State sponsored private toll company proposed in Texas bills SB1929/HB3783

The Texas rollercoaster just keeps on its wild ride. The latest tollroad bill pair to fly out of the Texas legislature is a grab-bag contrivance coming from both sides in the freeze debate. It has apparent heft though. The bills are authored by the transport committee chairs of the two houses - SB1929 sponsored by the north Dallas senator Robert Carona and its identical counterpart bill in the House HB3783 sponsored my Mike Krusee, the lonely opponent of a moratorium on private concessions.

The bills are touted as an effort to get a new consensus but they have to go through committees then to the floor of each house.

Contrary to some reporting SB1929/HB3783 have no moratorium on toll concessions. The bills do require concessionaires to pass more scrutiny. Whereas at present they only have to deal with TxDOT and the Texas Transportation Commission (TTC) they'd in future have to pass muster with several other agencies.

The bills propose to swing state gas tax money that presently goes to education to roads to the extent of some $600m/year, so would require increases in other taxes unless the state can do drastic cuts in public education. They also propose indexing the state gas tax, thereby reducing the annual erosion in its value over the years. But after operations and maintenance the gas tax is a trivial source of revenue for new road projects compared to tolling.

The bills recognize that tolling has to remain the primary source of funding for new road capacity.

 WARNING: This report is based on bills and actions as logged on the official website Texas Legislature Online operated by staff of the legislature. We've subsequently heard that the actual bill passed bears little resemblance to this, and that the Texas Legislature Online posted a draft bill posted instead of the real one. We haven't yet been able to check it out. (2007-04-22)

Texas Transportation Company

The most surprising proposal of a state sponsored toll company is apparently a counter to the criticism that presently bidding concessionaires are foreign - the proposal that the the Texas Transportation Commission (TTC) sponsor a Texas Transportation Company (TTCy) to build tollroads. Too many TTCs!

The bills want the state's transport commission to form a Texas Transportation Company (TTCy).

Despite its sponsorship the TTCy is to be a for-profit limited liability corporation or a limited partnership with the role of developing or acquiring toll properties and operating them as a business. TTCy is to have the power to issue securities and encumber its assets and enter into contracts in the same way as any for-profit business.

This clause seems to give it broad powers: "The company may enter into any contract, expend any funds, incur any indebtedness and procure goods and services necessary or convenient to develop any toll project on such terms as the governing body deems appropriate."

Securities are to be offered to investors to optimize their value and liquidity although preference is to be given in the issue of capital to pension, retirement and investment funds headquartered in Texas.

More questions than answers about this "private" toll company

The bills call the proposed TTCy "a private non-governmental entity." However they say nothing about whether the state will hold TTCy shares, whether having formed this company the Commission will have any continuing role in its governance. Will there be any restrictions on transactions in shares?

There is not a word in the legislation about how the board of directors will be appointed - rather important! The TTC, the governor, the legislature, or just the shareholders?

If just the shareholders then why does the government have to sponsor it?

Nothing either on how the company should report their results, whether their shares are to be tradeable and listable on stock exchanges.

Is the TTCy to be confined to Texas in its operations, or is it to be free to go anywhere in the world there's business like all true private companies.

Could it be taken over like most private companies?

Could it acquire and merge? Would those foreigners so feared by some in Texas be able to buy into TTCy, or are they to be barred? The bills don't say. Could TTCy do toll projects jointly with other companies or government authorities?

No answers in SB1929/HB3783 - a reminder perhaps of the charmingly amateur character of this Texas legislature?

COMMENT: One hates to say this because most legislatures are lousy with lawyers, but perhaps in Texas they really do need more legal advice?

Concessions to be run by many non-TxDOT officials

The bills would change the concessioning process by requiring:
- performance bonds or other security sufficient, as determined by TxDOT, to ensure the performance of the contract (223.205a amended)
- contract termination for convenience being proposed must be notified to elected officials (228.210)
- annual audits by auditor general
- review and approval of the proposed contract by the attorney general (228.0011)
- comptroller-general projections of traffic and revenues (228.012)

There's a ton of new work for government officeholders!

The state auditor "shall (very British!) perform an audit of each financial statement for a toll road segment or combination of segments." (228.0091)

The state's Texas Transportation Commission (TTC) is empowered but only with their consent (no hostile takeovers) to acquire toll projects from other government entities - counties, cities, regions (RMSs).

The TTC can issue toll revenue bonds or use other funds to acquire tollroads. (228.013b)

Joint powers agencies may be created to do tolls. (284.0021)

County toll agencies are granted the power to make agreements with banks, clearinghouses or other financial institutions. (285.075)

County toll authorities may exercise all the powers of regional mobility authorities but are to be subject to the same regulation by TTC. (248.0031, 366.037)

The bill gives local governments increased voting power on local toll authorities at the expense of the governor's power. (Sec 19)

Exclusive lanes are required to have at last two lanes alongside for vehicles other than those in the exclusive lanes, except that a trucks-only roadway is permissible - the applicability of this is a mystery. (Sec 10 224.145b amended)

The legislation does not increase the state's 20c/gal gasoline and diesel tax but would adjust it each Oct 1 by the percentage of the of the CPI increase in the preceding fiscal year. It also allows municipaities to levy sales taxes for transit.

TOLLROADSnews 2007-04-19 WARNING 2007-04-23