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Chapter 2.2

Use the Texas Turnpike Authority to Obtain Greater Funding for TxDOT Projects and Operations


Summary

The establishing legislation for the Texas Turnpike Authority (TTA), in addition to setting tolling authority, provides for numerous avenues to accelerate project delivery. The current Texas Department of Transportation (TxDOT) strategy does not formally integrate TTA as an essential part of the department strategy for project evaluation and delivery. There are existing restrictions for TxDOT participation that should be removed and improvements to the powers and rights of TTA that would significantly enhance their ability to effectively develop projects.

Building highways through toll financing, rather than pay-as-you-go financing, dramatically speeds the time it takes to complete a given project. We estimate that if tolls made possible the immediate construction of a $320 million project that would otherwise not be built for another 15 years, the project would economically benefit the state some $411 million more, over 30 years, than if the road was delayed and built as a free road under a pay-as-you-go system. This even takes into account toll payments and debt service.


Background

Toll roads, bridges, and tunnels have always played a role in the nation’s transportation network. The over 4,700 toll facilities in the United States include urban interstate roads such as the New Jersey Turnpike, over 500 urban expressways (such as President George Bush Turnpike, the Dallas North Tollway, and the Sam Houston Tollway), and more than 150 bridges and tunnels. The great majority of these facilities are publicly owned and operated. Nationally, toll roads accounted for more than 4,400 miles of highway in 1999, with 63 percent located on the Interstate Highway System.[1]

Texas has toll roads in Dallas and Houston. There are also a number of smaller bridge facilities, most associated with border crossings, such as the Cameron County International Toll Bridge, Laredo Nuevo Laredo International Bridge and McAllen International Toll Bridge.[2]

In 1953 the Legislature created the original Texas Turnpike Authority (OTTA) as an independent entity, headquartered in Dallas, with statewide authority to build toll roads and bridges. The toll roads were to be financed by revenue bonds issued by the OTTA and supported entirely by tolls collected from its projects. The OTTA’s efforts were primarily in the Dallas-Fort Worth area, developing three major toll road projects, including the Dallas-Fort Worth Turnpike, the Dallas North Tollway, and the President George Bush Turnpike.[3]

In 1983, strong traffic demand, voter support, and strong local finances allowed Harris County to create the Harris County Toll Road Authority to meet transportation needs the OTTA could not address. The Harris County Toll Road Authority proceeded with a 50-mile, $900 million toll road project that by all accounts has been very successful. In fiscal year 1990, the authority’s toll roads were used for 37.5 million vehicle trips.[4] By July 1998, the authority’s toll roads were used for one billion vehicle trips. In 1991, the Texas Legislature instructed the Texas Sunset Advisory Commission to look into the consolidation of the OTTA with the Texas Department of Transportation (TxDOT). In 1996, the Sunset Commission recommended consolidating the two agencies, since the operations of TxDOT and OTTA were very similar; both agencies build and maintain highways, and with the only significant difference being the method of financing construction.[5]


Enabling legislation

Senate Bill 370, passed by the 75th Legislature, abolished the old Texas Turnpike Authority and created a turnpike division within TxDOT to develop toll roads. The bill also established the regional North Texas Tollway Authority (NTTA) and transferred to it all Texas Turnpike Authority assets, rights, and other property located in Collin, Dallas, Denton, or Tarrant counties.[6]

TxDOT’s Texas Turnpike Authority (TTA) division has statewide jurisdiction for development of turnpikes and is not prohibited from pursuing projects within the areas covered by the two regional toll authorities. The objective of TTA is to consider the development of turnpike projects in any part of the state where there is a demonstrated need and where a project has been shown to be financially feasible.[7] The enabling act also authorizes TTA to enter into an agreement with the government of Mexico to cooperate on NAFTA and border-related issues.[8]

Merging the original Texas Turnpike Authority with TxDOT, and the attendant creation of the North Texas Tollway Authority, gives the state three independent agencies responsible for planning and constructing toll roads—the Texas Department of Transportation, the North Texas Tollway Authority, and the Harris County Toll Road Authority. The two regional authorities are serving the largest potential markets for toll roads in the state, and account for over 100 miles of toll road. Harris County has a bridge and two highways; NTTA has one bridge, one tunnel and two highways.[9] TTA does not currently have any completed projects. TTA’s enabling legislation did not change the Texas law that prohibits TxDOT from expending funds for the construction, operation, and maintenance of a toll facility of a public or private entity without a requirement for repayment.[10] Furthermore, despite the fact that TTA is a division of TxDOT, Section 52-b. Article III of the Texas Constitution precludes advancing funds for turnpike project development without an obligation for repayment.[11] Therefore, as described below under Project Funding, these funds must be repaid at closing which adds to the challenge of financing start-up toll roads


