Houston toll doesn't like TxDOT's SB792's concession approach
Posted Sat, 2007-11-10 17:44
It's a tale of two cities in Texas. In Dallas the NTTA public toll authority is embracing public toll concessions with alacrity, issuing regular upbeat statements about the progress with their 50 year lease concession on SR121, and their willingness to do more. In Houston by contrast Harris County officials are objecting strongly to Texas Department of Transportation's (TxDOT) application of the public tollroad concessioning process provided for in SB792, the Texas law passed last summer.
A two page letter of Oct 25 by Arthur Storey, executive director of the Harris County Public infrastructure Department and in
charge of the county tollroads addressed to Gary Trietsch, Houston rep of TxDOT lays out the county objection to TxDOT concession procedures. (Download letter here, 2 pages pdf)
"My prime concern is TxDOT's apparent negotiating presumption... that the project delivery model for the market valuation process is a competitively bid, full concession comprehensive development agreement (CDA) procedure."
Storey attacks a presentation called "Toll Road Market Valuations: Introduction and Planning" by consultants KPMG, TxDOT's advisers on tollroad valuation, a document or powerpoint we have not been able to obtain.
KPMG apparently says that SB792's market valuation should simulate a private sector concession procurement.
Storey writes: "Contrary to statements in the KPMG materials there is no language in SB792 that 'implies' that market valuation projects should be developed under a CDA-type procurement."
The Harris County chief does concede that Houston's Grand Parkway project is an exception and that a concession procurement "may be" appropriate: "However what works for one project such as the Grand Parkway may or may not work for another project."
His letter concludes: "We hope that you agree with and confirm to us that a full concession model is not the starting point for a determination of terms and conditions for a market valuation project. With that assurance we look forward to implementing the structure and tools that the legislature provided in SB 792 for addressing the mobility needs of our region."
Another TxDOT presentation - a draft for discussion
We do have a presentation (without KPMG identifier) in the form of powerpoint slides that seems to run along the same lines as as the KPMG paper that Storey refers to.
Titled "Completing a Market Valuation of a Toll Road Project" it has a note at the bottom 'CONFIDENTIAL DRAFT FOR
DISCUSSION." It states:
"Market value is defined as the total amount of concession fee payable to the project sponsor or the total amount of toll equity required from the project sponsor (stated in present value terms where necessary.)"
Financial model inputs should incorporate "past experience of those inputs pledged by proposers in previous CDAs to account for recent and relevant market conditions."
"The primary output of the market valuation exercise is an estimate of upfront payment from the private sector or the amount of toll equity that a project may require."
There follow some rather pedestrian slides on the inputs then under "Perform Market Valuation" there is this statement of principle:
"The market value will be based on the anticipated market conditions of a competitive procurement involving private developers..."
But the presentation does state early that TxDOT and the local toll road sponsor can agree to waive the requirement for a market valuation. It is clear however that TxDOT is keen to use the concession model for valuing public as well as private toll projects wherever possible. That is understandable because it will generate the most money for supporting other road projects, free or tolled.
If TxDOT and the local authority can't reach agreement then, under the SB792 law, neither party can advance the project as a tollroad. So by law each side has veto power over tolling - which could lead to some project gridlock.
SB792 on TxDOT dealings with local toll authorities
With some headings we've inserted here is the portion of SB792 on how TxDOT and local toll authorities must handle potential toll projects:
         Sec. 228.0111. TOLL PROJECTS OF LOCAL TOLL PROJECT
    ENTITIES. (a) In this section:
                (1) "Local toll project entity" means:
                      (A) a regional tollway authority under Chapter
    366;
                      (B) a regional mobility authority under Chapter
    370; or
                      (C) a county acting under Chapter 284.
Market valuation
                (2) "Market valuation" means the valuation of a toll
    project that:
                      (A) is based on the terms and conditions
    established mutually by a local toll project entity and the
    department for the development, construction, and operation of a
    toll project, including the initial toll rate and the toll rate
    escalation methodology; and
                      (B) takes into account a traffic and revenue
    study of the toll project using agreed-upon assumptions, an agreed
    project scope, market research, the estimated cost to finance,
    construct, maintain, and operate the project, and other information
    determined appropriate by the local toll project entity and the
    department.
                (3) "Region" has the meaning assigned by Section
    228.001, except that the region of a county acting under Chapter 284
    is composed of that county and the counties that are contiguous to
    that county.
