cities and counties and the counties surrounding us, and that this Grayson County RMA will allow us to do that.

But the process has been very smooth. It's been developed. From what we heard, the petition was February 11th, and we're already here on this month asking for this to be approved; so it's a quick process even with public -- with having a public hearing, and working with TxDOT has been very -- it's been a very good experience for us. And we're going to be moving very quickly, if this is approved today, to get the Governor to appoint our chairperson, and the Commissioners will

appoint the other -- the board members and get the policies established and ready to go.

So we think this can be something that can be replicated fairly easily throughout the state and certainly are willing to work and communicate with any counties around about how we did this and the approach. And I think that certainly the two that -- the first two RMA's are probably who you would want to talk to. They're much further along in the process, and they're much larger, but there's certain benefit that all counties, either multiple counties together -- like I talked about before, this may be something where our county may join with other counties, or Grayson County may go by the wayside in a few years, or we may join with the counties east and west. We can't go north because we are at the northern border.

MR. WILLIAMSON: Yeah.

MR. PHILLIPS: But there's certain benefits to this.

I don't want to take any more of your time and would certainly ask favorable consideration for the Grayson County RMA.

MR. WILLIAMSON: Questions or comments directed to Mr. Phillips?

MR. HOUGHTON: Will this be a toll road?

MR. PHILLIPS: At this point, eventually -- what we're looking at eventually is the North Texas Tollway Authority is looking that this will be at this point a path where this will end up. We're probably not there in the initial years. We have -- and we're looking for this to be a potential pass-through toll facility where we're coming and saving the State on their dollars by having an investment put up front; and so it's a little -- it's taking advantage of one of the other tools that we've created under 3588, but eventually you will probably see this to be part of a toll corridor of some type. And certainly that's probably several years out, and certainly building this and having this facility -- this mitigation facility for 75 and 35 will be helpful to get that tollway up there so that -- And the neat thing about the RMA, eventually the North Texas Tollway may come in and buy this facility from the RMA or from the State or however it's set up.

The neat thing about 3588 is we've got tools out there to get these facilities, these congestion mitigation facilities, built now, and sooner instead of later. Also, as you know, the 289 project, we have the Grayson County Airport, which is the former Perrin Field, with the extreme runways there, and we're -- no public announcement, but we understand that there are some

pretty good possible jobs coming into that area to utilize this facility or that the air facility -- the air base there that 289 will service; so we're pretty excited about possible announcements in the next couple of months about that.

MR. WILLIAMSON: I thought you were going to name that "Nichols Field".

MR. PHILLIPS: There may be something we could do. If we could -- we certainly could call it "Perry Nichols"; so maybe we could put "Nichols" in there.

MR. WILLIAMSON: I'll consider my public service a success when I get an airport and railroad named after Robert Nichols. It's the Nichols 12:00 o'clock right there.

Are there questions to or comments for?

MR. NICHOLS: I do have some, but I'll wait until we're finished.

MR. WILLIAMSON: Well, let's see. Judge McGraw.

MR. McGRAW: Mr. Chairman and Commissioners, thank you for allowing me to speak and be here, and thank you for your help in coordination. And I'd also like to thank TxDOT for their helping us get to this point.

I think it's probably one of the best things that's happened to Grayson County or will happen to Grayson County. It's very important that we get the Highway 289 extension from 56 to 82 and to the back side of the airport. We have thousands of acres that are developable in that area that I think can be used by industry. And as we have lost, I think, in our area some 50,000 jobs in the last three years ... and that's our tri-county area ... this is something that I think is very necessary for economic development for us.

I appreciate your consideration, and I would pray that you grant our application for being a Regional Mobility Authority for Grayson County.

MR. WILLIAMSON: Members, questions for or comments to Judge McGraw?

I want to tell you how impressed I am with your obvious forward thinking.

MR. McGRAW: Thank you.

MR. WILLIAMSON: I spent some time in Grayson County checking up on this, and I was very impressed with a community that's been hit hard and trying to figure out how to get back up and help themselves.

MR. McGRAW: Thank you very much. Any other questions?

MR. NICHOLS: Thank you, sir.

MR. WILLIAMSON: Okay. Phillip, if you want to return. Oh, I'm sorry, Judge. This is for the next time.

MR. NICHOLS: I'm sorry. He had three yellow cards there.

I'm going to echo what the Chairman has said. You-all have got a great opportunity up there with that airport. I know you are aware of it and you're doing things with it. You've got a big airport, you've got the rail, you've got -- you're trying to feed a big artery coming out of the Dallas area right up to you, and you're going to be successful. And my compliments to the entire community for putting this thing together. It took -- it's amazing you could have those public hearings and not have people objecting to it, which shows how well you-all's leadership has gone into the community in this thing.

In some of the other RMA's that have been formed, once you establish your board and they begin looking I'm sure they'll be focused on this project, but they also, as I've seen with some of the other boards, will start looking at other possibilities in the area  --

MR. McGRAW: Yes, sir.

MR. NICHOLS: -- which I think you'll be

amazed with what some of them have come up with. I know our district will be working to help you be successful, and I know the turnpike, TPA, have a lot of experience in people that can give you advice and suggestions and help.

But you also additionally -- I know you-all are going to have to fund your operating costs, your staff and things like that, but you may need some help, as we've seen in some of the others, with some technical studies on some of the possible other opportunities that may be out there. And I would encourage you as you start looking at that to try to analyze what you might need to come to the Commission. We have helped some of those others, and I know that Governor Perry had asked the Commission several years ago to allocate a certain amount of reserve funds to help encourage kind of a starter kit parts of the RMA's, and we do that sometimes.

MR. McGRAW: Okay. Appreciate that.

Any other questions or comments? Thank you very much.

MR. WILLIAMSON: Thank you, Judge.

Phil? Any questions or comments for Phil?

Well, RMA number three, I hope. Is there a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Is there a second?

MS. ANDRADE: Second.

MR. WILLIAMSON: All in favor signify by saying "aye". All opposed, "no". Motion carries.

Congratulations, Larry. Good job. I'm really proud of you all. It's good.

MR. BEHRENS: Okay. Moving on to Agenda Item 9(a), which will be a recommendation to authorize publication of Request for Competing Proposals. Phil, would you like to do that one?

MR. RUSSELL: Yes, sir. Thanks, Mike.

On March 30th of this year, last month we received an unsolicited proposal from Managed Lanes, LP. Their proposal was to develop tolled (managed) lanes along Interstate Highway 820 and State Highway 183 from 35W to the 35 area in both Dallas and Tarrant Counties as well as portions of 35W and 35E south to the extent necessary for connectivity and financing.

Development of this project is obviously a crucial element in relieving severe traffic bottlenecks existing in the Dallas/Fort Worth metroplex. If it were expedited, completion of this project may be realized through development of a public/private partnership and the employment of innovative methods such as those described in the unsolicited proposal.

Approval of this minute order would direct the

staff to publish a request for competing proposals and qualifications and subsequently evaluate the original unsolicited proposal as well as any other responsive proposals which are received within the allowed period. Now, we have currently put in 90 days for that advertising period; so again I'd be happy to address any comments you may have.

MR. WILLIAMSON: I might have one.

Members, we can do this -- we've got several things we need to accomplish. I'm going to want to talk about some things, and I'm also going to want to talk to the proposal that Mr. Kiewit has applied for, and I know each of have you some concerns. This is -- for the audience, Kirby, this is a big deal; so it will probably be one of our fastest moving if we go through with it, and we won't know that for 90 days or so. This will be probably one of our fastest moving comments, and this is precisely what the Governor has asked us to pursue. There are some concerns, and this is a big deal, and we need some comments; so you can now ask questions of Phillip yourself, or if you care to, I'll take the lead.

