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Texas Department of Transportation Commission Meeting


Ric Williamson Hearing Room
Dewitt Greer Building
1125 East 11th Street
Austin, Texas

Thursday, June 24, 2010


COMMISSION MEMBERS:

Deirdre Delisi, Chair
Ted Houghton, Jr.
Ned S. Holmes

Members not present:
Fred Underwood
William Meadows

STAFF:

Amadeo Saenz, Executive Director
Steve Simmons, Deputy Executive Director
Bob Jackson, General Counsel
Roger Polson, Executive Assistant to the
Deputy Executive Director
Dee Hernandez, Chief Minute Clerk

PROCEEDINGS

MS. DELISI:  Good morning.  It is 9:12 a.m. and I call the regular June 2010 meeting of the Texas Transportation Commission to order.  Note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State at 4:47 p.m. on June 16, 2010.

Before we begin today's meeting, please take a moment to place your cell phones and other electronic devices on the silent mode, please.

As is our custom, we'll open with comments from the commissioners, and since we're light two commissioners, we'll start with Commissioner Holmes.

MR. HOLMES:  Thank you.  I'd like to start with congratulations to the winners of the Keep Texas Beautiful Awards.  I think many of you know that TxDOT supports that function.  For about 20 years there was a $1 million award for a pool of winners, and the last go-round TxDOT increased that to $2 million which was extremely well received by the communities that received the awards, and they have ten categories based on population, and I'm going to read the names of the winners and offer my congratulations to them.  Utopia, Port Aransas, Cuero, Hutto, Katy, Lake Jackson, Cedar Park, North Richland Hills, Sugar Land, and Irving.

And I'll give you my sense of it.  We stimulate good behavior and this Keep Texas Beautiful program have literally thousands of volunteers that work in their communities to clean them up, to change them mindset of how they operate, and I think it's really a very beneficial program.  And I congratulate the winners and I appreciate very much the other 81 communities that entered their projects for consideration.

Now, on a sadder note, Fred Underwood, who all of you know always focuses on safety issues, has asked me to speak for him on the loss of one of our contractor employees earlier this week in Beaumont.  Safety is clearly a top priority for TxDOT.  We had a tragic accident on Monday in the Beaumont District.  One of our contractors was killed while working in a construction zone, an 18-wheeler came through barriers, safety trucks, injured three or four workers and killed Santos Granja, and Santos Granja leaves behind a wife and three kids.

Commissioner Underwood is not here today but asked me to remind everyone of the importance of driving safely all the time but particularly in school zones and working zones.  And I would like for all of us to observe a moment of silence in remembrance of Santos Granja and his family.

(A moment of silence was observed.)

MR. HOLMES:  Thank you very much.

MR. HOUGHTON:  Good morning to all who have come from parts of the State of Texas.  There is no truth to the rumor that this meeting will last longer than that tennis match that is going on in Wimbledon.  I'm not sure it's concluded yet, but at last count it as in excess of ten hours as they resumed play this morning.

I echo the remarks of my fellow Commissioner Ned Holmes and Fred Underwood about our contractor, our employees and to be safe, and please observe the laws of the State of Texas, and as you leave here today, drive safely on your return home.  Thank you.

MS. DELISI:  Again, also welcome to everyone who has come.  I know we have a very packed commission agenda today and it's drawn folks from all across the state, so it's good to have you here and welcome to Austin.

I just want to remind you if you wish to address the commission during today's meeting, please complete a speaker's card at the registration table in the lobby.  If you want to speak on an agenda item, please fill out a yellow card, if the topic which you'd like to speak on is not an agenda item, please fill out a blue card and we'll take your comments at the end of the meeting during our open comment period.  Regardless of the color of card, please, we ask that you try and limit your comments to around three minutes.

Our first item of business today is approval of the minutes for the May 26 and 27 meeting and the special meeting June 8. 

Members, the draft minutes have been provided in your briefing materials.  Is there a motion to approve?

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

Our first item today concerns a recommendation relating to the Grant Thornton management and organizational review, and Commissioner Holmes will present the item.

MR. HOLMES:  Thank you very much.  As many of you know, Fred Underwood and I served on a subcommittee that worked with the Grant Thornton in reviewing operations at TxDOT, and one of the things that became very clear was the need for restructuring and reorganization reform of TxDOT.  We have a 93-year history, we have extremely dedicated staff and employees and very talented staff and employees, but over a 93-year period you can become quite vested in the ways that you operate, and so it's always important as time goes by to review those operating standards and techniques to see where you can improve.

As we began to look at this issue, we believed that we needed an individual that could help TxDOT in that process and we have an individual today in our audience that I'd like to call forward, and I'd like to tell you a little bit about Mr. Howard Wolf.

Howard Wolf was born in Iran, Texas, that is, in Pecos County.  He was educated here in Austin, business degree and law degree, worked at Fulbright for many, many years, but what really strikes me as very, very relevant is his business experience and vast business experience in helping companies through extremely difficult times, quite frankly, much more difficult times than TxDOT faces.  He has led Continental Airline through bankruptcy, he has been called in by banking groups to help work out oil service companies that were in deep trouble, re-capitalizing financial institutions.  It's really an amazing resume and deep experience in organizational change and changed management.

We'd like for Mr. Wolf, if you would, to please come forward and tell us a little bit about your views and how you see TxDOT in some of the processes we might be going through.