                (4) "Toll project subaccount" means a subaccount
    created under Section 228.012.
          (b) This section does not apply to a toll project described
    in Section 228.011(a).
          (c) A local toll project entity is the entity with primary
    responsibility for the financing, construction, and operation of a
    toll project located within its boundaries.
          (d) Subsection (c) does not limit the authority of the
    commission or the department to participate in the cost of
    acquiring, constructing, maintaining, or operating a toll project
    of a local toll project entity.
          (e) Except as provided in this subsection, if a local toll
    project entity or the department determines that a toll project
    located within the boundaries of the local toll project entity
    should be developed, constructed, and operated as a toll project,
    the local toll project entity and the department mutually shall
    agree on the terms and conditions for the development,
    construction, and operation of the toll project, including the
    initial toll rate and the toll rate escalation methodology. The
    terms and conditions for the procurement and operation of the State
    Highway 99 project shall be approved by the metropolitan planning
    organization in which the project is located.
If unable to agree...
          (e-1) If the local toll project entity and the department
    are unable to mutually agree on the terms and conditions for the
    development, construction, and operation of the toll project as
    required by Subsection (e), neither the local toll project entity
    nor the department may develop the project as a toll project.
          (f) After agreeing on the terms and conditions for a toll
    project under Subsection (e), or after metropolitan planning
    organization approval of the terms and conditions for the State
    Highway 99 project, the local toll project entity and the
    department mutually shall determine which entity, including a third
    party under contract with the local toll project entity or the
    department, will develop a market valuation of the toll project
    that is based on the terms and conditions established under
    Subsection (e). The department and the local toll project entity
    have 90 days after the date of the receipt of a final draft version
    of the market valuation designated as "complete; subject to
    approval by the Texas Department of Transportation and (name of
    local toll project entity)" to mutually approve the market
    valuation included in the draft version or, in the alternative,
    negotiate and agree on a different market valuation. If the
    department and the local toll project entity are unable to agree on
    a market valuation within the 90-day period, the market valuation
    in the draft version is considered to be final for purposes of this
    section and mutually approved on the last day of that period.
          (f-1) The department and a local toll project entity may
    agree to waive the requirement to develop a market valuation under
    this section.
          (f-2) If the department and the local toll project entity
    are unable to mutually determine which entity will develop the
    market valuation of the toll project under Subsection (f), neither
    the department nor the local toll project entity may develop,
    construct, or operate the project as a toll project.
Locals have first option
          (g) A local toll project entity has the first option to
    develop, finance, construct, and operate a toll project under the
    terms and conditions established under Subsection (e). A local
    toll project entity, other than a regional mobility authority under
    Chapter 370, has six months after the date that the market valuation
    is mutually approved under Subsection (f) to decide whether to
    exercise the option. For a project proposed to be located within
    the boundaries of a regional mobility authority under Chapter 370,
    after the market valuation is final under Subsection (f), the
    metropolitan planning organization for the region in which the
    project is located shall determine whether the toll project should
    be developed using the business terms incorporated in the market
    valuation. If the metropolitan planning organization determines
    that the toll project should be developed using the business terms
    in the market valuation, the regional mobility authority has six
    months after the date the metropolitan planning organization
    decides whether to exercise the option to develop the project. If a
    local toll project entity exercises the option with respect to a
    toll project under this subsection, the local toll project entity,
    after exercising the option and within two years after the date on
    which all environmental requirements necessary for the development
    of the toll project are secured and all legal challenges to
    development are concluded, must:
                (1) enter into a contract for the construction of the
    toll project; and
                (2) either:
                      (A) commit to make a payment into a toll project
    subaccount in an amount equal to the value of the toll project as
    determined by the market valuation, to be used by the department to
    finance the construction of additional transportation projects in
    the region in which the toll project is located;
                      (B) commit to construct, within the period agreed
    to by the local toll project entity and the department, additional
    transportation projects in the region in which the toll project is
    located with estimated construction costs equal to the market
    valuation of the toll project; or
                      (C) for a regional mobility authority under
    Chapter 370, commit to using, for a period to be agreed upon by the
    department and the authority, all surplus revenue from the toll
    project for the purposes authorized by Section 370.174(b) in an
    amount equal to the valuation of the project.
          (h) If a local toll project entity exercises the option with
    respect to a toll project under Subsection (g) and has not begun the
    environmental review of the project, the local toll project entity
    shall begin the environmental review within six months of
    exercising the option.