Amadeo, I'm going to use you as a tool. I'm going to speak through you. He's got a plane to catch.

MR. SAENZ: No. I'm just checking to see whether to say "good morning" or "good afternoon".

[Laughter.]

MR. WILLIAMSON: He's got me.

I'm going to use you as a tool to speak to Mr. Kiewit and Mr. Fleur and Mr. Abrams and ... Who's the guy in San Antonio? Anybody? Zachary.

Is it your understanding, Amadeo, that the Governor intended and the legislature intended to give us multiple construction and financing tools for the purpose of taking a chance on trying different things different ways?

MR. SAENZ: That's correct, sir. In fact, the CDA project includes not only designing and building -- designing and constructing, but it also has an element of financing.

MR. WILLIAMSON: And the Governor would not be pleased, and the legislature would not be pleased, if we simply put different words and different time lines and different phrases around the same way we've done business and then continued on, attempting to create the illusion that we were doing things differently?

MR. SAENZ: That's correct.

MR. WILLIAMSON: And in all likelihood, those tools would be greatly diminished, if not perhaps removed, from us two, four or six years from now?

MR. SAENZ: That's correct.

Money just like everybody else. She lines up after the other 25 that came to see me.

MR. WILLIAMSON: So just so the Commission understands completely and just so our good partners out in the construction world and design world will understand clearly, the Governor and the legislature gave us a tremendous amount of entrepreneurial authority. They handed us the key to this and said "Go take a chance. We need roads and railroads available. We need air quality programs. We need a plan for the future. Go do that."

So we have these tools. And is it your understanding that we cannot and will not create an illusion, we will be perfectly willing to try new things, progressive new things, but they really have to be new; they have to be things that we couldn't otherwise do in the same course of business?

MR. SAENZ: That's correct, sir.

MR. WILLIAMSON: I thank you for taking time. This is what -- And the other members might have questions for you, or they might have questions for Phil.

Members, any questions for Amadeo generally about signing the bill in advance?

Okay, Phil. You can come back up.

The Commission under our rules is allowed to

know some things about these proposals. There's a point at which the Chinese wall guys up, we can't know anything, but right now that wall is not there. We can ask questions. We have no leverage in order to know if we want to go forward with it or not. The proposal includes the first element, as I understand it, design and build. We'll design it, you get the right-of-way and provide prints, we'll design and build it, and we'll be on it like flies on a ... Is that how you understand it?

MR. RUSSELL: Generally, yes, sir.

MR. WILLIAMSON: And does the proposal also include and we'll finance it all, and we'll get our money back in some ownership through tolls?

MR. RUSSELL: Who would finance it all?

MR. WILLIAMSON: Proposal.

MR. RUSSELL: No, sir.

MR. WILLIAMSON: Who would be financing the project?

MR. RUSSELL: I think primarily it would be the Department.

MR. WILLIAMSON: So this is basically a design-build proposal, not a design, build and operate proposal?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Members? Phil's

available to you before I ask this question.

MR. HOUGHTON: Can we talk about the actual numbers, Mr. Chair?

MR. WILLIAMSON: Yes, sir. This is real important. This is a big deal.

MR. HOUGHTON: Okay. What is the value of the project?

MR. RUSSELL: I don't have it in front of me. The best I remember, it was in the area of about two-and-a-half million.

MR. HOUGHTON: Million or billion?

MR. RUSSELL: Billion. Excuse me.

MR. WILLIAMSON: It's a good thing you corrected that because I would say "Mike, get it written up right now".

MR. HOUGHTON: And what would be our equity contribution by TxDOT?

MR. RUSSELL: Well, Commissioner, it would be yet to be determined, but as the Chair suggested  --

MR. HOUGHTON: Well, I mean you've got to get total viable. What's the total viability of a 2.5- billion-dollar project?

MR. RUSSELL: We have not run those numbers. To my knowledge, I don't think anybody has. I don't know if ETCOG has run any of those numbers or not.

I think that's yet to be determined.

MR. HOUGHTON: How do we know, then, if this is -- how do we know if the equity -- what we're going to be required to put in as equity? Why would we go forward with this if we did not know any factual numbers?

MR. RUSSELL: Well, I think, Mr. Houghton, that the philosophy would be to move forward. We open this up perhaps for competing proposals. We'll very clearly articulate what criteria we would utilize, short list the terms, and that criteria would be to the extent that we could minimize State and Federal dollars.

MR. HOUGHTON: Well, let me go back. Don't we have a rule that if we go forward, there's five proposals, if we go to three, that we have to pay the unsuccessful proposers a fee for their intellectual knowledge that they supplant? Is that correct?

MR. RUSSELL: That only applies after we issue the detailed proposal, not at this stage.

MR. HOUGHTON: But my point is I would think I'd want to know up front what this thing may or may not require from an equity standpoint. If I'm going to go down that road, I'm going to have a liability on the other end, not knowing what I'm getting into.

MR. RUSSELL: Well, potentially,

Commissioner Houghton, you're right. At a certain time once we've issued the detailed proposal we would get into that stipend issue. Statutorily it says we will pay a stipend. It does not say how much.

MR. HOUGHTON: I'm going blind.

MR. WILLIAMSON: What I think Phil is trying to say is we're not going to be taking this step. We'll have to take another step here in about 120 days to  --

MR. HOUGHTON: Will I know the numbers in 120 days on what the equity contribution may or may not be required by TxDOT?

MR. RUSSELL: Potentially, but again now you're 120 days. We hope to get some clarification from this proposer as well as competing proposers, but I doubt we're going to get any traffic rating numbers that we're really going to be able to weigh in and say it's going to be this amount  --

MR. WILLIAMSON: No. But, Phil, understand his question. He's asking you are we going to have to sign on the stipend before we have the -- I think the answer is "no".

MR. RUSSELL: "No".

MR. WILLIAMSON: Well, we won't enter into that part until we know. The other one -- he doesn't

want to be obligated to pay the stipend before we know about what it is we're going to have to put into the deal.

MR. RUSSELL: You're right, sir. Clearly the Department's in the driver's seat. We only issue that detailed proposal when we're ready. At this stage there's nothing at risk, nothing that would be assumed, no stipend, nothing else. We would only come back at the second stage with that request for detailed proposals. We could do that at the proper time.

MR. WILLIAMSON: And in fact, we can't get competing proposals unless we take this step, right?

MR. RUSSELL: That's correct.

MR. WILLIAMSON: Our choice today is to say "We want to do this if ..."

MR. RUSSELL: We won't know what other ideas might be out there unless we advertise for competing proposals.

MR. HOUGHTON: Does this fit the 10-year plan for the MPO?

MR. RUSSELL: I may need some help from Maribel, or actually part of this is that one little piece out in Bill's area, right?

MS. CHAVEZ: It's all in the compete.

MR. RUSSELL: In your area?

MS. CHAVEZ: It's all in the compete.

MR. NICHOLS: Maribel, why don't you just come up here?

MR. WILLIAMSON: It's your constituent. It's your question.

MS. CHAVEZ: Mr. Chairman, I'm a District Engineer in Fort Worth, and against my staff's better advice I came today.