Governing Structure

TTA is unique within TxDOT in that it has its own enabling act; it operates as a division of TxDOT, yet it has an independent board appointed by the Governor.[12]

The Texas Turnpike Authority Board consists of seven members—six directors appointed by the governor plus the chair of the Transportation Commission, or a designee. The TTA director is selected by and serves at the pleasure of the Texas Transportation Commission.[13]

Transportation Code, §362.051 provides that certain governmental entities may not begin construction of a toll road, toll bridge, or turnpike without the approval of the commission if the project is to become part of the state highway system.[14] In order to move forward with the development of a project, the Texas Turnpike Authority Board must approve the project, submit it for further approvals to the Transportation Commission, which in turn prepares and issues a minute order authorizing the project.[15] A minute order sets policy and authorizes an action by the Texas Transportation Commission and is used any time the Commission is required to make a decision.


Operations Structure

TTA has only 12 employees, with a currently authorized level of 20. Because TTA is a division of TxDOT, employees fall within the salary structure and overall employee cap at TxDOT. The turnpike division staff operates in an entrepreneurial fashion by limiting the number of internal employees and instead relying upon outsourced contracts for the majority of their design and planning functions.[16]

Since its inception, TTA has procured engineering, design, technical, legal and financial advisory services from outside sources, as authorized under the enabling legislation. TTA uses a private general counsel firm, a financial advisor, and bond counsel.[17]

Before conducting an initial feasibility study, TTA must have commission approval.[18] TTA staff believe they are able to respond quickly to needs at least in part because they can use outside consulting firms. While the division is authorized almost twice the current staff, the TTA Director would like to keep the organization as small and focused as possible. Because their initial development work (design, planning, toll feasibility studies, and so forth) is funded by TxDOT, TTA competes with all the other TxDOT districts for consultant funding. So far, this has not created any significant problems.[19]


Operations Funding

The enabling legislation provided for a gradual transfer of funds from the regional NTTA to the new TTA.[20] In the 1999-2000 biennium, TTA received about $17.5 million from the NTTA, to help fund its initial operations.[21]

TTA has been using these transfer funds to pay operating costs. For the 2001-2002 biennium, TTA will request TxDOT funds for certain operating costs. Any remaining balance of NTTA transfer funds will then be available for such work as initial assessments of potential projects.[22] TTA projects a funding shortfall of about $5 million unless they can finance that amount when they complete the first project financing based on toll revenues.[23]

In the near future, TTA will rely on advances from TxDOT for operating costs and development work (such as planning, design, and feasibility studies) related to specific turnpike projects as its primary source of funding. TTA will use proceeds from revenue bonds for project construction when the pre-development work for the project is complete, including necessary approvals, and bonds can be issued based on the forecast toll revenues.[24] (See further details under Project Funding.)


Project Development

TTA is required to encourage public and private participation in turnpike projects and has adopted formal rules to promote fairness, involve private participants in turnpike projects, and promote confidence among project participants.[25] Consistent with these requirements, the TTA board adopted rules (effective November 1, 1998) to encourage private involvement with a fair and efficient process. Entitled Private Involvement in TTA Projects, Chapter 54 covers issues such as policies on private involvement, solicited proposals and unsolicited proposals.[26] The objectives of this policy are: a) expand the scope of turnpike projects studied; (b) accelerate the construction and completion of turnpike projects; (c) reduce the overall costs of turnpike projects; and (d) maximize the benefits to be derived from turnpike project facilities.[27]

Under these rules, TTA is allowed to enter into exclusive development agreement negotiations and negotiate with the proposers without being bound by any provision in the submitted proposal, whether solicited or unsolicited.[28] Section 361 of the Transportation Code also allows TTA to “use an exclusive development agreement with a private entity to construct, maintain, repair, operate, extend, or expand a turnpike project by invested private funding or by public and private funding.”[29] Such an agreement allows negotiating a contract with a single private sector entity for everything from initial design through operations, including financing.