MR. WOLF:  Thank you, Commissioner, and hello to the Chair and Commissioner Houghton.

The remarks that I'll make this morning are not about [inaudible], they're about what began with the Grant Thornton report, and then I'm going to say a few things about the total concept of organizational change.  And this is sort of broken into two parts because I put together some thoughts yesterday that I might share with you and I'm going to do those first quickly, sort of bullet points that I'll tick off here, and then I'll go into how I woke up in the middle of the night and thought about this further and have got some additional comments to add.

But starting off with my original comments, I would say that I have been recently asked by people to give my impression of the Grant Thornton report, and I view this document as an invitation to a comprehensive restructure project that will enable TxDOT to meet the transportation needs of the people of Texas in the 21st Century.  I believe the report calls for radical transformational change.

I've also been listening with rigor to what others are saying about the Grant Thornton report.  Some comments about the opportunities for change identified in the report request immediate specific action.  It is very important to remember that there is a major distinction between action that makes prompt change and effective action which produces long-term sustainable results.  There has been talk about low-hanging fruit, about presenting a proposed implementation plan at the next commission meeting to achieve a quick start that will produce relatively simple victories.  Persons who make statements of that type exhibit a profound lack of understanding of how organizational behavior operates in the domain of transformational change.

A 93-year-old department of government with 10,000-plus employees is a highly complex and connected entity.  Any transformational change must be preceded by a comprehensive plan that is first envisioned, developed and presented, and next validated and accepted with a high degree of alignment by interested stakeholders.  Otherwise, a change that is quickly made will have a magnified negative effect throughout the entire department.  Reacting to a quick fix, the entity will react with vigor and force to protect itself, circle the wagons and defeat the next proposed action.

If you look at the history of TxDOT, you can see that past efforts to quickly make changes have been swallowed by the department like the whale swallowed Jonah. Please understand that there are no quick fixes that will result in transformational lasting and effective improvements.  The reason restructure is used to describe what is to be done is because it is a term that engineers understand.  A restructure means exactly what the word says: a change of the entire structure which will involve the whole organization.

For years we've heard the expression it’s not brain surgery.  The phrase is meant encourage and comfort people like something you would say to your teenage daughter or son when they are learning to parallel park.  As you know, we now have brain surgeons applying their skills every day in almost every hospital in America.  Where am I going with this?  Well, the challenge of bringing innovation and efficiency to a large longstanding governmental institution, such as TxDOT, is not brain surgery, transformational change is substantially more difficult to perform than brain surgery, the failure rate is greater than brain surgery.

That fact, unless it is executed with skill and precision, transformational change is simply next to impossible, and I think that's the most important part in the first part of what I want to say.  Institutions, by their very nature, have no intrinsic appetite for change.  The most powerful force is an institution as large and as established as TxDOT is the status quo.

So when there is broad agreement that it's time for change, what do you do?  First, a team must be recruited to develop a plan for change, commitment for transformational change must be led within TxDOT which means that any plan must include the alignment of people in TxDOT. There must be broad support by the legislature and by the public generally but TxDOT must lead the way.  Only then can steps be taken to implement change.

To enable TxDOT to meet the expectations of its stakeholders in the 21st Century will require new levels of innovation, efficiency and productivity at the organization. Because failure is not an option, this is how TxDOT must approach the challenges that TxDOT will face going forward in responding to the Grant Thornton report.  Anyone who does the job of helping implement the changes that need to be made at TxDOT must do that from within the organization.

Now, those are my first comments.  Now let me tell you my middle-of-the-night comments about this.  I got to thinking of why are we even discussing change at TxDOT, and it's easy to say well, it's the Grant Thornton report and that has brought this to the forefront.  But I submit to you no, it's much deeper than that, there was a lot of conversation before Grant Thornton was even employed about what needs to be done at TxDOT, and you have to look at that in the context of all the conversation in the State of Texas about all aspects of government, not just state government but national government.

After sort of looking over the remarks I just gave you yesterday at home and then I sat down and started reading the New York Times, I went to sleep and then I woke up thinking again in the middle of the night about what I'd read in the New York Times.  I won't try to tell you the whole article, you probably saw it, it was in the Wednesday, July 23 national edition, and the headline is "Census Reports Has Reached Almost All Households," the subheading, "Texas and its largest cities are the big gainers in the 2010 Census."  That's the preview of coming attractions and that, in my opinion, is why we're talking about change.

It's very hard for people generally to think further ahead than what they're going to do today, next week, vacation this summer, et cetera.  Thinking about what we're going to do in 2030 and 2040, it's so easy to push that aside and not think about it.  I don't know where TxDOT is going to be in 2030 or 2040, that future hasn't been written, it's going to be written by TxDOT and by the people of the State of Texas.

But let me tell you what we all do know.  I heard the demographic report when I was put on the Tax Reform Commission, one of the first things we heard was an update by the state demographer, and wow, what's happened in Texas that's going to come out in the 2010 Census is nothing like what's going to happen in the next 20 or 30 years in Texas. We're going to grow, we're going to have so many people and they're going to have so many needs:  education, healthcare, et cetera, et cetera.