But the entire corridor, and as far as the Department's concerned, there's actually three projects the way we introduced them, but they are identified in the NTP and the MPO's Metropolitan Transportation  --

MR. NICHOLS: Is that in the 2030, the 2025, or is that in the next 10 years?

MS. CHAVEZ: It's the 2025. It is the 2025 plan.

MR. NICHOLS: But the dollars that we try to work with, I know we're always planning in the future what's needed and wanted, but in the -- we use a 10-year plan for our dollars. It's not in the 10-year plan, is it?

MR. HOUGHTON: Somebody is saying over here part of it.

MS. CHAVEZ: Yeah. I can't speak for the Dallas portion, but the two -- essentially the two

projects that are in Tarrant County, they are in the UTP they're not fully funded, but they are in the UTP.

MR. WILLIAMSON: It's sort of an interesting situation that this project presents us. This is one of -- I don't know -- technical people like Maribel may know the answer to this, but this is one of the five most overloaded sections of the state. It's clearly qualified.

But the interesting dilemma this presents us is the metropolin are going through their planning process right now, and who knows where these two projects or three projects will fit in the local's planning process, but they may well decide locally we just can't allocate very much money to this; and so then the State has a question to ask itself: Is this important enough for the State of Texas, not the region, but for the State of Texas to pursue? And then if it is, would this proposal by Mr. Kiewit or an alternate proposal that was better made by Mr. Fleur, Zachary or Abrams, be so attractive to us that we would be willing to take it on as a State project? And I find that it's a very interesting dilemma, though, that Mr. Kiewit put us in.

MS. ANDRADE: I have a question. I certainly do not want to discourage unsolicited proposals, but is this common that we receive a proposal

like this without telling us how it's going to get done or how it's going to get financed?

MR. RUSSELL: I think, Commissioner Andrade, we've really had a full spectrum. We've had some where it was very detailed. I think the 45 Southeast proposal at least initially was pretty well down to the thing. Others have been more generic and just more of a philosophical idea.

MS. ANDRADE: So if I just have an idea I want to build it and send it in and say I want to build this --

MR. RUSSELL: Well, it still has to pass muster. We have to make sure that it has a basic plan to put together development, plans for how they're going to implement it, and all of those criteria have to be checked on this proposal so it does meet that threshold requirement.

MS. ANDRADE: So basically what you're telling us is that this is a good project, and we just want to go out there and get more proposals on this, and then we'll make a decision as to how it's going to get done  --

MR. RUSSELL: That's correct.

MS. ANDRADE: -- but at this time we still don't know how it would be funded or whether it's a toll

line?

MR. RUSSELL: That would be a correct statement.

MR. WILLIAMSON: For purposes of the agreement, Amadeo, I have been walking through the philosophy with Bill, and we're going to get a chance to take to Mr. Kiewit. The purpose was to communicate to our partners who I know have indicated an interest in the process, which the Governor's led, the legislature's led, we're empowered to do innovative things and take chances.

We're not empowered to do things the same way and call it something different, and we can't create that illusion. What we need from them, whether it's Mr. Pfeffer or Mr. Fleur or Mr. Abrams or Mr. Zachary, we need financed entrepreneurial proposals. We have the authority to deal. We need proposals to deal. Otherwise, why would the citizens of Tarrant County, why would Maribel as a District Engineer, why would we as a Commission, want to do anything different than the way we're doing it now?

We have a very dependable transparent logical process we follow for the fair distribution of gasoline taxes among the administration. There's no reason for us to change that. There's every reason for us to be excited about the proposal. It's truly entrepreneurial.

MR. NICHOLS: May I?

MR. WILLIAMSON: If we say to the competing public, those who would do this also, these are the parameters we expect, we'll have some proposals to do that, I think.

MR. HOUGHTON: Go ahead.

MR. NICHOLS: I had comments relating to three different areas related to this.

First of all, the -- I think it's new. This whole process is new to the State, it's new to us, it's new to the employees, and it's fairly new to many people in the industry who are wanting to participate in this. And as we -- we're all learning this together in reality, and I think as we had a discussion item earlier relating to construction sanctions, stuff like that, I think it might be good to set up and have a discussion item at one of our Commission Meetings in front of the public where we give direction to the staff a criteria of the kinds of things we're looking for, not to restrict but at least eliminate certain types of proposals that we may not be interested in, to encourage the industry to look for innovation where we think we can look. So I think they need some direction, and I think we're heading in a good direction.

On whether or not today -- we have one of two

choices: We could stop this process on this project and that's it, or we can go ahead and agree to accept the concept and move forward, and then we could advertise, I would suggest at least 90 days for people to put something together.

These are really proposals more to try to qualify who could make a proposal as opposed to the details that we would get into a stipend. That way we'd at least find out who's interested in putting together a proposal on this project. And then you-all get into an interview, go through qualifications and all that kind of stuff, and then you might end up with two firms or three firms or five firms who are interested in conceptually trying to come up with a way to tackle this.

So let's do it. That's my opinion. And that doesn't cost us. But we need to give some direction so that there's not a false hope out there that if any of these concepts -- you know -- they're expecting us to kick in half a billion dollars or a billion dollars or something like that like on some of them I've seen and have no risk to them as a proposal because it's basically "Here's our proposal. We'll build it. You pay for it. We think we can sell some bonds, but anything that goes short the State covers." That's not the kind of creative thinking we're looking for. At least I'm not.

MR. WILLIAMSON: No.

MR. NICHOLS: And there are some out there  --

MR. WILLIAMSON: Nor is the Governor, though his whole point about this is to take a chance.

MR. NICHOLS: But there are -- that project is important to me; and so I know it's very important. I know -- but we had delegation from that area that actually came to the Commission last year and requested -- they said, "It's not even in your 10-year plan"; so their hopes in dealing for the expansion unless we use some tools, they would have a chance of that thing being stranded for about 10 more years.

And so I know in the Waco area, I'm going to relate in the Waco area -- I'm going to talk about Waco here for just a second. We'll get several things under this. The -- I know in Waco, you know, the concept of tolls kind of caught the locals by surprise, and they're having to consider it and evaluate it, and there's going to be quite an educational period; but last year when the delegation of communities who live along this route -- and it's a big road between Dallas and Fort Worth, and these are communities along that that knew they had a problem. The Commission threw out and I think Chairman Williamson threw out, "Well, would you-all be interested

in us tolling it? If we could extend it by using tolling, would you-all be for that?"

And the local newspaper still -- I think it's a pretty good size newspaper in Fort Worth, and in my book I'm going to read you what their comments are today or this past week, and then I'm going to tell you what the comments were last year. Today in this thing -- it was three pages. I'm just going to read a couple of lines. The big newspaper ... I won't say which one ... says -- in Fort Worth says the title is "Toll road proposed between the --" Well, it says "futuristic", "this project --" it defines it as "a futuristic toll expressway that would whisk motorists between North Fort Worth, North Dallas, with a speedy solution to today's traffic problems."

Later it says: "It may be the most significant change in metroplex transportation since the Dallas/Fort Worth Turnpike"; so it's a pretty large article, very positive. When we brought this idea up and proposed it, and the Chairman is the one that threw it out to the delegation and caught them by surprise, less than 12 months ago this same newspaper had an article this big (indicating) that said "Tolling: What a ..." and the term was "... goofball idea" and the "goofball Commission members". This is before you-all got on. You -all have

raised the level.

MR. HOUGHTON: We've raised the level.

MR. NICHOLS: Yeah. And they used the word "goofball" three or four times, at least three times in that article. It was a pretty big slap to the Commission, but look how it's changed in just those six to nine months.