The exclusive development agreement approach differs significantly from the traditional lowest bidder approach used by TxDOT for construction contracts. Under the current TxDOT process, projects are normally broken into small pieces, the department issues detailed plans and specifications, unit-price bids are submitted and opened on a set dates and awarded based on mathematical calculation of the lowest overall cost.


Project Programming and Selection

TTA is still developing new toll road project development and selection criteria, and has not yet established a long-range strategic plan of specific goals. The current TxDOT project programming and selection process does not fully integrate the TTA into the statewide transportation planning process, although the TxDOT commission must approve TTA projects.

The current TTA project selection process begins with local entities (such as counties, cities, metropolitan planning organizations) and or the TxDOT district offices identifying and proposing projects to TTA. TTA then conducts a preliminary feasibility study to assess the toll viability, whether or not the project will generate sufficient revenue to pay for construction and maintenance. If a project is assessed to be financially viable and/or of significant importance to TxDOT, the Texas Transportation Commission and the TTA board can direct the TTA to continue studies and project development.[30]

For a solicited proposal, TTA prepares and issues a Request for Qualifications to determine vendor interest in developing the project. TTA reviews the submittals to identify qualified firms who will receive a detailed Request for Proposal (RFP). Based on responses to the RFP, TTA selects one or more contractors with which to negotiate an exclusive development agreement.[31]

Unsolicited proposals follow a different path. Private entities may submit directly to TTA a proposal requesting participation in a turnpike project. Such proposals must be designated as either a “Conceptual Proposal” or “Detailed Proposal” following the guidelines in TTA rules. TTA charges $5,000 to review an unsolicited conceptual proposal and $20,000 for an unsolicited detailed proposal.[32] These fees serve to provide some funding for review and ensure that the proposers have completed at least preliminary analysis of their ideas. Studies that TTA deems necessary to continue project analysis are conducted and paid for as negotiated between TTA and the successful proposer and designated in the exclusive development agreement.[33]

While the current project selection process has not been formalized, TTA is developing incentives to encourage communities and TxDOT districts to become more active in recommending projects. Identifying potential projects early would maximize the potential time savings as well as allow for the use of innovative financing options.[34]


Project Funding

For any project to be financed with revenue bond proceeds there must be a traffic and revenue study which demonstrates traffic volumes and toll revenues will be sufficient to pay off the bonds. As the toll projects currently underway are not expected by TTA to be capable of 100 percent toll funding, they expect federal, state, and local participation.

TxDOT is allowed to expend funds for the construction, operation, and maintenance of a toll facility only if requirements for repayment are included in the project authorization.[35] Furthermore, despite the fact that TTA is a division of TxDOT, Section 52-b, Article III, Texas Constitution precludes advancing funds for development of turnpike projects without an obligation for repayment.

The Texas Transportation Commission has issued minute orders structuring advance TxDOT funding of up-front work for TTA projects.[36] The three key elements of such advance funding include (1) repayment from the bond issue for that portion of the project; (2) all work products will go to the district that constructs the project, if the project does not become a toll road; and (3) specific minute orders will be passed for each project.[37]

TTA is concerned that although its long-term objective is to be self-sustaining, short-term funding issues may present a significant challenge.[38] Specifically, the requirements for immediate repayment severely restrict the ability of TTA to proceed with these projects; a project cannot proceed until full repayment to TxDOT can be refinanced along with other project costs. This requirement also affects the ultimate cost of the bonds, because a lower ratio of revenue to expenses results in a higher interest rate. Long-term repayment obligations also make financing of projects more difficult. The ability of TxDOT to contribute money without a repayment obligation (i.e., “toll equity,” see Recommendations E and F) would greatly enhance project financing.