          (i) If a local toll project entity does not exercise the
    option to develop, finance, construct, and operate a toll project
    under Subsection (g), or does not enter into a contract for the
    construction of the project and make a commitment described in
    Subsection (g)(2) within the two-year period prescribed in
    Subsection (g), the department has the option to develop, finance,
    construct, and operate the toll project under the terms and
    conditions agreed to under Subsection (e). The department has two
    months after the date the local toll project entity fails to
    exercise its option or enter into a construction contract and make a
    commitment described in Subsection (g)(2) to decide whether to
    exercise its option. If the department exercises its option with
    respect to a toll project under this subsection, the department,
    after exercising the option and within two years after the date on
    which all environmental requirements necessary for the development
    of the project are secured and all legal challenges to such
    development are concluded, must:
                (1) enter into a contract for the construction of the
    toll project; and
                (2) either:
                      (A) commit to make a payment into the toll
    project subaccount in an amount equal to the value of the toll
    project as determined by the market valuation, to be used by the
    department to finance the construction of additional
    transportation projects in the region in which the toll project is
    located; or
                      (B) commit to construct, within the period agreed
    to by the local toll project entity and the department, additional
    transportation projects in the region in which the toll project is
    located with estimated construction costs equal to the market
    valuation of the toll project.
          (j) If the department does not exercise the option to
    develop, finance, construct, and operate a toll project under
    Subsection (i), or does not enter into a contract for the
    construction of the project and make a commitment described in
    Subsection (i)(2) within the two-year period prescribed in
    Subsection (i), the local toll project entity and the department
    may meet again for the purpose of agreeing on revised terms and
    conditions for the development, construction, and operation of the
    toll project, and the local toll project entity and the department
    shall follow the process prescribed in Subsections (f)-(i).
          (k) Consistent with federal law, the commission and the
    department shall assist a local toll project entity in the
    development, financing, construction, and operation of a toll
    project for which the local toll project entity has exercised its
    option to develop, finance, construct, and operate the project
    under Subsection (g) by allowing the local toll project entity to
    use state highway right-of-way and to access the state highway
    system as necessary to construct and operate the toll project.
    Notwithstanding any other law, the toll project entity and the
    commission may agree to remove the project from the state highway
    system and transfer ownership to the local toll project entity. The
    commission or the department may not require a local toll project
    entity to pay for the use of the right-of-way or access, except to
    reimburse the department for actual costs incurred or to be
    incurred by the department that are owed to a third party, including
    the federal government, as a result of that use by the local toll
    project entity. If a local toll project entity exercises its option
    to develop, construct, and operate a toll project under this
    section, the following shall be deducted from the amount of the toll
    project entity commitment under Subsection (g)(2):
                (1) an amount equal to the amount reimbursed under
    this subsection, if any; and
                (2) with respect to a county operating under Chapter
    284, an amount equal to the costs of any road, street, or highway
    project undertaken by the county under Section 284.0031 before the
    acceptance of the market valuation, if the county requests a
    deduction and specifies in reasonable detail a description and cost
    of the project and the department agrees that any such road, street,
    or highway project constitutes an additional transportation
    project under Subsection (g)(2)(B).
          (l) A local toll project entity shall enter into an
    agreement with the department for any project for which the entity
    has exercised its option to develop, finance, construct, and
    operate the project under Subsection (g) and for which the entity
    intends to use state highway right-of-way. An agreement entered
    into under this subsection must contain provisions necessary to
    ensure that the local toll project entity's construction,
    maintenance, and operation of the project complies with the
    requirements of applicable federal and state law.
          (m) Notwithstanding any other law, the commission and the
    department are not liable for any damages that result from a local
    toll project entity's use of state highway right-of-way or access
    to the state highway system under this section, regardless of the
    legal theory, statute, or cause of action under which liability is
    asserted.
          (n) An agreement entered into by a local toll project entity
    and the department in connection with a toll project that is
    financed, constructed, or operated by the local toll project entity
    and that is on or directly connected to a highway in the state
    highway system does not create a joint enterprise for liability
    purposes.
          (o) Notwithstanding an action of a local toll project entity
    taken under this section, the commission or department may take any
    action that in its reasonable judgment is necessary to comply with
    any federal requirement to enable this state to receive federal-aid
    highway funds.