MR. WILLIAMSON: But in fairness to my hometown newspaper, I did throw out slapping tolls on the existing lanes to let us borrow money fast to build the new lanes. I think that's what Paul -- by the way, he's a graduate of Baylor University. He's the publisher, or is he the editor? I can't remember. Which is it? Paul Marable.

MR. NICHOLS: He's an opinion editor.

MR. WILLIAMSON: He's a graduate of Baylor. Anyway, he called it putting tolls up on existing lanes.

MR. NICHOLS: But conceptually, I mean there's an attitude that's changing in a very fast period of time when they recognize that some of these projects we can't build and advance them forward unless we do something, whether it be tolls or some of these other things.

MR. WILLIAMSON: Of course, I still

advocate putting those tolls on some of the existing roads. I think that's the way get a road built.

MR. NICHOLS: Seemed like one of them had to do with the attitude. The other one had to do with moving forward, looking for -- I'm going to suggest -- in a minute I'll make that motion that we do accept it and go ahead and advertise, but at least allow ample time like 90 days after we advertise it for proposals to come in, but also send a realistic signal that if the proposal is going to be for us to kick in a half a billion or a billion dollars as a solution and there's no risk in equity by the proposers, then it's not realistic.

I think this project is a viable project, tolling that thing to expand. I do personally think it's very viable. I haven't run the numbers, obviously, but what we've done -- what we have -- beginning last summer we began taking much of the expansion money in the metropolitan areas and putting some of the recommendation of projects into the local's hands so the money that we normally would have had available like in the next place we're handing out there to that Metropolitan Planning Organization that recommendation, and their priorities -- I mean that's where this allocation would have to come from; so you know, they may have higher priorities for their allocated money than this.

MR. RUSSELL: Mr. Nichols, as far as the plan, actually I guess last week or the week before last we had a meeting, and the staff recommendation was for us to develop a planned strategy on unsolicited proposals; so I've given those marching orders, and I agree if we're trying to put something together we should have that fairly quickly for you.

And again, Chairman Williamson talked about it. Again, our process is a two-pronged two-step process which would be a request for qualifications followed by a request for detailed proposals, and at that stage is when the issue of a stipend would be invoked. At this stage it's merely casting a live net to see what sort of innovative ideas and concepts are out there.

MR. WILLIAMSON: But we're actually in effect telling first our DE and second the public that this is high enough on our chart that we have an acceptable proposal.

MR. NICHOLS: But after the advertisement and once we interview all of those proposals -- proposers, I guess, and their proposals, if we review all of those and we realize there's no way we can kick in that equity, then we can just drop it right there?

MR. RUSSELL: Yes, sir, or for other reasons, as well.

MR. NICHOLS: As long as we have that option.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Bill, are you still around?

UNIDENTIFIED MALE: No, but I'm here in his place.

MR. WILLIAMSON: You sent Bill home?

UNIDENTIFIED MALE: He just went home all by himself.

MR. WILLIAMSON: He's fixing to get his punishment, believe it or not.

In your mind, is there any project in the state of Texas that's more attractive to this kind of proposal than this one?

MR. SAENZ: I think this project lends itself. I think also at the same time the Metropolitan Planning Organization, that area is putting together their Metropolitan Plan. It's looking at those allocations that we've provided them and what projects are going to be their priorities.

If we could get a proposal from an entity and they come in and they're putting in some private or additional dollars from somewhere else that will complement what the MPO has, they may be able to get this

thing into the plan work; so we could simultaneously be doing those two things. One is working with the MPO; second is going out there and see what we can get under competing proposals and then try to merge those together.

MR. WILLIAMSON: What are the areas in the state that we would like to see this kind of proposal focus on?

MR. SAENZ: We've got several other projects proposed like up in Dallas, for example, the LBJ project in Dallas, that we are working on that project. And I know that the MPO also considers that project a high profile project. I would imagine that the Houston area has some projects that they're interested in trying to do the same thing.

One thing that we can go do is work with the MPO's, identify their highest priorities, and maybe start moving forward with the scenario where we solicit proposals under the solicited proposal process. And those solicited proposals could come in with the mechanisms to how to construct it and how fast it could be constructed. You could start with qualifications as well as what other additional resources could come in from the proposers that could help the locals get those projects  going.

MR. WILLIAMSON: So under the law, for

example, the LBJ Freeway expansion, you can tell Bill he had a chance and since he wasn't here we passed up on him. We could issue a solicited proposal to the world that would say "If you're interested in doing this for us, if you can do it -- do this part in three years and this part in five years, if you can supply this amount of capital and be willing to take this amount of tolls until you're repaid, and if you will accept this buy-out for the contract, then that's what he want." We could do that, couldn't we?

MR. SAENZ: Yes, sir, we can.

MR. WILLIAMSON: And then UTTA could look at what we're doing and say "Wait a minute. That's how we want to do that." Or the MPO could say "Wait a minute. We want to make this more profitable"?

MR. SAENZ: That's correct.

MR. WILLIAMSON: Or everybody could say "It's too rich for us. Can you guys handle it? The State won't. Do you think you can?"

MR. SAENZ: It would give us all of the flexibility.

MR. WILLIAMSON: That is precisely the matrix we wish to create, is it not  --

MR. SAENZ: That's correct.

MR. WILLIAMSON: -- that complete -- that

matrix of choices?

MR. SAENZ: But we've got a lot of skillets -- a lot of irons in the fire right now and a lot of people putting the pieces of the puzzle together, and we're now beginning to start to merge them.

MR. WILLIAMSON: Members, I'm going to ask Mr. Pfeffer to come forward in a moment, and we certainly have failed in this, and Maribel, of course, wants to lecture us a little bit; so go ahead.

MS. CHAVEZ: It might be helpful for those who are not familiar with that order to know what was already under development, the project that we were already working on, and so how this complements or works with that plan; but actually that corridor ... and it's in the NTP's plan ... already had HOV facilities identified; so we were already working to develop the added capacity along that whole corridor from 35E to 35W. We were already identifying -- and there's about three separate projects, but we were already identifying the added capacity, and that added capacity would be an HOV facility.

My understanding is that what we're looking at is an opportunity to perhaps toll that network of HOV that we were already in the process of developing; so it doesn't change the plan significantly or substantially as

far as what the region was already developing. It just helps, hopefully, to accelerate, to make those projects happen because, in fact, there were three existing projects, two in Tarrant County and one in Dallas County. Only one of those in Tarrant County had funds identified for it, and it wasn't for -- it was for early implementation like a Phase 1 type; so we didn't actually have all of the funds identified.

The other two projects, though, we've been developing did not have construction funds identified, but the typical section, if you will, the cross-section, is along the same lines of what we're already developing and what's already in the MPO's plan, just not fully funded.

MR. RUSSELL: It's always money.

MR. WILLIAMSON: Mr. Pfeffer, do you want to step into this?

MR. PFEFFER: Yes, sir. I'm Jerry Pfeffer. I'm Vice President of Peter Kiewit Sons. I appreciate the opportunity to address the Commission.

MR. WILLIAMSON: My lawyer tells me that there are certain things I can ask you and certain things I shouldn't ask you. I have a great lawyer. And I don't wish to (inaudible). This is the open new year in Texas. The Governor and legislature has said take a chance.

We've asked the private sector world to propose taking a chance with us.

So far we haven't seen much of a chance in the private sector world. I don't mean that personally. I mean we just haven't seen the entrepreneurial aggressiveness that we thought might occur, and we still hope that it will occur.