In the 76th Legislature, Senate Bill 925 was designed to authorize TxDOT to expend funds for toll projects including TTA and Senate Joint Resolution 3 addressed the constitutionality of such funding. Neither of these passed.[39]


Current Projects

The focus of TTA’s efforts has been developing four projects that were already under study by the former independent agency. Those projects, all in the Austin area, are State Highway 45, the extension of Loop 1 northward, State Highway 130 from north of Georgetown south to Seguin, and US 183-A, from Lakeline Boulevard to north of Leander.[40] The Transportation Commission approved and issued minute orders providing development funding for State Highway 45, $82 million; US 183-A, $36 million; and Loop 1, $30 million.[41]

Two of these projects are to be completed via exclusive development agreements which can use methods such as design-build otherwise not currently allowed for TxDOT projects. While a developer can use design-build under exclusive development agreements, TTA does not decide what method they will use to develop a project. One of the exclusive development projects is State Highway 130; estimated at $916 million (not including right-of-way costs) it is the largest of the four projects under consideration. The other exclusive development agreement project is State Highway 183-A, with an estimated construction cost of $190 million. TTA anticipates ground breaking on all projects in 2002.[42]


Design-Build

TTA has been seeking legislation that would permit them to use design-build in contracts for turnpike improvement projects. Design-build projects are those where the detailed design and the construction are included in one contract.[43] The TTA director is part of a working group established by the Senate Committee on Intergovernmental Affairs to address design/build legislation. The working group includes representatives from a variety of contractor, engineer and architect associations, as well as TxDOT, TTA, and the Texas Department of Criminal Justice.

There continues to be opposition from some members of the Associated General Contractors who are concerned about fairness in selection in a non-low bid environment and pressure for more and more design-build projects.

There is an inferred concern that smaller construction companies will have less opportunities for highway contracts if design-build is allowed. The discussions center on assuring a fair, equitable procedure without giving an unfair advantage to large, out-of-state construction firms. The proponents of design-build agree that this is not a method that is generally applicable to the majority of the construction performed by TxDOT.[44]


One tag for all roads

As noted above, Texas has three different toll authorities with separate legal authority to build and operate toll roads. At first, toll roads needed employees in booths to collect tolls. Later, automatic coin machines were added as an additional payment option. Recently, new technology has made it possible for the electronic payment of tolls with electronic toll tags that are read by scanners at collection points. Harris County Toll Road Authority has branded their version of electronic toll collection “EZ Tag” while NTTA calls theirs “TOLLTAG.”[45]

By setting up a prepaid account with a toll road agency, a customer can attach the toll tag to their windshield so that payment is automatically debited from their account. If the account is set up with a credit card, the prepaid balance is automatically replenished when a certain dollar level is reached.

The benefits of electronic toll collection (“ETC”) include reduced labor costs and increased customer convenience. Most toll roads with ETC provide dedicated lanes for toll tag customers and the most modern facilities have special lanes allowing the tag to be scanned at highway speeds. These dedicated toll lanes greatly increase the number of vehicles served during peak load times.

When drivers use toll roads run by more than one agency, the benefits are even greater if they can use a single toll tag and account for all of the roads. This “interoperability” means that there is no difference to the driver which entity is operating the road.

Because TTA and the two regional toll authorities in Texas operate independently, each agency handles ETC differently. Without statewide standards, TTA must still determine their toll collection standards. Harris County Toll Road Authority and NTTA use the same tag vendor but use different tags. Once TTA opens their toll roads, there might be three different toll tags for three separate Texas toll roads, leading to confusion and delays. The border-crossing bridges will further complicate the situation when they automate their toll collections.

If toll systems were interoperable, drivers could purchase one ETC tag and use it for all Texas tolls. This would be particularly important for truckers and other cross-state travelers, and could encourage use of toll roads.

The interoperability aspects go beyond tolls to include probes for traffic management systems, weigh stations, border crossings and airport parking. Once there are common transponders and the different authorities’ data systems are networked, there is further potential for a number of other e-commerce revenue streams such as fast food purchases. Interoperability can both increase the efficiency of collecting funds and provide additional revenue sources.


Automated Toll Enforcement

In order for electronic toll collection to work effectively, particularly in high speed collection lanes, toll roads use automated vehicle enforcement systems to ensure equal treatment of all customers. These enforcement systems take a digital picture of the license plate of any vehicle which does not pay the proper toll.

If the proper legislative authority is in place, the agency can then use this information to send a citation to the violator and collect a fine. Currently, the TTA’s ability to utilize video enforcement for toll violators is questionable. TTA has identified the need to clarify its statutory rights in this regard as a high legislative priority. Under the Regional Toll Authority legislation, those entities can use video surveillance or any other reasonable evidence to enforce toll violations.[46]


Recommendations

A. The Texas Department of Transportation’s (TxDOT) ability to meet demands for construction of roads and highways can be improved by making better use of the Texas Turnpike Authority (TTA). TTA’s flexibility and responsiveness in project development—in contrast with the significant procurement and staffing limitations that apply to the remainder of TxDOT—mean that TTA should have a larger role in the department’s operations.