          (p) A local toll project entity and the department may issue
    bonds, including revenue bonds and refunding bonds, or other
    obligations, and enter into credit agreements, to pay any costs
    associated with a project under this section, including the
    payments deposited to the applicable toll project subaccount, and
    the costs to construct, maintain, and operate additional
    transportation projects that the local toll project entity or the
    department commits to undertake in accordance with this section, as
    follows:
                (1) the bonds or other obligations and the proceedings
    authorizing the bonds or other obligations must be submitted to the
    attorney general for review and approval as required by Chapter
    1202, Government Code;
                (2) the bonds or other obligations may be payable from
    and secured by revenue of one or more projects of the local toll
    project entity or the department, including toll road system
    revenues, or such other legally available revenue or funding
    sources as the local toll project entity or department shall
    determine;
                (3) the bonds or other obligations may mature serially
    or otherwise not more than 30 years from their date of issuance;
                (4) the bonds or other obligations are not a debt of
    and do not create a claim for payment against the revenue or
    property of the local toll project entity or the department, other
    than the revenue sources pledged for which the bonds or other
    obligations are issued; and
                (5) the local toll project entity and the department
    may issue obligations and enter into credit agreements under
    Chapter 1371, Government Code, and for purposes of that chapter, a
    local toll project entity and the department shall be considered a
    public utility and any cost authorized to be financed in accordance
    with this subsection is an eligible project.
          (q) The provisions of this section requiring metropolitan
    planning organization approval of the terms and conditions for the
    State Highway 99 project expire August 31, 2009.
          (r) This section expires August 31, 2011.
          (s) This section does not apply to:
                (1) any project for which the department has issued a
    request for qualifications or request for competing proposals and
    qualifications before May 1, 2007, except for the State Highway 161
    project in Dallas County;
                (2) the eastern extension of the President George Bush
    Turnpike from State Highway 78 to IH 30 in Dallas County;
                (3) the Phase 3 and 4 extensions of the Dallas North
    Tollway in Collin and Denton Counties from State Highway 121 to the
    Grayson County line, and the planned future extension into Grayson
    County;
                (4) the Lewisville Lake Bridge (and portions of FM 720
    widening projects) in Denton County; or
                (5) the Southwest Parkway (State Highway 121) in
    Tarrant County from Dirks Road/Altamesa Boulevard to IH 30.
TOLLROADSnews 2007-11-10
It's a tale of two cities in Texas. In Dallas the NTTA public toll authority is embracing public toll concessions with alacrity, issuing regular upbeat statements about the progress with their 50 year lease concession on SR121, and their willingness to do more. In Houston by contrast Harris County officials are objecting strongly to Texas Department of Transportation's (TxDOT) application of the public tollroad concessioning process provided for in SB792, the Texas law passed last summer.A two page letter of Oct 25 by Arthur Storey, executive director of the Harris County Public infrastructure Department and in
charge of the county tollroads addressed to Gary Trietsch, Houston rep of TxDOT lays out the county objection to TxDOT concession procedures. (Download letter here, 2 pages pdf)"My prime concern is TxDOT's apparent negotiating presumption... that the project delivery model for the market valuation process is a competitively bid, full concession comprehensive development agreement (CDA) procedure."
Storey attacks a presentation called "Toll Road Market Valuations: Introduction and Planning" by consultants KPMG, TxDOT's advisers on tollroad valuation, a document or powerpoint we have not been able to obtain.
KPMG apparently says that SB792's market valuation should simulate a private sector concession procurement. Storey writes: "Contrary to statements in the KPMG materials there is no language in SB792 that 'implies' that market valuation projects should be developed under a CDA-type procurement."
The Harris County chief does concede that Houston's Grand Parkway project is an exception and that a concession procurement "may be" appropriate: "However what works for one project such as the Grand Parkway may or may not work for another project."
His letter concludes: "We hope that you agree with and confirm to us that a full concession model is not the starting point for a determination of terms and conditions for a market valuation project. With that assurance we look forward to implementing the structure and tools that the legislature provided in SB 792 for addressing the mobility needs of our region."Another TxDOT presentation - a draft for discussion
We do have a presentation (without KPMG identifier) in the form of powerpoint slides that seems to run along the same lines as as the KPMG paper that Storey refers to.
Titled "Completing a Market Valuation of a Toll Road Project" it has a note at the bottom 'CONFIDENTIAL DRAFT FOR
DISCUSSION." It states:"Market value is defined as the total amount of concession fee payable to the project sponsor or the total amount of toll equity required from the project sponsor (stated in present value terms where necessary.)"