There's sort of an iron hexagon in government as to how all the pieces fit together but the one that ties them together is transportation.  I don't care what your political persuasion is, I don't care how liberal, how conservative you are or whether you're total disinterested, it makes no difference, everyone in this state directly or indirectly relies on our transportation system.

And I submit to you that that's why everyone is so uncomfortable because you know that there's this gorilla out there of where we're going to be in 20 or 30 years and is TxDOT going to be ready, is it going to meet that challenge.  And I submit to you that one of the reasons that people are so uncomfortable is, and this is what I wrote this morning as I woke up in the middle of the night, the people at TxDOT have lost the capacity to create the future they envision.

TxDOT is an organization staffed with a tremendous amount of capable and intelligent and smart people who want to do the right thing, but like so many of us in every aspect of life, and particularly in government and in business, it's the vision that we have of the future. When you overlay that with what's going to happen in this state in population growth, it's difficult, if not impossible, to have that vision in mind as you're trying to work on a project that's got to come to fruition in the next six to 18 months.  Everyone, not only TxDOT, but the commissioners, the managers, the employees, everyone at TxDOT, and also the legislature and informed people sense and feel this, that there's a future coming that we're not ready for.

So what must happen to meet the events that TxDOT knows are going to happen if you really look out that far, and here's where I may lose you in some of these things but I want to give you at least my sense of what must happen. There needs to be a fundamental shift in the way TxDOT thinks about the place and role of TxDOT in the world.  TxDOT needs to move from resignation to the fact that it must solve problems, to being able to think in terms of possibilities, what are the possibilities here, what is a possibility to do this in a different way, in a more efficient way, in a more effective way, not just solving the problem, not just grinding it out, but what are the possibilities going forward.

TxDOT must shift its understanding of its relationship to the people in TxDOT and the people of Texas. They've got to think more in terms of the fact that we are all connected and we're not adversarial in any way and not accept adversarial conversations, adversarial approaches, but connected approaches.  It's got to move beyond explaining, justifying, defending what happens, it needs to invite mutual exploration of new ideas, new possibilities.  The way it was done in the last 93 years is not going to take us into 2030 and 2040, it's going to have to be some new ideas, new possibilities, new solutions, new results that have never been done, much less thought of in TxDOT.

There's going to have to be a shift in the nature of TxDOT in its commitment.  TxDOT has been committed to performing jobs by seizing the task at hand by the throat and choking it into submission.  That's not going to work going forward.  Instead, TxDOT must learn to pause, take a deep breath, step back and open itself to listening, listening, listening to possibilities.  Only in that way will it be able to submit to the will of the people and to do the job it's charged to do.

In this way new possibilities will emerge, possibilities that haven't even been thought of today of ways to finance roads, ways to enhance mobility and transportation.  What I'm saying is that there is an innate number of ways in which TxDOT can operate.  The way it's operated in the past is not necessarily the way it must operate in the future; instead, it must operate differently in the future.  Only by committing to be open to change will TxDOT be able to find its appropriate place in the future of Texas.

To find someone to help make that happen, you know, you can pick your favorite person today, President Obama, Lieutenant Governor Dewhurst, Governor Perry, and you can parachute them in here and tell them to fix TxDOT, and I don't care who it is, you're not going to have someone come in from the outside, me included, and being able to fix TxDOT.  Whoever comes in must become a part of TxDOT.  That's why whoever takes on this assignment needs to be inside TxDOT and needs to draw on people in TxDOT to join with that person and people from the outside to invent a new culture, and then explain that culture, get people to understand it and be accepting of change, transformational change, sustainable change, and doing things in a different way.

That's not easy.  As I said before, it's not brain surgery, it's not done every day in hospitals in America.  Most attempts at something like this fail because the organization doesn't move forward fast enough and quick enough to embrace the possibilities that emerge from change.

We live in a free society, you don't force anyone to do anything, in a place like TxDOT, you're not going to persuade or get someone to agree to do anything, you're going got have to make a deal, not a commercial deal but a deal that you can make in an organization like this, and the deal is going to have to be based on the fact that the people in this organization see that it is better for them and better for the organization that TxDOT does something in a new way as opposed to the way they've been doing it.

That's the deal you're going to have to make, and the people in TxDOT will have to buy into that deal, and when they do, sustainable transformation will happen.  Formulating that deal, arranging that deal, explaining that deal, getting alignment to that deal will take time, anywhere from six to 18 months.  It will take a team effort, collective wisdom and a lot of give and take and a lot of conversation, but it can be done, and if you do it here at TxDOT, you will set a precedent that people will look at for decades around the United States as how you change government.

I'll stop there if you want to ask me any questions, but that's my story for today and I'm sticking to it.

(General laughter.)

MR. HOLMES:  Mr. Wolf, you've had extensive experience in organizational change and leading companies through bankruptcy proceedings and very, very difficult times.  When you took those tasks on, I assume you didn't do those by yourself, that you built a team.

MR. WOLF:  Absolutely.

MR. HOLMES:  And if I understood it correctly, you were building a team both from within the organization and then you would bring some additional people from outside.  Is that correct?

MR. WOLF:  That's correct, yes.  You need people in the organization because they will know things that you couldn't possibly find out in the time frame you need to find them out, and they will have ideas and approaches and thoughts.  If you can give them the freedom to express those things, that will be invaluable.