Besides setting tolling authority, the establishing legislation for TTA provides numerous ways to accelerate project delivery. Existing restrictions for TxDOT participation in toll road projects should be removed and the powers and rights of TTA should be improved to significantly enhance their ability to effectively develop projects.

Finally, to maximize the ability of TTA to develop toll projects, several legislative changes are recommended. The most important are authorization for TxDOT to invest in possible turnpike projects without a requirement for repayment, and providing for automated toll enforcement.

B. Texas Department of Transportation’s project selection process should be modified to first review all projects to determine those that are likely candidates for innovative approaches and revenue production and include a structured process for recommendations of projects to be placed on the Texas Turnpike Authority project list.

This requirement would include consideration of when it is cost effective to aggregate projects that otherwise would be divided into smaller projects to meet TxDOT project selection criteria.

By integrating the analysis of roadways into the project selection process, the best decisions can be made about which projects make the most sense to develop on a user-fee basis. Since TxDOT estimates that a large percentage of the transportation needs of the state of Texas are going unmet, the appropriate use of toll roads can be a very cost-effective tool to meet the overall demand.

C. TxDOT should fully integrate and take maximum advantage of TTA’s ability to deliver projects more quickly and use innovative practices such as the exclusive development agreement with the private sector.

TTA’s approach of involving the private sector in project development allows multiple activities to proceed simultaneously. Because of significant pressure to meet a wide variety of needs while assuring that no errors are made, TxDOT has put in place very detailed and sequential procedures. While these measures may be effective, they are not efficient, resulting in lengthy delays and continued unmet needs.

D. TTA should be used as a test bed for implementing new, innovative strategies such as design-build that are not currently used by TxDOT.

As these new strategies are developed, a structured process should be put in place to identify those that might be used in TxDOT districts for non-toll projects. To facilitate the use of innovative approaches in TxDOT, TTA staff should administer complex or unusual projects (with or without tolls) using non-traditional methods such as design-build.

New, innovative approaches have the best results when they are directed by a group who understands these methods and is committed to their success. Rather than create another group within TxDOT to foster these new approaches, TTA can be the leaders for successful implementation. With an entrepreneurial attitude, fewer restrictions and rules, and flexible staffing based on outsourcing, TTA is in the best position to manage these initial efforts and refine the approaches and processes. To be effective, TTA must maintain a streamlined approach to their projects, while emphasizing innovation and speed. If the new approaches show promise, they can be integrated into the toolbox of available contracting methods for the department as a whole.

E. State law should be amended to allow TxDOT and TTA to use the design-build approach on appropriate projects.

The Texas Transportation Code requires competitive bids on all highway construction projects.[47]

The design/build approach should be considered by TxDOT when any of these conditions exist:

  • strict selection based on low bid not practicable or advantageous;
  • cost not the sole award criteria;
  • financial considerations, such as revenue bonds (which should include all toll-financed projects);
  • large, complex project to be completed in a relatively short time; and,
  • specialty project, such as Intelligent Transportation Systems.

TTA should have the authority to use design-build for any turnpike projects it deems necessary. The solicitation process should include competitive sealed proposals from pre-qualified respondents, with contract awards based on overall best value for the state of Texas. (A full discussion of the design-build approach is contained in the paper on Alternative Bidding Methods to Speed Construction Projects.)

The authority to use design-build should ultimately be extended to non-turnpike TxDOT projects. There should be dedicated staff for design-build implementation, and TTA should pilot the overall design-build program.

F. State law should be amended to allow TxDOT to financially participate in the development of toll roads without a requirement for repayment.

TTA should move forward with requesting a legislative change to section 222.103 of the Transportation Code to make repayment permissible rather than required.

This will also require a constitutional amendment to provide for an exception to Section 52-b, Article III, Texas Constitution that would allow for construction, maintenance, and operation by the department, an agency of the state, or a political subdivision of this state, of turnpikes, toll road, or toll bridges without the repayment requirement.