Financial model inputs should incorporate "past experience of those inputs pledged by proposers in previous CDAs to account for recent and relevant market conditions."
"The primary output of the market valuation exercise is an estimate of upfront payment from the private sector or the amount of toll equity that a project may require."
There follow some rather pedestrian slides on the inputs then under "Perform Market Valuation" there is this statement of principle:
"The market value will be based on the anticipated market conditions of a competitive procurement involving private developers..."
But the presentation does state early that TxDOT and the local toll road sponsor can agree to waive the requirement for a market valuation. It is clear however that TxDOT is keen to use the concession model for valuing public as well as private toll projects wherever possible. That is understandable because it will generate the most money for supporting other road projects, free or tolled.
If TxDOT and the local authority can't reach agreement then, under the SB792 law, neither party can advance the project as a tollroad. So by law each side has veto power over tolling - which could lead to some project gridlock.
SB792 on TxDOT dealings with local toll authorities
With some headings we've inserted here is the portion of SB792 on how TxDOT and local toll authorities must handle potential toll projects:
         Sec. 228.0111. TOLL PROJECTS OF LOCAL TOLL PROJECT
    ENTITIES. (a) In this section:
                (1) "Local toll project entity" means:
                      (A) a regional tollway authority under Chapter
    366;
                      (B) a regional mobility authority under Chapter
    370; or
                      (C) a county acting under Chapter 284.
Market valuation
                (2) "Market valuation" means the valuation of a toll
    project that:
                      (A) is based on the terms and conditions
    established mutually by a local toll project entity and the
    department for the development, construction, and operation of a
    toll project, including the initial toll rate and the toll rate
    escalation methodology; and
                      (B) takes into account a traffic and revenue
    study of the toll project using agreed-upon assumptions, an agreed
    project scope, market research, the estimated cost to finance,
    construct, maintain, and operate the project, and other information
    determined appropriate by the local toll project entity and the
    department.
                (3) "Region" has the meaning assigned by Section
    228.001, except that the region of a county acting under Chapter 284
    is composed of that county and the counties that are contiguous to
    that county.
                (4) "Toll project subaccount" means a subaccount
    created under Section 228.012.
          (b) This section does not apply to a toll project described
    in Section 228.011(a).
          (c) A local toll project entity is the entity with primary
    responsibility for the financing, construction, and operation of a
    toll project located within its boundaries.
          (d) Subsection (c) does not limit the authority of the
    commission or the department to participate in the cost of
    acquiring, constructing, maintaining, or operating a toll project
    of a local toll project entity.
          (e) Except as provided in this subsection, if a local toll
    project entity or the department determines that a toll project
    located within the boundaries of the local toll project entity
    should be developed, constructed, and operated as a toll project,
    the local toll project entity and the department mutually shall
    agree on the terms and conditions for the development,
    construction, and operation of the toll project, including the
    initial toll rate and the toll rate escalation methodology. The
    terms and conditions for the procurement and operation of the State
    Highway 99 project shall be approved by the metropolitan planning
    organization in which the project is located.
If unable to agree...
          (e-1) If the local toll project entity and the department
    are unable to mutually agree on the terms and conditions for the
    development, construction, and operation of the toll project as
    required by Subsection (e), neither the local toll project entity
    nor the department may develop the project as a toll project.
          (f) After agreeing on the terms and conditions for a toll
    project under Subsection (e), or after metropolitan planning
    organization approval of the terms and conditions for the State
    Highway 99 project, the local toll project entity and the
    department mutually shall determine which entity, including a third
    party under contract with the local toll project entity or the
    department, will develop a market valuation of the toll project
    that is based on the terms and conditions established under
    Subsection (e). The department and the local toll project entity
    have 90 days after the date of the receipt of a final draft version
    of the market valuation designated as "complete; subject to
    approval by the Texas Department of Transportation and (name of
    local toll project entity)" to mutually approve the market
    valuation included in the draft version or, in the alternative,
    negotiate and agree on a different market valuation. If the
    department and the local toll project entity are unable to agree on
    a market valuation within the 90-day period, the market valuation
    in the draft version is considered to be final for purposes of this
    section and mutually approved on the last day of that period.
          (f-1) The department and a local toll project entity may
    agree to waive the requirement to develop a market valuation under
    this section.