On the other hand, there is also no substitute for fresh eyes.  This is the second time I've ever been in this building and I am really ignorant about TxDOT, you couldn't overestimate what I don't know, but I do bring fresh eyes and I do bring a very open mind, and I do bring the capacity to listen with rigor.  And what I mean when I say listening with rigor is listening with rigor is not sitting there thinking what am I going to say in response to this, how am I going to get my point out there, et cetera, et cetera, listening with rigor means that you are in the moment and you are doing everything you humanly can to understand what this person is saying to you and what is their message and why they're saying this to you.

Now, that's not an easy discipline, let me tell you, I fail at that a few times every day and I've been working on this for 25 years.  But only by listening with rigor are you able to get collective wisdom so you can move forward as a group and get things done.  So yes, you've got to have a group, you've got to have knowledgeable people, you've got have fresh eyes, and you've got to all listen.

MR. HOLMES:  In that regard, as you see, two of our commission members are not here which is unfortunate, and Madame Chair, this is an extremely important decision for the commission and my sense is we probably need the collective wisdom of the balance of the commissioners.

MS. DELISI:  Well, I agree with that.  It goes to what Mr. Wolf, I think, was saying which I thought was so profound that you're middle-of-the-night comments are sometimes more profound than what you've been thinking about, but this concept of making a deal and it's a deal with you, with us, with the administration, with our 10,000 employees that we will work together to effectuate change, meaningful and sustainable change in this agency.

And to that end, I think you're right, Commissioner, to have all five commissioners here essentially saying we want to make that deal with the right person to build this agency going forward and to do, at the end of the day, what's right, not only what we think is right but what's right for this agency and what's right for the consumers we serve.  So I think that makes good sense to perhaps delay for a period of time so that the other two commissioners can be present.

MR. WOLF:  Thank you very much, I appreciate you listening.

MR. HOLMES:  Thank you.

MS. DELISI:  Commissioner, do you have anything?

MR. HOUGHTON:  When might we be getting together and cogitating over this?

MS. DELISI:  Well, here's what I think, I think there's a lot of work to be done, as Mr. Wolf mentioned, and I think every month that passes by is time that we cannot get back.  What I would propose, and I know that this is a burden on you all more than it is on me, but to come back here as soon as possible, and I believe as soon as possible would be Friday, July 2 for a special meeting of the commission.  So that's my intention right now.  If we post today, next Friday would be the soonest we could do it.

MR. HOUGHTON:  Bob, can we do that?

MR. JACKSON:  We can.

MR. HOUGHTON:  I'll be here.  I look forward to the journey, Mr. Wolf, look very much forward to that journey.

MR. HOLMES:  We very much appreciate your thoughtful comments too.  Thank you.

MS. DELISI:  Amadeo.

MR. SAENZ:  Thank you, Madame Chair.  Good morning.  Today we're ready to start our agenda.  I am going to move up agenda item number 13(c)(3), it's part of our routine minute orders, and we have a person here with us today.  This agenda item is really the redesignation of what we call the extension of Wonder World Drive that was built under the Pass-Through Toll Program by the City of San Marcos, and the mayor of San Marcos is here with us today. That project is complete and getting ready to open and we now need to designate that as RR 12.  As part of that, there will be some additional changes with other roads and the mayor wanted to come back and make a presentation to you this morning.

MS. DELISI:  So at this time I'd like to call up Mayor Susan Narvaiz.  Sorry about that.

MAYOR NARVAIZ:  That's okay.  I'm known as Mayor Susan because that’s just easier.

MS. DELISI:  All right.  Mayor Susan, come on up.

MAYOR NARVAIZ:  Mayor Susan Narvaiz from San Marcos, Texas.  Good morning, commission.  I thank you for your work for the people of Texas.

I am here on item 13(c)(3), and as you heard, we have a long history working with TxDOT.  We have a Minute Order 108745, dated December 13, 2001 to accept maintenance and operation responsibility of certain sections of RM 12 and RM 2439 totaling approximately 4.6 miles.

The city council of San Marcos is in support of the following redesignations:  redesignate FM 3407 as RM 12 from the intersection of FM 3407, known as Wonder World Drive locally, at RM 12 to SH 123; redesignate RM 12 to SH 80 from approximately three miles west of Loop 82 to IH 35, and at the request of TxDOT, dual designate SH 80 with SH 21 from the intersection of SH 80 and IH 35 eastward to the intersection of SH 80 and SH 21, and that aids direct connection to Lockhart, our fellow community.

This action represents the cooperative effort of the state, TxDOT and local municipalities to increase safe, efficient movement of people across the center of our great state, and so we would appreciate your support of this request.  Thank you very much.

MS. DELISI:  Thank you, Mayor.  Any questions?

MR. HOUGHTON:  So moved.

MS. DELISI:  It's part of our Routine Minute Orders so we'll just take it up then, or should we take it now?

MR. SAENZ:  We can do it either way.

MS. DELISI:  Let's go ahead and do it.

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MAYOR NARVAIZ:  Thank you so much.

MR. SAENZ:  Thank you, Mayor.  Thank you for the great work you did on the pass-through toll project and congratulations on getting it complete.  We were at the groundbreaking, we hope to be there at the ribbon-cutting.

MAYOR NARVAIZ:  That will be on July 24 and you'll all be receiving invitations.

MR. SAENZ:  Thank you.