G. State law should be amended to add a new title that provides that a person commits an offense if a vehicle is on a state highway facility without paying the proper toll.

A first step would be legislation similar to last session’s Senate Bill 1487, which would have implemented an automated enforcement system on toll facilities on the state highway system, and make it an offense to operate a vehicle on a state highway without paying the proper toll.[48] The amended statute also needs to provide that an offense is a misdemeanor punishable by a fine not to exceed $250. It should further amend Section 224.157 to provide that prosecution of a violation under Section 224.156 can be based upon proof of non-payment of toll by video, photographic, or electronic recording, together with proof that the defendant was the registered owner of the vehicle when the offense occurred establishes the commission of the offense.

Section 224 should be further amended to authorize the Texas Transportation Commission to use such technology as it deems necessary, including but not limited to automatic vehicle license tag identification photography and video surveillance, to aid in the collection of tolls and the enforcement of toll violations.

Sections 361.253 and 254 of the Transportation Code should also be amended to provide that a person commits an offense if the proper toll is not paid and that offense is punishable by a fine not to exceed $250, using the same prosecution proof as described for Section 224 above.

H. TxDOT and TTA should, in conjunction with the regional toll authorities, develop interoperability standards for statewide electronic toll collection.

A statewide interoperability standard should be addressed and the toll collection issues resolved before construction begins on the first toll road in the Austin area. Otherwise, TTA may face additional costs if the technical aspects (tags, computer hardware and software) must change to accommodate a different standard. TTA should take the lead to form a working group representing all interested parties to establish short- and long-term solutions for interoperability and interagency cooperation.


Fiscal Impact

The direct fiscal impact on the state’s finances of relying more heavily on toll financing cannot be estimated. This depends on the specific financial arrangements involved in each project.

Roads, whether they are toll facilities or free facilities, have a large effect on productivity in our economy with one comprehensive study indicating that every dollar spent on road construction yields 29 cents in increased productivity.[49] Increased productivity represents real monetary savings to businesses which can, in turn, increase investment and other business spending in the state, resulting in an even more profound economic effect.

The full economic effects of toll roads are more difficult to model than are the effects of free roads by the fact that toll facilities are largely financed through bond issues and that the bond service is paid through tolls. Construction speed-ups and the incentives of toll facility administrators to operate efficiently are also difficult to predict and model. Nevertheless, some general benefits can be calculated assuming that a toll facility takes the place of a free facility that would otherwise be built with the current tax and fee revenue stream, but 15 years into the future.

The TTA plans to construct 122 miles of toll roads for $2 billion, with approximately 75 percent of the construction costs to be financed with borrowed funds–bond issues and federal loans. That is, each mile of tollroad (four or six-lane facilities with support facilities) will cost about $16 million.

If a toll facility 20 miles in length is constructed over two years, the total cost of construction will be $320 million. (Inflation costs are not considered.) It is assumed that 75 percent of construction, bond issuance costs, and the first two years’ debt payments are financed through 30-year bonds at 5.75 percent and are completely paid through toll revenues. Taking into account the fact that the construction of the project will result in general economic benefits, that 25 percent of the construction cost is financed by sacrificing some free facilities that would have been built, and that a free facility would be eventually completed in 15 years, the toll facility is still a wise investment. This also accounts for the fact that toll revenues represent monies that toll facility patrons could otherwise spend and circulate in the economy.

The economic benefit brought about by the construction project itself is outweighed by that economic activity sacrificed from free-road construction projects not being pursued as well as the lost economic benefit that would have accrued had road users not had to pay tolls in order to service the debt. Despite this cost, the productivity effects of roads are such that savings to businesses as well as non-monetary, but measurable, benefits to drivers in general result in a net present value of building the toll facility of $411 million over 30 years. In economic terms, even if the net present value of such a facility is $1, a positive result indicates that the project should be undertaken.

While the $411 million net present value figure is very rough and may seem high, it should be noted that experience in Harris County indicates that this is a realistic assessment of the value of toll roads. The Harris County Toll Road Authority spent $1.6 billion on toll projects entirely financed through 30-year bonds at a time when interest rates were considerably higher than today. The toll roads in Harris County have been financial successes to the point that currently the Harris County Toll Road Authority runs a $45 million yearly surplus that can, in turn, be used to construct additional toll facilities.[50] Given the fact that drivers in Harris County are willing to pay these tolls in addition to state and federal gasoline taxes, federal tire taxes, state license and registration fees, as well as other taxes to support roads, the obvious success of the Harris County Toll Road Authority illustrates the immense economic value of toll facilities.