          (f-2) If the department and the local toll project entity
    are unable to mutually determine which entity will develop the
    market valuation of the toll project under Subsection (f), neither
    the department nor the local toll project entity may develop,
    construct, or operate the project as a toll project.
Locals have first option
          (g) A local toll project entity has the first option to
    develop, finance, construct, and operate a toll project under the
    terms and conditions established under Subsection (e). A local
    toll project entity, other than a regional mobility authority under
    Chapter 370, has six months after the date that the market valuation
    is mutually approved under Subsection (f) to decide whether to
    exercise the option. For a project proposed to be located within
    the boundaries of a regional mobility authority under Chapter 370,
    after the market valuation is final under Subsection (f), the
    metropolitan planning organization for the region in which the
    project is located shall determine whether the toll project should
    be developed using the business terms incorporated in the market
    valuation. If the metropolitan planning organization determines
    that the toll project should be developed using the business terms
    in the market valuation, the regional mobility authority has six
    months after the date the metropolitan planning organization
    decides whether to exercise the option to develop the project. If a
    local toll project entity exercises the option with respect to a
    toll project under this subsection, the local toll project entity,
    after exercising the option and within two years after the date on
    which all environmental requirements necessary for the development
    of the toll project are secured and all legal challenges to
    development are concluded, must:
                (1) enter into a contract for the construction of the
    toll project; and
                (2) either:
                      (A) commit to make a payment into a toll project
    subaccount in an amount equal to the value of the toll project as
    determined by the market valuation, to be used by the department to
    finance the construction of additional transportation projects in
    the region in which the toll project is located;
                      (B) commit to construct, within the period agreed
    to by the local toll project entity and the department, additional
    transportation projects in the region in which the toll project is
    located with estimated construction costs equal to the market
    valuation of the toll project; or
                      (C) for a regional mobility authority under
    Chapter 370, commit to using, for a period to be agreed upon by the
    department and the authority, all surplus revenue from the toll
    project for the purposes authorized by Section 370.174(b) in an
    amount equal to the valuation of the project.
          (h) If a local toll project entity exercises the option with
    respect to a toll project under Subsection (g) and has not begun the
    environmental review of the project, the local toll project entity
    shall begin the environmental review within six months of
    exercising the option.
          (i) If a local toll project entity does not exercise the
    option to develop, finance, construct, and operate a toll project
    under Subsection (g), or does not enter into a contract for the
    construction of the project and make a commitment described in
    Subsection (g)(2) within the two-year period prescribed in
    Subsection (g), the department has the option to develop, finance,
    construct, and operate the toll project under the terms and
    conditions agreed to under Subsection (e). The department has two
    months after the date the local toll project entity fails to
    exercise its option or enter into a construction contract and make a
    commitment described in Subsection (g)(2) to decide whether to
    exercise its option. If the department exercises its option with
    respect to a toll project under this subsection, the department,
    after exercising the option and within two years after the date on
    which all environmental requirements necessary for the development
    of the project are secured and all legal challenges to such
    development are concluded, must:
                (1) enter into a contract for the construction of the
    toll project; and
                (2) either:
                      (A) commit to make a payment into the toll
    project subaccount in an amount equal to the value of the toll
    project as determined by the market valuation, to be used by the
    department to finance the construction of additional
    transportation projects in the region in which the toll project is
    located; or
                      (B) commit to construct, within the period agreed
    to by the local toll project entity and the department, additional
    transportation projects in the region in which the toll project is
    located with estimated construction costs equal to the market
    valuation of the toll project.
          (j) If the department does not exercise the option to
    develop, finance, construct, and operate a toll project under
    Subsection (i), or does not enter into a contract for the
    construction of the project and make a commitment described in
    Subsection (i)(2) within the two-year period prescribed in
    Subsection (i), the local toll project entity and the department
    may meet again for the purpose of agreeing on revised terms and
    conditions for the development, construction, and operation of the
    toll project, and the local toll project entity and the department
    shall follow the process prescribed in Subsections (f)-(i).
          (k) Consistent with federal law, the commission and the
    department shall assist a local toll project entity in the
    development, financing, construction, and operation of a toll
    project for which the local toll project entity has exercised its
    option to develop, finance, construct, and operate the project
    under Subsection (g) by allowing the local toll project entity to
    use state highway right-of-way and to access the state highway
    system as necessary to construct and operate the toll project.