This is just one of the partnerships, commissioners, that we've done with cities through the Pass-Through Toll Program.  A new project was built but the county and city are taking back part of the old system that will reduce the total miles of the department, so that's one of our good jobs.

I'm going to move on back to our regular agenda. Agenda item number 3 deals with Public Transportation, and Eric Gleason, our division director for Public Transportation Division, will present a minute order dealing with transportation development credits for the City of Odessa.

MR. GLEASON:  Good morning.  For the record, I'm Eric Gleason, TxDOT director of Public Transportation.

Agenda item 3(a) awards approximately 503,000 in transportation development credits to the City of Odessa to assist in the construction of a new administration and maintenance facility for EZ Rider, the public transportation system serving the cities of Midland and Odessa.  This is the second award of TDCs for this project; previously Minute Order 111967 awarded just over 570,000 TDCs for the first phase.  Should you approve this action today, it will result in sufficient federal funding to complete the facility.

Staff recommends your approval of this minute order.

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  Eric will now present the minute order doing the same thing for the City of Galveston.

MR. GLEASON:  Agenda item 3(b) awards approximately 695,000 in transportation development credits to the City of Galveston for a combination of fleet and facility projects, rebuilding or replacing infrastructure damaged during Hurricane Ike.  These TDCs will help leverage federal program dollars to rebuild damaged trolley truck bed and switching facilities, replace or rebuild vehicles damaged by the storm, and help revitalize downtown Galveston with an investment in an intermodal transportation and parking facility.

Staff recommends your approval of this minute order.

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  Agenda item 3(c), Eric will present the minute order that deals with the award of Federal Metropolitan Transportation Planning funds and also transportation development credits.

MR. GLEASON:  Agenda item 3(c) awards approximately $6,874,000 of Federal Transit Administration Metropolitan Planning Program funds and 1,374,985 in transportation development credits as described in Exhibit A.  Section 5303 funds are allocated using the latest census data.  Metropolitan planning organizations receive funds based on the ratio of each MPOs population to the total population of all MPOs.  These funds are used to support a variety of activities, including management and economic feasibility studies, evaluations of previously funded projects, development of transportation plans, TIPs, and other planning tasks associated with improvements to public transportation systems' facilities and equipment.

We recommend your approval of this minute order.

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  Eric will now present agenda item 3(d) which deals with the award of state funds for public transportation providers for 2011.

MR. GLEASON:  Agenda item 3(d) awards approximately $28.7 million in state funds to small urban and non-urbanized transportation systems for Fiscal Year 2011.  These funds are for both operating and capital expenses and are used to leverage federal funding for the same purposes.  There are 30 small urban and 38 non-urbanized or rural public transportation systems eligible for state funding.  These systems carry almost 23 million passengers and travel over 45 million miles of service each year.  The allocation among these systems show in Exhibit A is consistent with the funding allocation adopted by the commission in the Texas Administrative Code.

We recommend your approval of this minute order.

MR. HOLMES:  May I ask just a quick question?  Was this the formula that you were referring to yesterday that would change by virtue of the new census?

MR. GLEASON:  Yes, sir.

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  Thank you, Eric.

MR. GLEASON:  Thank you.

MR. SAENZ:  Agenda item number 4, commission, deals with an update on the department's Internal Compliance Program, and Deputy Executive Director Steve Simmons will present this agenda item.

MR. SIMMONS:  Good morning, Madame Chair, commissioners, Mr. Saenz.  For the record, I'm Steve Simmons, deputy executive director of the Texas Department of Transportation, and once again I'm presenting this report in my capacity as the department's internal compliance officer.

And I won't go into details about how we created this back in 2007, but just to remind you, the ICP program was initiated to basically raise awareness of compliance and ethical issues facing the department, educate our employees and partners of existing and proposed policies, procedures and laws, identify risks where we may be weak in controls, establish policies, standard operating procedures and acting accordingly where necessary to eliminate any identified risks or violations.

Over the last six months we've been very active. We've continued our risk assessment, we established work groups that identified areas of the department that have been identified as risks, they have rated them as high, medium and low, as well as a probability of whether that risk is high, medium or low.  Those work groups presented their findings to the Executive Internal Compliance Committee, we ranked them, and have moved them to the administration for concurrence.  And we believe this will be one piece in helping implement some of the Grant Thornton recommendations.  The ICP will distribute these prioritized items to the work groups which will coordinate with the divisions and offices to draft appropriate operating procedures.

We've been training our employees.  Our IDEA training, or the Increasing Departmental Ethical Awareness, refresher course has just gone online on our IWAY.  This is our annual training of our employees to understand the different issues that are going on with it, and this is the first year we've actually included a test for our employees.

As you are very aware, part of the ICP program also established training for the commission and administration to make sure that we're fresh and up to date with the different issues that are up there.  We completed that training last November.

We've instituted several new proposed rules and things regarding doing business with TxDOT.  The rules were passed in March of 2010 to Section 3139, stating that to be eligible to receive state or federal public transportation funds from or through the department, an entity must have adopted an internal ethics and compliance program that satisfies the requirements of Section 1.8 of the U.S. Sentencing Guidelines which I've used and talked about many times.

We're proposing contract sanction rules which were proposed last month which state having an ethics and internal compliance program could be mitigating factors when considering sanctions to impose for violations, and final adoption of these rules are scheduled for August of 2010.