Was it your the company's intention to focus on just the design-build aspect and get it done fast? You weren't interested in the personal and financial side at all?

MR. PFEFFER: Sir, if you don't mind, I'd like to just give you a quick statement by way of background before I answer your questions.

MR. WILLIAMSON: Is Peter Kiewit still an employee of your company?

MR. PFEFFER: That's correct. There are about 1,500 stockholders.

MR. WILLIAMSON: An amazing story.

MR. PFEFFER: If I may, sir, good afternoon. As I mentioned, I'm Jerry Pfeffer. I'm Vice President of Peter Kiewit Sons. Kiewit employs 1,300- some-odd people in the state of Texas in road building and other industries, as well. Our development company is headquartered in Fort Worth. Our team includes a

number of Texas companies, including JDA, who is the current (inaudible).

We'd like to thank you for moving so rapidly on this as noted. This began in March. We see this as an opportunity to work together with you, the MPO, the jurisdictions along the route and others, to try to find ways to accelerate the solutions to congestion or to solve congestion on this very critical corridor.

As you may be aware, a recent survey identified 22 critical intersections in the state of Texas. Nine of those are in the metroplex, and five of the nine are along this stretch of highway; so this is a poster child project.

The new lanes we're talking about will offer motorists a new option that they don't have today to bypass gridlock. All of the existing capacities out there will remain free, and all of the lanes we're talking about will remain publicly owned at all times.

To keep traffic moving, we propose to vary tolls up and down during the day in order to cause people to change their behavior, to get motorists to pick the times of day that they want to travel, to encourage -- because a lot of travel during peak hours is discretionary travel, if people only understood the cost of congestion.

The tolls would all be collected electronically. Using toll tags would be accepted by virtue of your regulations throughout the state.

The proposal we've put in reflects our experience doing the first of these projects, (inaudible) express lanes. That was the first project we financed over in the United States since World War II. It's the world's first fully automated toll road, and it was the first demonstration of this concept of managed lanes.

Now, we've met with over 40 elected and appointed officials along this corridor, and I've got to tell you I've never seen the kind of positive response that we're seeing from those officials. Many of them were here at the delegation mentioned, and I had the opportunity to sit in the back of the room of that delegation and heard from you loud and clear that you had the three choices: the slow road, no road or toll road. They all gulped and said "Well, maybe we need to make it work as a toll road."

But as you noted, when in the year past we began working in earnest on this project in November and began talking to people, we just couldn't find a consensus. There wasn't a process in place for moving the idea forward. We applaud the suggestions you're making with the MPO's and other stakeholders, that you

look for these high priority partners and identify them to the industry and solicit proposals.

Unsolicited proposals have a place, and we will continue to look at places where they may work, but clearly if there is a consensus built among public agencies and the proposals sought, we'll look at others, as well.

With the new legislation in place, we're all trying to figure out how to work together to take advantage of those who have authority. Our proposal does include a finance plan. It also include a letter from J.B. Morgan saying that they've looked at the financial plan, and while it's based on preliminary numbers it appears to work.

The "chicken and egg" problem in these projects is if we can't stand here today, nor can anybody in the Department or even at the MPO, and tell you exactly what percentage of the cost of this project can be borne by the tolled revenues that we expect to collect.

We've learned on 9/11 that the best draft by consultants in the industry can be way off just because of relatively small variations in the demand or the socioeconomic conditions along the corridor.

In our proposal we outlined a suggestion that if you were to decide to go forward, that you

have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: All in favor signify by saying "aye". Opposed, "no". Motion carries. I assume we can make this work  --

MR. PFEFFER: Yes, sir.

MR. WILLIAMSON: -- all over the state. You see why I wanted you all to sit through? Because this gives you some guidance on your situation.

We're going to take a one-minute break.

(Recess taken from 1:26 to 1:45 p.m.).

MR. BEHRENS: As we said earlier, we were going to wait on Agenda Item 9(b) until after the executive session; so we'll go to Agenda Item Number 10 on contracts for the month of April. Tom.

MR. BOHUSLOV: Good afternoon, Commissioners. My name again is Thomas Bohuslov. I'm the Director of the Construction Division.

Item 10(a)(1) is regarding awarding maintenance contracts let on April 7th and 8th, 2004 with an estimated cost at 300,000 dollars more. There are 19 projects averaging 2.63 bidders per project. The staff recommends award of all projects.

MR. WILLIAMSON: Members, the floor is open for questions directed to Thomas.

Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Second?

MR. NICHOLS: Second.

MR. WILLIAMSON: I've got a motion and a second. All in favor signify by saying "aye". All opposed, "no". Motion carries.

MR. BOHUSLOV: Item 10(a)(2) is for consideration of awarding a Highway and Building Contract let on April 7th and 8th, 2004, with 61 projects averaging 4.2 bidders per project.

We have two projects recommended for rejection. The first one is in Parker County. It's Project Number 3211, and this project just had one bidder that was 37-38 percent over, which was too high and there wasn't enough competition. We feel like we'd like to see if we can solicit more competition.

Another project recommended for rejection is in Wood County. It's Project Number 3205. We had one bidder, and it was 58 percent over. This project involves funds from the City of Mineola, and they'd like to see us go back and see if we can get reduced costs and also see if they can solicit more competition for it, as well. The staff recommends award with the two exceptions noted.

MR. HOUGHTON: So moved.

MR. NICHOLS: Second.

MR. WILLIAMSON: Got a motion and a second. All in favor signify by saying "aye". All opposed, "no". Motion carried.

MR. BEHRENS: Agenda Item 10(b) will be Amadeo will give you a recommendation on a contract claim in Walker County.

MR. SAENZ: Good afternoon, Commissioners. For the record, I'm Amadeo Saenz, Assistant Executive Director for Engineering and Chairman of the Contract Planning Committee.

The minute order before you approves a claim settlement for a contract by Peninsula General Insurance Company for Project IM 45-2(97) in Walker County in the Bryan District. On March 11th the TxDOT's Contract Claim Committee considered this claim and made a recommendation for settlement to the surety, and the surety has accepted.

The Committee considers this to be a fair and equitable settlement to the claim and recommends your approval. I'll be happy to answer any questions.

MR. WILLIAMSON: Questions, Members?

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I've got a motion and a second. All those in favor will signify by saying "aye". All opposed, "no". Motion carries.

MR. BEHRENS: Agenda Item 11 will be the remainder of our routine minute orders. We've already covered 11(a)(2) and 11(a)(3). Those minute orders are as listed. They were posted on our required agenda. I might note that on Item 11(f) on speed zones we have two highways -- or we have one stretch of highway in two counties where the speed limit was increased to 75 miles an hour. I bring that up for Mr. Houghton's benefit. They're both in El Paso County or in the El Paso District.

Other than that, unless you have any items you'd like to discuss about each one, I'd recommend approval of the rest of the minute order.

MR. WILLIAMSON: Mike, I know that the Department cannot know exactly where a piece of property the Commission members own, but I believe that you know generally where the property is that we're about to discuss. Are there any transactions involved in that which we're fixing to approve that might affect us negatively, to your knowledge?

MR. BEHRENS: Not to my knowledge.

MR. WILLIAMSON: And I assume none of us

have any knowledge of the same or we would recuse ourselves from questioning.

MR. NICHOLS: I have a comment.

MR. WILLIAMSON: Please.