By leveraging TTA to the maximum level, major projects can be moved forward on a much faster timeline. Not all projects that are needed can be supported 100 percent by tolls. However, tolls can accelerate development by reducing the costs that must be paid out of traditional tax and fee revenue streams. As a result, certain benefits accrue.

By building them sooner and faster, the overall construction cost is reduced. For example, the projected cost for the combined State Highway 45/Loop 1 is $730 million. If, by developing the project as a toll road it is completed 5 years sooner, a 5 percent construction cost inflation factor means that construction costs would be reduced by over $200 million.


Endnotes

[1 ]Office of Highway Policy Information, Federal Highway Administration, “Toll Facilities in the United States: Bridges - Roads - Tunnels - Ferries,” February 1999, Publication No. FHWA-PL-97-008 (http://www.fhwa.dot.gov/ohim/toll99.pdf). (Internet document.)

[2] Office of Highway Policy Information, Federal Highway Administration, “Toll Facilities in the United States: Bridges - Roads - Tunnels - Ferries,” February 1999, Publication No. FHWA-PL-97-008 (http://www.fhwa.dot.gov/ohim/toll99.pdf). (Internet document.)

[3] North Texas Tollway Authority, “About the NTTA,” (http://www.ntta.dst.tx.us,html). (Internet document.)

[4] Harris County Toll Road Authority, “HCTRA History,” (http:// www.co.harris.tx.us/tollroad/history.html). (Internet document.)

[5] Texas Sunset Advisory Commission, Texas Department of Transportation Staff Report, pp. 138-140.

[6] Texas S.B. 370, 75th Leg. Reg. Sess., Chapter 361, Subchapter H on transfers and Section 7.26 creating North Texas Tollway Authority, (1997).

[7] A turnpike project is a toll highway constructed, maintained, or operated under Chapter 361 of the Texas Transportation Code as a part of the state highway system. It also includes any improvement, extension, or expansion to the highway.

[8] Texas S.B. 370, 75th Leg. Reg. Sess., Section 361.042 (1997).

[9] North Texas Tollway Authority, "About the NTTA," and Harris County Toll Road Authority, “HCTRA History,” (http://www.ntta.dst.tx.us/body-about.html) and (http://www.co.harris.tx.us/tollroad/history.html). (Internet documents.)

[10] V.T.C.A., Transportation Code §222.103.

[11] Testimony by David M. Laney, Texas Transportation Commission, to the Texas Senate Committees on Border Affairs and State Affairs, Laredo, Texas, January 11, 2000.

[12] V.T.C.A., Transportation Code §361.031 and 032; and testimony by David Laney, Texas Transportation Commission, to the Texas Senate Committees on Border Affairs and State Affairs, Laredo, Texas, January 11, 2000.

[13] V.T.C.A., Transportation Code §361.031(g).

[14] V.T.C.A., Transportation Code §361.101 authorizes the authority to construct, maintain, repair, and operate turnpike projects within the state as may be determined by the authority subject to approval as to location by the commission. Transportation Code §361.043 authorizes the authority to designate the location, and establish, limit, and control such points of ingress and egress, for each project as may be necessary and desirable in the judgment of the authority and the department to ensure the proper operation and maintenance of the project.

[15] Interview with Robert B. Daigh, director, Turnpike Planning and Development, Texas Turnpike Authority, Austin, Texas, May 25, 2000.

[16] Interview with Phillip Russell, director, Texas Turnpike Authority, Austin, Texas, January 26, 2000.

[17] Texas Turnpike Authority organizational chart.

[18] V.T.C.A., Transportation Code §361.182 (d).

[19] Interview with Phillip Russell, director, Texas Turnpike Authority, Austin, Texas, January 26, 2000.

[20] Texas S.B. 370, 75th Leg. Reg. Sess. (1997).

[21] Texas Turnpike Authority Board Meeting Minutes of March 9, 1999.

[22] Interview with Robert B. Daigh, director, Turnpike Planning and Development, Texas Turnpike Authority, Austin, Texas, May 25, 2000; and memorandum from Phillip E. Russell, director, Texas Turnpike Authority, to Jefferson Grimes, manager, State Legislative Affairs, Texas Department of Transportation, “Requested Information for Business Practices Project,” June 6, 2000.