New rules are being adopted for ethical conduct by entities doing business with the department which will combine the internal compliance requirements and the sanction rules in one place, defining expected conduct by those who do business with TxDOT.  We established our first ICP newsletter which we call Compliance Focus, and the first issue was sent electronically to all employees in April.  The issue announced the new training, provided additional clarification and information on gifts and favors, an update on the TxDOT Watch and the risk assessment project, as well as specifics on our compliance with the U.S. Sentencing Guidelines.

For the next six months, we will continue our risk assessment.  We will continue our employee training; you'll be invited back to the commissioner annual training. Our TxDOT Watch continues to be effective.  We will continue to look at rules and options to continue to raise the bar on our ethics and compliance program, we're developing an ethics awareness poster, we will have a new newsletter out, and we are also providing some resources to other state agencies regarding our program.  Specifically the Texas Department of Public Safety has asked us about our TxDOT Watch program, things of that nature.  We continue to research other state agencies regarding ethics policies and working with our partners outside the department.

With that, that's our report for this six months.

MR. SAENZ:  Thank you, Steve.

Agenda item number 5 deals with the promulgation of administrative rules, 5(a) deals with final adoption, and Carol Davis will present a minute order on the final adoption of rules for Chapter 28, Oversize and Overweight Vehicles and Loads.  Carol, good morning.

MS. DAVIS:  Thank you.  Good morning.  For the record, I'm Carol Davis, director of TxDOT's Motor Carrier Division.

The proposed amendments to Chapter 28 concerning Oversize and Overweight Vehicles and Loads are necessary to implement provisions of House Bill 4594 and address updates to the current Oversize and Overweight permitting process.  The amendments include a statutory reference change regarding which roads are authorized for use under a Chambers County permit, include that the person who loads a vehicle as someone who is subject to compliance with these rules, and clarifies procedures for maintaining motor carrier records.

The department received two written comments on the proposed amendments.  One comment concerned language requiring access to records held at the motor carrier's principle place of business.  Staff believes that the current wording allows flexibility for motor carriers to comply with the rule and for the agency to apply a reasonable test for compliance without additional revisions.

Two comments concerned the list of required records that a motor carrier is required to keep.  The commenters felt that the list was too restrictive and may require a motor carrier to create records that they didn't need in the normal course of their business.  Staff agrees that the language could be interpreted as such, and we have revised that language to clarify that the listed documents are required only if applicable to their business.

And we are recommending approval of final adoption of the amendments before you, and I'd be happy to answer any questions.

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MS. DAVIS:  Thank you.

MR. SAENZ:  Thank you, Carol.

Agenda item 5(b) deals with proposed adoption of rules, and James Bass will present the proposed rules dealing with the State Infrastructure Bank.

MR. BASS:  Good morning.  For the record, I'm James Bass, chief financial officer at TxDOT.

This minute order proposes amendments to the rules governing the operations of the State Infrastructure Bank, and as background, the commission appointed an advisory committee to work with the department and come up with proposed amendments to the rules in anticipation of additional capitalization from the Prop 12 Bond proceeds.

The proposed rules are believed to reflect the consensus agreement of the advisory committee members, and again, because of the capitalization of the bank with general obligation bond proceeds, we felt like it required revisions to the rules governing the operations of the bank, and primarily because the use of the general obligation bonds is limited and the size of the loans anticipated to be made from those bond proceeds are contemplated to be substantially larger than what has gone on from the existing SIB, and it's also expected that a portion of the loans made from the Prop 12 will be leveraged through the issuance of revenue bonds which the proceeds of those revenue bonds could therefore be used to make additional loans, therefore, that's the background as to why we thought they were necessary amendments to the rules.

And it would establish a separate account for the Prop 12 proceeds so it would be separate and distinct from the traditional funds that have been in place since 1998.  It would, within the Prop 12 account, establish two categories of loans that could be made from those proceeds: one would be loans of sufficient credit quality that they could serve as security for revenue bonds going forward; the other would be loans of lesser credit quality that might not be good candidates to be pledged for security for revenue loans.

And some of the reasons that might be is because of the subordination of the loan in relation to other debt instruments, and also, if the intent is for the loan from the Prop 12 SIB to be taken out and repaid in a three- or four-year time period, that would not necessarily be a good candidate for source of pledge.

MR. HOUGHTON:  Sounds like a backstop to me.

MR. BASS:  I do not believe it is a backstop, no, sir.

MR. HOLMES:  On a different note, I believe that however we structure these, and in respect of whether we believe it could be used to collateralize a revenue bond or not, that we need to structure them in a way that we believe the SIB will actually be repaid.  These are not grants, that is a different program, we have 12 categories of grants, and I think it's really important that the recipients of these loans understand that they do, in fact, need to be repaid and they're not structured as a grant.

MR. BASS:  Correct.  That's a major tenet of the traditional or the historic SIB that we've had and definitely that would be one we would continue going forward.  As you suggested, if someone is interested in a grant rather than a loan, there is toll equity, there is the regular design-bid-build program to address projects through grant mechanisms.  It is a bank and the intent is for those loans to be revolved and recycled to go and make second and third generations of loans, and so yes, it is obviously critical that they be repaid and we want to make sure that loan is structured that they can be repaid.