MR. NICHOLS: And I support everything in here. I have no problem with anything in there except there are two items that come up on a regular basis. And, Carlos, I meant to ask you something awhile ago, or it might have been Mike. On the speed zones, I know that when we have a construction area that we know we'll be working in we post it in here, we vote on it, we accept that speed zone and we post the speed zone, but I recall ... and I may be recalling incorrectly ... that if we have a maintenance situation that occurs and our maintenance crews go out there and they have to work and put up the orange cones and all of that, that they are not authorized to set up a speed limit. Is that correct?

MR. LOPEZ: That's correct. All they can do is set up an advisory speed limit sign.

MR. NICHOLS: Yeah. So as we work -- and I know some members of the legislature are looking for ideas of things that would be helpful. Safety-wise our maintenance crews, even though we put up an advisory thing, there's no authority to it. I mean the Highway Patrol can't really issue a ticket that will stick if

somebody zooms by at 70 miles an hour and they have an advisory of 45 in front of this emergency thing, unless it's actually voted on by us.

MR. LOPEZ: It's a more difficult ticket to make stick.

MR. NICHOLS: And I would think most members of the legislature would understand this situation and support something that would help us on a safety issue like that.

MR. WILLIAMSON: I agree.

MR. NICHOLS: So I would encourage us to -- Is Coby here? I saw him awhile ago. I'm not asking him to come down. I'm just -- I don't need him. We just need to make sure we bring that forward as something, because I know the interim committees begin, one of them is next week.

Another one which I have seen since I've been on the Commission is, for instance, there is an item in here ... What is it ... 11 -- Number 4 -- no. It's 11(a), yeah. And it's a 400-dollar tract of land. Is that right? $430.00. And every month we have one or two of these things, and that's fine, but due process on -- it doesn't matter if it's a 300-dollar tract or a 400- dollar tract, it's got to go through a multi-thousand- dollar process and go through months before it gets to

us.

Then if we approve it, it then actually goes to the Land Commissioner's Office, and the Land Commissioner himself must sign it. Then it must on go on to the Governor's office, and the Governor himself must sign it before this thing is released, this 400-dollar tract.

And what I had seen, and I talked to a number of people in some of these communities where if you've got an oddball 300-dollar tract that happens to obstruct a piece of property that somebody is trying to develop or has a chance to put in something and that industry or business goes into the community, they need some kind of a quick answer, you know, "We'll do this, but we've got to make sure we get this."

When they come and ask our local district or area office, they can't say. They can say "We can put it through the system", but by then the opportunity is lost. And so I would think that it would probably require a constitution. I'm not a lawyer. He's saying "no". No? But if the legislature could set a dollar value, whether it be $10,000.00 or 20,000, whatever people feel comfortable with, that if it's under that amount we could streamline that process to expedite settlement stuff.

MR. WILLIAMSON: I think probably what you're really saying is if Coby didn't take good notes,

we've got another legislative issue.

MR. NICHOLS: I think there's two.

MR. BEHRENS: When you made your comments earlier in the week, we voted on putting that on the agenda, but we will explore that and see what it takes to do that, because right now our folks, all they can do if somebody comes in to maybe acquire one of those tracts is just tell them it's a long, lengthy process, and it will probably cost the State more money in going through that whole process than what we're getting for it.

MR. NICHOLS: Right. Plus it discourages the opportunity; this loss, we have no idea what's actually lost. And we need to get it out in the hands of business; so I would encourage us to come forward with a proposal or something like that that would  --

MR. WILLIAMSON: If we can ever find Coby, we'll give him that.

MR. NICHOLS: There's two. One is related to safe speed, and one is --

MR. BEHRENS: We will get it to Coby.

MR. WILLIAMSON: Any other discussion about this matter?

MR. HOUGHTON: Is DPS aware of the 75-mile-an hour zone, Mike?

MR. BEHRENS: What's that?

MR. HOUGHTON: Never mind.

MR. WILLIAMSON: He's asking if the DPS has approved that 75 miles an hour.

MR. BEHRENS: Well, I think as we move forward, and just like Mr. Nichols was talking to Carlos about the speed limits and the work zone and what our maintenance forces can do, you know, any time you have a speed limit you need enforcement. And I think as we move forward into the next session we can talk to DPS and partner with them, and maybe we can do other things in the session to get more enforcement out there on the work area.

Back to you.

MR. WILLIAMSON: That's what I'm talking about.

Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor will signify by saying "aye". All opposed, "no". Motion carries.

Ready, Mike?

MR. BEHRENS: Ready.

MR. WILLIAMSON: Okey-doke. At this time the Commission will recess its open meeting to go into

executive session to confer with legal counsel and discuss the purchase of real property as noticed in the public published agenda filed with the office of the Secretary of State. It is now 1:56 p.m. We are in recess.

Oh, let's see. We want Ted to be a part of this, right? Wait a minute. We're back out of recess. I need to say something. We're back out of recess for a moment.

There are several items I wish to discuss with OGC in executive session, Mr. Monroe. One item might involve a financial institution with which Commissioner Houghton has a nontransportation-related financial association. Mr. Houghton has elected on his own to withdraw from any executive session or discussion involving that financial institution. We do, however, have other things I wish to discuss with you that I would ask Mr. Houghton to attend with us. So at the proper time we'll ask Mr. Houghton -- we will comply with his request to allow him to excuse himself in the discussion of the former.

We're now in recess.

(Recess taken from 1:57 to 2:34 p.m. for

Executive Session.)

MR. WILLIAMSON: The Meeting of

Commissioners is called to order. Commissioners have returned from executive session, and no votes were taken, no decisions were made during that session.

We will now return to the agenda. Mr. Behrens.

MR. BEHRENS: Mr. Chairman, we have two agenda items remaining. We'll go back to Agenda Item Number 5 under Transportation Planning. This will be to consider the Webb County International Bridge Application. Mr. Jim Randall.

MR. RANDALL: Jim Randall, Director of Transportation Planning and Programming Division.

This minute order provides for the approval of a Webb County International Bridge Application. Transportation Code Section 201.612 requires Commission approval of a new highway bridge over the Rio Grande. South 43 of the Texas Administration Code, Sections 15.70 through 15.76 provides that a political subdivision (inaudible) authorized to construct or finance the construction of a bridge over the Rio Grande must obtain approval from the Commission prior to requesting approval from the Federal Government.

The Department received an application from Webb County on September 17th, 2003 to construct such a bridge. The Commission considered the County's request but on December 18th, 2003 disapproved the application

when they issued Minute Order 109.520.

The Commission based its decision on the following: (1) the lack of a written commitment from the (inaudible) jurisdictions (inaudible) to provide adequate roadway connections to the proposed bridge; (2) sufficient information did not exist to indicate the bridge was consistent with the Regional Transportation Plan developed by the Metropolitan Planning Organization; and (3) the lack of public support for the construction of the bridge.

On February 19th, 2004 Webb County submitted a letter requesting that our application be reconsidered based on the following: The County provided a copy of the diplomatic note from the agency in Mexico to the U.S. Department of State expressing Mexico's interest in conducting necessary feasibility studies on both sides of the border.

The counties also provided a copy of a letter from a promoter interested in the development of this project to Mexico and a tentative request from the Ministry of Foreign Relations and any other Mexican Federal Agency to be an official sponsor for the bridge, including the roads necessary to connect Mexico any farther.

A fifth international bridge is contained in

the Metropolitan Transportation Plan indicating there's a need for the bridge. The Metropolitan Transportation Plan could not indicate which entity would construct and own the bridge or the bridge's location until all competing bridge applications are resolved and the Federal review and approval process is completed.

