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Senate set to sell our highways to corporations in exchange for quick cash

(Austin, TX – April 2, 2009) The Texas Senate is set to vote on whether to end the moratorium on private toll contracts and vote to re-authorize them for another 6 years. Comprehensive Development Agreements, called CDAs in Texas (also known as public private partnerships or PPPs), would hand over segments of our highway system to private, mostly foreign, corporations for a half century at a time. Senator John Carona’s bill, SB 404, is eligible to be taken up by the full Senate today.

“Texans don’t want their PUBLIC highway system sold to the highest bidder, nor do they want corporate-run toll roads that cost commuters 75 cents a mile to get to work,” said Terri Hall, Founder of Texas TURF.


Private toll road contracts are due to sunset this fall. In 2007, Texans stood-up and demanded a moratorium on CDAs and sent a bill to the Governor with a combined vote of 169-5.

“The public is largely unaware of what our politicians are about to ram through. They think they took care of it two years ago only to wake-up to find the nightmare continues unabated,” Hall notes.

These deals cost taxpayers 50% more, are failing all over the country, and result in extremely high tolls, like the DFW contracts just signed with Spain-based Cintra that will charge commuters 75 cents a mile to get to work. That’s $3,000 a year in new toll taxes.

TURF believes that especially in these economic times, the higher toll rates charged by these foreign toll operators are completely unsustainable. CDAs also eat-up our existing gas tax dollars for lengthy contract negotiations and legal angling. There were 20 lawyers present at the signing of the SH 130 CDA. TxDOT has squandered at least $18 million on legal fees alone for just the TTC-35 CDA.

CDAs are the most risky and most expensive method of delivering toll projects. Testimony from Dennis Enright of Northwest Financial in New Jersey before the Senate Transportation Committee March 1, 2007, seems to have been quickly forgotten by the Legislature. Mr. Enright said there is no risk transfer to the private entity and that CDAs cost the taxpayers of a minimum of 50% more than public toll roads. Mr. Enright rightly called toll roads monopolies by their very nature. He also said it’s always best to keep these projects in the public NOT private sector.

“Public infrastructure that Texans depend on for daily living shouldn’t be under the control of private companies whose primary motive, naturally, is profit, not the public interest,” states Hall.

A second bill, SB 17 authored by Senator Robert Nichols, is tied to Carona’s SB 404. If the Senate votes to re-authorize CDAs, it’s contingent upon SB 17 passing as well. SB 17 purports to protect the public from private toll contracts and make CDAs only a last resort. However, the way the current bill, SB 17, is structured, if the public toll entity cannot get the financing together to do a public toll road, they’d have to pass the project to TxDOT who would hand it to the private developer.

“The bill doesn’t give the public any protection, but shows TxDOT how it can just wait it out and then hand projects to the private companies,” Hall points out.

The bill also allows the whole evaluation process to be waived and TxDOT and public tolling entities can jump precipitously into CDAs.

“So what’s the point of the bill, if they can waive the requirements and get a free pass?” asks Hall.

Texas examples…

The recent I-820 deal in Tarrant County uses a host of public money (gas taxes, federal TIFIA loans, private activity bonds or PABs) to subsidize this PRIVATE toll contract, yet Cintra gets the right to toll Texans for 50 years and take all the profits out of state. In fact, TxDOT plunked down more cash for the project than did Cintra! (Read it here.)

The LBJ freeway CDA project to toll I-635 uses public employee pension funds to invest in the deal, with toll rates of 75 cents a mile and can rise monthly. TxDOT will even pay Cintra for the loss of the “prevailing toll” revenues due to HOV users and Cintra is guaranteed 12% to 23% PROFIT! (Read more here.)

Their models show only 10 & 11% of all traffic will be able to afford to take these billion-dollar toll lanes. The congestion, or variable, tolling actually jacks-up the toll rates to guarantee certain speeds or pay TxDOT a penalty for slower travel times. This means they purposely price cars off the toll lanes as a financial incentive.

“So what’s the point of all this risky, multi-generational leveraged debt? Mobility or making money? We’re headed for an infrastructure bubble that is destined to fail, which is likely to ensure massive taxpayer bailouts when they do. All those cars not on the toll road will be sitting in traffic, contributing to our air quality issues and being late to work while still paying taxes for highways (gas tax) and not getting a thing for it,” Hall observes.

TURF is urging Texans to call their state lawmakers and tell them not to let private corporations takeover our public highways.

“Tell them “NO” to SB 404 and SB 17, and “NO” to more sweetheart deals,” Hall implores.

Read how CDAs are failing all over the world on our CDA Fact Sheet here: http://www.texasturf.org/images/stories/pdf/FactSheet-CDAs-P3s.pdf

Terri Hall is the Founder of Texas TURF. TURF is a non-partisan grassroots group of nearly 100,000 citizens concerned about toll road policy and the Trans Texas Corridor. TURF promotes affordable, non-toll transportation solutions. For more information, please visit their web site at: www.TexasTURF.org.

Contacts: Terri Hall, Founder/Director, Texans Uniting for Reform and Freedom (TURF), (210) 275-0640
EMAIL: terri@texasTURF.org

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