MR. HOUGHTON:  Do you have any kind of inkling as to what we could expect in some proposals?

MR. BASS:  Not at this point.  I think we'll see a number of them and I would expect that the applications and the rules set out a program call for the Prop 12 SIB, and so we would go out and get applications for that $1 billion all at one time so we could look at the best opportunities and the most efficient use of that capital.  I would suspect that we'll get applications for more than a billion dollars when we do go out with that program call, but as far as which specific projects or which entities will be applying, I don't know.  I could guess, but I haven't had any conversations with anyone that they plan on submitting for a particular project.

Another reason why we wanted to have at least the ability for these lesser loans or loans of lesser quality and perhaps of lesser dollar amount, $4 million or below, when we do get those, the first place we're going to look is the existing SIB, the traditional SIB.  However, just being aware that there's the potential that the amount available in that traditional SIB at the time that it's needed by the applicant may not match up, and so we didn't want to shut the door on those opportunities or those entities who might be looking for a smaller loan, we wanted to keep flexibility within the Prop 12 account to make sure that those still very much needed critical projects would have an avenue and an opportunity to continue to move forward.

In part, because looking at larger loans, wanting to make sure there is the ability for it to be repaid and to maintain the option if the commission so chooses in the future to leverage those outstanding loans through the issuance of revenue bonds, the proposed rules have some requirements for additional information as compared to the existing SIB.  And again, that would allow for a more sophisticated analysis on the ability of the applicant to repay the loan, and some of that additional information is just the most recent official statement from the applicant for whatever outstanding debt they have that's payable from the same revenue source that's proposed to be pledged for the repayment of the SIB loan.

There's a requirement of a financial feasibility study as to how it will be paid.  That can be waived by the executive director if it doesn't fit the particulars of the project, but it's a requirement in the Prop 12 under the existing rules, it's something we could ask for, but these rules say we're going to ask for it on day one.  And it also goes through and clarifies the form of any pro forma cash flows that we're going to be looking for from the applicant to make sure we have the ability to analyze the financial feasibility of it.

A few things just to mention, it will continue to have a two-step process on the State Infrastructure Bank, just like we have in the traditional one, there will be a preliminary approval, followed by negotiation and discussion and then followed by final approval.  But prior to granting preliminary approval, some of the things the rules lay out that will be considered by the commission would be the need for and benefits of the proposed project, the availability of funding from all sources, percentage of the project cost that will be covered by the requested loan, the financial feasibility of the project, the potential for leveraging the loan, potential social, economic and environmental impacts of the project, and the interoperability of the toll collection system if the loan is indeed for a toll project, and then evidence of public support and the applicant's experience in managing a similar type project as the subject of their application.

I would like to thank all of the members, before seeing if you have additional questions, of the advisory committee, but I'd like to point out and especially thank Judge Burrows of Bell County for chairing the committee and getting us to the ultimate point to where we are today.  He was very helpful, as were all the members.  Staff within the Finance Division was helpful, as always, but I'd also like to especially thank Jim Thomason of the Office of General Counsel for shepherding us through the amendments of the rules and really doing a lot of work with the advisory committee.

I'm happy to answer any questions that you might have.  Staff would recommend your approval so that we could post these rules to the Texas Register to receive public comment.

MS. DELISI:  Any comments or questions?

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. BASS:  Thank you.

MR. SAENZ:  Thank you, James.

Agenda item 5(b)(2) deals with proposed rules dealing with Public Transportation, and Eric Gleason will present this minute order.

MR. GLEASON:  Again for the record, I'm Eric Gleason, TxDOT director of Public Transportation.

Agenda item 5(b)(2) proposes amendments to Chapter 31.36 of the Texas Administrative Code concerning the distribution of funds to public transportation providers.  These amendments will clean up outdated fiscal year references, revise what is commonly referred to as the Commission Discretionary Program for non-urbanized area federal funds to no more than 10 percent of the available annual federal apportionment, and codify the funding allocation process that has been used the past two years under the discretionary allocation making it a stand-alone allocation.  This process has used each agency's proportional share of reported revenue miles as the basis for the allocation.

Eliminating the Commission Discretionary award amount will provide more funds to be granted through the annual formula process and add greater certainty to projected funding amounts for providers from one year to the next.  Using revenue miles as a basis of the additional allocation maintains a universally accepted practice in place for the previous two fiscal years.

The Public Transportation Advisory Committee met and discussed these proposed changes on June 17.  They are recommending adoption of these proposed changes.  Should the commission adopt these proposed changes today, they will be published in the Texas Register for the purposes of receiving public comment through August 9, 2010.

We recommend your approval of this minute order.

MS. DELISI:  Any questions before I call up the witness?

(No response.)

MS. DELISI:  Jeff Heckler.

MR. HECKLER:  Good morning.  I'm Jeff Heckler with the Texas Transit Association, and before I get started which will again be mercifully brief, I want to thank Eric and his team for all the hard work that they put in on this. This has been a bone of contention among us in the transit industry for many years and to have it come to this fruition point has just been a godsend and they've been wonderful to work with.  So we respectfully request your approval for this item.  Thank you.

MS. DELISI:  Thank you.  Is there a motion?

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  Thank you, Eric.

Agenda item number 6, commission, deals with the 2010 Pass-Through Toll Program, and John Barton will present this agenda item and a minute order.