Sufficient information exists to indicate that this bridge is consistent with the Regional Transportation Plan developed by the Metropolitan Planning Organization, giving them jurisdiction over this project.

The counties provided letters of support for construction of the bridge from the Mayors of the Cities of Rio Bravo and El Sandaniza. The counties also provided documentation of attempts to convince the City of Laredo to join in a cooperative effort to the International Bridge in lieu of competing bridge applications.

Additionally, the counties provided an opinion from their counsel that a county has a direct and specific authority to construct an international toll bridge within the limits of a city located in a county without the requirement of the county receiving the city's consent.

The staff recommends approval of this minute

order.

MR. WILLIAMSON: Members, the floor is open to ask questions or comments of Jim or Amadeo Saenz, if he's available.

Amadeo, what time is it?

MR. SAENZ: State for the record the time? Almost evening, close to 2:45.

MR. WILLIAMSON: I understand there was some question raised about whether or not a county could build a bridge on property owned by a city or municipality.

MR. SAENZ: Yes, sir. And part of the submittal that the County Attorney submitted was a brief that basically said that they outlined that they did have the authority to build that bridge. There are some statutes that allow a county that's along the border to build an international bridge (inaudible).

MR. WILLIAMSON: On the United States side will that bridge be connected to a County Road or a City Road or any road?

MR. SAENZ: It can be connected to a County Road, it can be connected a City Road, it can be connected to a State Road.

MR. WILLIAMSON: Is there a road that exists now at the proposed site?

MR. SAENZ: I think, yes, there is a County Road that  --

MR. WILLIAMSON: And is that a County Road?

MR. SAENZ: Yes.

MR. WILLIAMSON: Could the State build a highway to the United States side of the bridge?

MR. SAENZ: Yes, sir. We have -- in a lot of instances we have taken County Roads, and most of the time the State Highway connects the international bridge facility to the first State Highway, and most of those are State Highways. They're converted from City Streets or County Roads to State Highways.

MR. WILLIAMSON: Even though it's going through the city limits of the city?

MR. SAENZ: That's correct.

MR. WILLIAMSON: So in theory, the County could build a bridge, we could build a State Road to it and just connect it without having to deal with the County?

MR. SAENZ: That's correct.

MR. WILLIAMSON: We have a witness. I suppose we should hear from her first. I just wanted to clarify that first, if you don't mind.

Ms. Gutierrez. And again I thank you for being

so patient.

MS. GUTIERREZ: Commissioners, thank you. Thank you very much for the work that you do for the great State of Texas and for all of us that serve in some way in our official capacities as elected officials in this state.

I know that Mr. Randall just outlined the minute order of -- Webb County's response to that minute order, and most of my presentation was going to be based on that, but I do ask the Transportation Commission today for its approval for this very, very important project, not only for Laredo and for Webb County but for the State of Texas, because it is a very, very important project. So we are here, and any questions that you might have I would be more than glad to answer.

MR. WILLIAMSON: And for the record, Members, this is Judy Gutierrez, Commissioner for Webb County. And you have the floor for questions. Any comments or questions for Ms. Gutierrez?

MS. GUTIERREZ: Mr. Chairman, I know we provided a package for the Commission. There is a lot of information there that relates to the minute order and, you know, citing the legal authority and everything else that -- and the reason why we believe that our application should move forward.

MR. WILLIAMSON: And it's very effective.

Any questions, Members, of this Commission?

MS. ANDRADE: Mr. Chairman, I'd like to take a moment to thank Commissioner Gutierrez for working with our staff, and I certainly appreciate all of your support and all you did to get this application in. Thank you very much.

MS. GUTIERREZ: Thank you.

MR. NICHOLS: I want to compliment the work that you've done, also. In addition to having been very patient today, we've obviously covered a lot of territory. You-all have come back and back and worked with our staff and made a good faith effort to get everything that they requested or felt like was necessary and things of that nature; so I appreciate you-all doing that. Thanks for everything.

MS. GUTIERREZ: Thank you, Commissioner.

MR. WILLIAMSON: Other questions or comments, Members?

MS. ANDRADE: I have a question for Amadeo.

MR. WILLIAMSON: Commissioner, thank you very much. And again, thank you so much, all of you, for all your patience. It was a long day.

MS. GUTIERREZ: We understand.

MS. ANDRADE: For the record, I attended unofficially the December meeting in 2003 where we did have those two applications and we did deny them. Has the City received an application?

MR. SAENZ: Yes, ma'am. We received an application from the City of Laredo that addresses the concerns of the minute order, the issue of the minute order. The staff has been reviewing and received it last Friday late, and it was forwarded, and it's already been looked at. They're reviewing it this week.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Members, are there any other questions or comments for Mr. Saenz?

Okay. Mr. Randall, you're back up. Anything else you wish to comment on, Mr. Randall, or advise us about?

MR. RANDALL: No.

MR. WILLIAMSON: Questions or comments for Jim Randall?

Do I have a motion?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor will signify by saying "aye". All opposed, "no". Motion carries.

Thank you for being so patient.

MR. BEHRENS: I have Item 9(b) concerning Webb County, and we bring before you a proposal to acquire the Camino Colombia Toll Road. Amadeo.

MR. SAENZ: Good afternoon, Commissioners. For the record, I'm Amadeo Saenz.

This minute order authorizes the Executive Director or his designee to enter into any necessary agreements to acquire the Camino Colombia Toll Road at a cost not to exceed 20 million dollars to become a Category 12 (inaudible).

Transportation Code 361 authorizes the Texas Department of Public Transportation to acquire a turnpike project to be part of the State Highway system and authorizes the Texas Transportation Commission to provide for the expenditure of monies for the acquisition of the turnpike project.

Transportation Code Section 361.132 authorizes the Department to acquire public or private real property it determines necessary or convenient for the construction, expansion, enlargement, extension, improvement or operation of a turnpike project.

Camino Colombia, Inc. is a private corporation chartered under the laws of the State of Texas who has constructed and operated a private toll road in Webb

County known as Camino Colombia Toll Road. Camino Colombia, Inc. defaulted under the financing agreements for the Camino Colombia Toll Road, and a nonjudicial foreclosure sale for the toll road and other trust property was held in Webb County on January 24th, 2004.

The toll road was acquired, and the title is now held by Camino Texas Partnership, LP, who has offered to convey Camino Colombia Toll Road to the Department for the price of 20 million dollars. Acquiring this toll road will facilitate the efficient operation of the State Highway system, including providing system continuity with Mexico, and will benefit the state and traveling public. We recommend approval of this minute order.

I'll be happy to answer any questions.

MR. WILLIAMSON: Members, we're going to have one witness, and we're certainly open to discussing or asking Amadeo questions now, or we can hear from the witness.

MR. NICHOLS: Let's hear the witness.

MR. WILLIAMSON: Marco Antonio Garza Campos.

MR. VILLARRIAL: Honorable members of the Texas Transportation Commission, my name is Carlos Villarrial. I work for Webb County, and I wanted to introduce Marco Antonio Garza, who works for FIDENOR,

which is the State agency for the State of Nuevo Leon.

I just wanted to update the Commission that they are also our partners in the forming of a Regional Mobility Authority in Webb County, that we have submitted an application, but they will be our partners for the construction of a rail bridge at the Colombia Bridge site that will be Phase 1 of the Webb County Regional Mobility Authority, and of course, eventually will be the starting piece for the South Texas Regional Mobility Authority that will connect obviously Webb County, Duvall County, Jim Wells, Nueces and San Patricio County all the way to the Port of Corpus Christi.