    Notwithstanding any other law, the toll project entity and the
    commission may agree to remove the project from the state highway
    system and transfer ownership to the local toll project entity. The
    commission or the department may not require a local toll project
    entity to pay for the use of the right-of-way or access, except to
    reimburse the department for actual costs incurred or to be
    incurred by the department that are owed to a third party, including
    the federal government, as a result of that use by the local toll
    project entity. If a local toll project entity exercises its option
    to develop, construct, and operate a toll project under this
    section, the following shall be deducted from the amount of the toll
    project entity commitment under Subsection (g)(2):
                (1) an amount equal to the amount reimbursed under
    this subsection, if any; and
                (2) with respect to a county operating under Chapter
    284, an amount equal to the costs of any road, street, or highway
    project undertaken by the county under Section 284.0031 before the
    acceptance of the market valuation, if the county requests a
    deduction and specifies in reasonable detail a description and cost
    of the project and the department agrees that any such road, street,
    or highway project constitutes an additional transportation
    project under Subsection (g)(2)(B).
          (l) A local toll project entity shall enter into an
    agreement with the department for any project for which the entity
    has exercised its option to develop, finance, construct, and
    operate the project under Subsection (g) and for which the entity
    intends to use state highway right-of-way. An agreement entered
    into under this subsection must contain provisions necessary to
    ensure that the local toll project entity's construction,
    maintenance, and operation of the project complies with the
    requirements of applicable federal and state law.
          (m) Notwithstanding any other law, the commission and the
    department are not liable for any damages that result from a local
    toll project entity's use of state highway right-of-way or access
    to the state highway system under this section, regardless of the
    legal theory, statute, or cause of action under which liability is
    asserted.
          (n) An agreement entered into by a local toll project entity
    and the department in connection with a toll project that is
    financed, constructed, or operated by the local toll project entity
    and that is on or directly connected to a highway in the state
    highway system does not create a joint enterprise for liability
    purposes.
          (o) Notwithstanding an action of a local toll project entity
    taken under this section, the commission or department may take any
    action that in its reasonable judgment is necessary to comply with
    any federal requirement to enable this state to receive federal-aid
    highway funds.
          (p) A local toll project entity and the department may issue
    bonds, including revenue bonds and refunding bonds, or other
    obligations, and enter into credit agreements, to pay any costs
    associated with a project under this section, including the
    payments deposited to the applicable toll project subaccount, and
    the costs to construct, maintain, and operate additional
    transportation projects that the local toll project entity or the
    department commits to undertake in accordance with this section, as
    follows:
                (1) the bonds or other obligations and the proceedings
    authorizing the bonds or other obligations must be submitted to the
    attorney general for review and approval as required by Chapter
    1202, Government Code;
                (2) the bonds or other obligations may be payable from
    and secured by revenue of one or more projects of the local toll
    project entity or the department, including toll road system
    revenues, or such other legally available revenue or funding
    sources as the local toll project entity or department shall
    determine;
                (3) the bonds or other obligations may mature serially
    or otherwise not more than 30 years from their date of issuance;
                (4) the bonds or other obligations are not a debt of
    and do not create a claim for payment against the revenue or
    property of the local toll project entity or the department, other
    than the revenue sources pledged for which the bonds or other
    obligations are issued; and
                (5) the local toll project entity and the department
    may issue obligations and enter into credit agreements under
    Chapter 1371, Government Code, and for purposes of that chapter, a
    local toll project entity and the department shall be considered a
    public utility and any cost authorized to be financed in accordance
    with this subsection is an eligible project.
          (q) The provisions of this section requiring metropolitan
    planning organization approval of the terms and conditions for the
    State Highway 99 project expire August 31, 2009.
          (r) This section expires August 31, 2011.
          (s) This section does not apply to:
                (1) any project for which the department has issued a
    request for qualifications or request for competing proposals and
    qualifications before May 1, 2007, except for the State Highway 161
    project in Dallas County;
                (2) the eastern extension of the President George Bush
    Turnpike from State Highway 78 to IH 30 in Dallas County;
                (3) the Phase 3 and 4 extensions of the Dallas North
    Tollway in Collin and Denton Counties from State Highway 121 to the
    Grayson County line, and the planned future extension into Grayson
    County;
                (4) the Lewisville Lake Bridge (and portions of FM 720
    widening projects) in Denton County; or
                (5) the Southwest Parkway (State Highway 121) in
    Tarrant County from Dirks Road/Altamesa Boulevard to IH 30.
TOLLROADSnews 2007-11-10
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