[23] Texas Turnpike Authority Board Meeting Minutes of March 9, 1999.

[24] Testimony by David M. Laney and Robert L Nichols, Texas Transportation Commission, before the Texas House Committee on Transportation, Austin, Texas, February 2, 2000.

[25] V.T.C.A., Transportation Code §361, subchapter 1, which provides for public and private participation in turnpike projects, and §361.306 requires that rules be adopted to encourage private participation and promote fairness and confidence in the process by which private participants are chosen.

[26] T.A.C., Chapter 54, Subchapter A.

[27] T.A.C., Title 43, Part 2, Chapter 54, Private Involvement in Texas Turnpike Authority Projects.

[28] T.A.C., Title 43, Part 2, Chapter 54, Private Involvement in Texas Turnpike Authority Projects.

[29] V.T.C.A., Texas Transportation Code §361.302 Exclusive Development Agreements with Public or Private Entities.

[30] Memorandum from Phillip E. Russell, director, Texas Turnpike Authority, to Jefferson Grimes, manager, State Legislative Affairs, Texas Department of Transportation, “Requested Information for Business Practices Project,” June 6, 2000.

[31] T.A.C., Transportation, Chapter 54, §54.4.

[32] T.A.C., Transportation, Chapter 54, §54.5.

[33] T.A.C., Transportation, Chapter 54, §54.5 (F) (ii).

[34] Memorandum from Phillip E. Russell, director, Texas Turnpike Authority, to Jefferson Grimes, manager, State Legislative Affairs, Texas Department of Transportation, “Requested Information for Business Practices Project,” June 6, 2000.

[35] V.T.C.A., Transportation Code §222.103.

[36] Texas Turnpike Authority Board Meeting Minutes of February 15, 2000, Minute Order #108052.

[37] Texas Turnpike Authority Board Meeting Minutes of February 15, 2000.

[38] Interview with Robert B. Daigh, director, Turnpike Planning and Development, Texas Turnpike Authority, Austin, Texas, May 25, 2000.

[39] Testimony by David M. Laney, Texas Transportation Commission, to the Texas Senate Committees on Border Affairs and State Affairs, Laredo, Texas, January 11, 2000.

[40] Texas Turnpike Authority Board Meeting Minutes of February 15, 2000.

[41] Texas Turnpike Authority Board Meeting Minutes of February 15, 2000. Minute orders #10853-108055.

[42] Texas Turnpike Authority Board Meeting Minutes of February 15, 2000, and "Influx of Design-Build Plans Enter Texas Highway Future,” Engineering News Record, April 24, 2000, p. 16.

[43] An additional issue paper entitled “Alternative Construction Selection Practices” discusses design-build in detail.

[44] Minutes of the Senate Committee on Intergovernmental Relations Design-Build Work Group, April 5, 2000 and April 19, 2000.

[45] United States Toll Facilities, "ETTM On The Web," (http://www.ettm.com/). (Internet document.)

[46] V.T.C.A., Transportation Code §366.178, Failure or Refusal to Pay Toll: (f) In the prosecution of a violation for nonpayment, proof that the vehicle passed through a toll collection facility without payment of the proper toll together with proof that the defendant was the registered owner or the driver of the vehicle when the failure to pay occurred, establishes the nonpayment of the registered owner. The proof may be by testimony of a peace officer or authority employee, video surveillance, or any other reasonable evidence.

[47] V.T.C.A., Transportation Code, Chapter 223, Subchapter F, and Chapter 361.

[48] Texas S.B. 1487, 76th Leg., Reg. Sess. (1999).

[49] M. Ishaq Nadiri and Theofanis Mamuneas, “Contributions of Highway Capital to Output and Productivity Growth in the U.S. Economy and Industries,” Federal Highway Administration, August 1998, (http://www. fhwa.dot.gov//////policy/gro98cvr.htm). (Internet document.) A summary is also available at (http://www.fhwa.dot.gov//////policy/nadiri2.htm). (Internet document.)

[50] Telephone Interview with Wesley Frieze, president and CEO, W. P. Engineering and Consulting, Inc., former executive director, Harris County Toll Road Authority, November 11, 2000.