So I wanted to introduce him to let you know that he's here, he's interested in this taking place, but also to update you as to where we are in our plans to create a Regional Mobility Authority.

MR. GARZA: Thank you, Commissioners. I would like to tell you that Governor Paras just recently sent a letter to Governor Perry asking to reopen the Camino Colombia Toll Road, and I would like to read a statement from the Nuevo Leon Government, if I may, of course, Commissioners.

"Statement on the issue Camino Colombia Toll Road Presented to the Honorable Texas Transportation Commission.

Nuevo Leon Governor, Jose Natividad Gonzalez Paras, has a new vision on the economic and commercial integration between Nuevo Leon and Texas.

Governor Gonzalez Paras has appointed FIDENOR as the public agency in charge of promotion, support and development of an international corridor between Monterrey and San Antonio, using the Solidarity Bridge in Colombia, Nuevo Leon.

It is very important, in order to increase the chances to succeed of the corridor project to reopen the Camino Colombia Toll Road, since this highway is the natural way to establish the American counterpart -- the Mexican counterpart of the Nuevo Leon corridor.

Governor Gonzalez Paras has been planning the construction of a new road from Monterrey to the Solidarity International Bridge in Colombia. This new road will increase the traffic to the Colombia Bridge, and it would increase the expected traffic load on the Camino Colombia Road. In a way, the road project in Nuevo Leon would be reinforced if, and only if, the Camino Colombia is reopened and operated to attend the increased traffic demand in the route to San Antonio.

On the other hand, we are close to achieving the assignment from the Mexican Federal Government which is to build and operate an international rail bridge and

a railroad from the Solidarity Bridge to a point located southwards named Camaron Station, connecting this new railroad with the existing one from Nuevo Laredo to Monterrey. We are working together with the Webb County Rural Rail Transportation District to build and operate the project and looking for the investors in Mexico to implement the project in both sides of the border.

We also want to create a utility network in the right-of-way located along the new road in Nuevo Leon, backing up in the Mexican side the industrial cluster resulting from the Trans-Texas Corridor System, and increasing the economic and commercial flows both ways in our countries.

Summarizing, I would say that Camino Colombia Toll Road is the entrance door to the biggest country market in the world, and the additional traffic load will make it a profitable business.

Nuevo Leon will support in every possible way the new opening of this important road to build a bridge to our brilliant future together."

Muchas gracias. Do you have any questions about ...

MR. NICHOLS: First of all --

MR. WILLIAMSON: In Espanol. [Laughter.]

MR. NICHOLS: It's going to be real short,

then.

We appreciate you very much being here today and making those comments. When you started rattling off or saying that you're looking not only for rail and road but you wanted utility corridors, I was writing myself a comment here that that sounds like the Trans-Texas Corridor, which finally you then said it. And we're just so tickled and pleased that you-all recognize the importance of that and are already incorporating some of that into your plans; so we very much appreciate that, and I appreciate you going to the trouble to convey that information; so I think we're going to be hopefully trying to do everything that we can to see that it works.

MR. GARZA: Okay.

MS. ANDRADE: Muchas gracias ...

(Ms. Andrade and Mr. Garza conversed in Spanish.)

MR. WILLIAMSON: Thank you.

MR. HOUGHTON: I wish I could take him to El Paso. Thank you.

MR. WILLIAMSON: We appreciate it very much. My Spanish is not as good as Hope's, but I try to learn every day, and I understood most of what you said, and I appreciate your comments.

MR. NICHOLS: Are we in the comments with Amadeo now?

MR. WILLIAMSON: Yes.

MR. NICHOLS: I had -- for the record, on this I know as we consider taking action on this that there are going to be those in the legislature who may question what are we doing buying a toll road if financing doesn't work. And I think it's important that we now have on record totally voluntarily a vision of what might could occur out there, but also, you know, we have an interest in the well district in Webb County in that corridor, but also it's my understanding that that particular road, if you look at the forward mark of the projected loop, I think that falls within Llano.

MR. SAENZ: It's a little bit north, but you could make some connections to make this road connect in the future to Laredo and then also connect it further east.

MR. NICHOLS: So there's a lot more than just it being a useful road. There's a lot more than just a plain toll road. There are many uses -- future uses coming up.

MR. SAENZ: This road, Commissioners?

MR. WILLIAMSON: That was the question.

MR. SAENZ: Yes, there are a lot of uses. This road is very similar to -- we build Farm to Market Roads all across the state, and we have some criteria for

those types of roads that they have to have 2- or 300 vehicles per day. Well, this road has that. This road also has the -- in addition, this road connects to an international bridge, and we heard from our neighbors to the south that there is an interest in developing a corridor, expanding this corridor, as well as there's also interest in the South Texas Regional Mobility Authority that's looking at trying to make a connection from the Port of Corpus Christi towards Laredo; so there's a lot of possibilities for expansion to make this project work.

MR. NICHOLS: And if we were to go and try to build that from scratch, do the engineering, go through the environmental process, acquire the right-of-way and do the construction, it would cost how much more than --

MR. SAENZ: We ran an estimate, and to be able to build this road today or last year when we were looking at this early on, it would cost us somewhere between 35- and 40 million dollars to be able to build this thing.

MR. NICHOLS: And if we had built it in a traditional manner, we then would have to be planning for the long-term maintenance on that thing, roadway, which over a period of 40 years might could actually cost more

MR. WILLIAMSON: Any other questions or comments, Members? I have none.

Do I have a motion?

MS. ANDRADE: So moved.

MR. WILLIAMSON: Do I have a second?

MR. NICHOLS: Second.

MR. WILLIAMSON: All those in favor will signify by saying "aye". All opposed, "no".

MR. HOUGHTON: I abstain.

MR. WILLIAMSON: Motion carried.

And for the record, as stated earlier, Mr. Houghton did not participate in the executive session relating to the Camino Colombia and did not participate in the voting that just took place. He abstained. He does not have a financial relationship with the financial institution related to transportation. He does have a very, very tenuous or not -- just a small financial relationship (inaudible), and the record will reflect that he did not vote.

What else, Michael?

MR. BEHRENS: That concludes that portion of the meeting.

MS. ANDRADE: Mr. Chairman ...

MR. WILLIAMSON: You've got to be kidding.

MS. ANDRADE: Mr. Chairman, on behalf of

the City of Laredo, I'd like to acknowledge their presence and thank them for their attendance here. We've got Ms. Cindy Criaso from the Mayor's office. And if you'd like to introduce the other two.

UNIDENTIFIED MALE: Novaria Cia.

UNIDENTIFIED FEMALE: (Inaudible) Director and the City Attorney.

MS. ANDRADE: Thank you very much.

MR. GARZA: Mr. Chairman, I would like to give you a copy of the letter that I read. (Handing folder to Mr. Williamson.)

MR. WILLIAMSON: Thank you very much.

Okay, Mike.

MR. BEHRENS: We have no one signed up for open comments.

MR. WILLIAMSON: We have no open comments. How long did that string it out?

UNIDENTIFIED MALE: Until next month.

MR. WILLIAMSON: If there is no further business before the Commission, I'll entertain a motion to adjourn.

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: All in favor? All Opposed, "no". We are adjourned, for the record, at 2:59 p.m.

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission

LOCATION: Waco, Texas

DATE: April 29, 2004

_________________________ Lorna G. Hildebrandt CSR, RPR

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