MR. BARTON:  Good morning.  For the record, my name is John Barton, and I have the pleasure of working for you and Texas as the assistant executive director for Engineering Operations here at TxDOT.

Item number 6 that is before you today would authorize the executive director or his designee to move forward with negotiations on pass-through toll projects that you would select through this minute order, and I have a brief presentation of this call for projects that I'd like to share with you.

The Pass-Through Toll Program is administered in accordance with Title 43 of the Texas Administrative Code, Chapter 5.54, and as you'll recall, in February of this past year you issued the authority for the department to issue a call for projects.  That call for projects was opened on March 12 and it closed on May 11 of this year, and we were authorized to proceed with the selection of projects or recommendation for selection of projects up to an approximate value of $300 million in pass-through toll reimbursements.  The department received 37 applications during the call for this project.  Three of those the review team considered to be non-responsive and the remaining 34 were evaluated.

I'd like to just pause for a moment to share with you who those members of the Pass-Through Toll Program Review and Evaluation Committee were.  I think they did an outstanding job and I think it's important to recognize them.  Rene Garcia of our Design Division who is with us today ‑‑ Rene, if you'll stand up ‑‑ served as the chair of that review committee and does lion's share of the work for this effort.  Assisting Rene on the committee was Dorn Smith from our Finance Division, Wes Naumann of our Houston District, Mark Jones of our Austin District, J.D. Ewald, as you know, with our office of General Counsel, does a great deal of work for us in many different areas, and then Cindy Landez and I believe she's also with the Design Division.

They did a great job, very difficult task, took a lot of time and effort, and I think they did an outstanding job for us in preparing for today.

The criteria that is used to evaluate projects is set forth in the Administrative Code, they're shown here on this slide, I won't speak to each of them, but they look at different things like how much the communities are bringing forward in terms of financial contribution to the project, the impact that the project would have on the area of the state in which it's located, things that it does to address congestion, safety and air quality, and then how it fits in with the overall system in the state, as well as the reimbursement schedule that the community felt like they would need and whether or not they were using a transportation reinvestment zone as part of their project application.

Other factors that the commission can consider in selecting these projects have to do with the overall goals of the department that the commission established for us, as well as things like whether or not the project affects a BRAC realignment facility in Texas, whether the project is on a hurricane evacuation route, and other similar types of important factors that are established that we looked at.

Today we are recommending that eleven projects be approved or selected to allow us to move forward with negotiations on.  The total value of those is slightly more than $280 million.  We've also identified four other projects that we feel also are of note and should be on a waiting list, if you will, to move forward if we complete the negotiations on the first eleven and there are remaining funds on the table to get us to the total maximum estimated reimbursement of about $300 million.

As you note, that totals 15, and therefore, there were a lot of very worthwhile projects that were left out of consideration in this particular call.  Some of those are very impactful for their communities and I think it's important to note that projects like State Highway 200 in San Patricio County, FM 973 here in Travis County, Loop 49 that was recommended and applied for by the North East Texas Regional Mobility Authority, and like FM 102 down in the City of Wharton, they're all very important projects, very impactful for those communities, and the department and local district staff understand those and will continue to work with those communities to try to identify ways to advance those projects and have them ready for the next opportunity that might be made available.

As we move forward, if you approve these selections today, or whatever selections you choose to make, the next part of the process would be to begin a negotiation of the reimbursement amount.  The $280 million that I mentioned is just the estimate at this time and is likely to change.  I think it's important to note that we will only be reimbursing the construction costs for projects and that it will be limited to a maximum of 100 percent of that construction cost based on the contract award.

We will be deducting from that as we move forward with negotiations, based on your guidance in the past, any value for work that's being provided by the department.  So if we prepare the design or if we have acquired the right of way, if we will be overseeing the construction, then the maximum amount of reimbursement would be reduced from 100 percent of contract award for the construction to a value less than that.  And all of the agreements will include the actual cost provision that were recently adopted by the commission in a minute order earlier this month.

So the next steps as we move forward are to seek your approval of today's minute order that would authorize our executive director of his designee to move forward in the negotiation process on those projects that are shown in the exhibit to this minute order, and during that process we will negotiate the amount of reimbursement that we would recommend for your approval to these communities for those projects, and then seek your approval of that in a subsequent action through a minute order.  That minute order would authorize us to enter into agreements and then we would execute the agreements for the projects to move forward, and all of this needs to happen before the end of this fiscal year so at least by your August commission meeting.

So with that, staff is recommending your approval of this minute order, I'll be happy to answer any questions that you might have and certainly be willing to discuss any of the projects that are proposed in staff's recommended list of projects.

MS. DELISI:  Any questions for John?

MR. HOUGHTON:  Do we have people to speak?

MS. DELISI:  We do.  So then at this time I'd like to call up Judge Rene Ramirez.

MR. HOUGHTON:  Have these been posted?

MR. BARTON:  Yes, this information has been posted.  I've taken numerous phone calls yesterday and today and I expect I'll be taking several more.

MR. HOUGHTON:  Do you have a bulletproof vest on?

MR. BARTON:  I always wear Kevlar whenever I come to the office and I certainly am willing to take on any conversation that anybody might like to have.

(General laughter.)

JUDGE RAMIREZ:  Good morning.

MS. DELISI:  Good morning, Judge.

JUDGE RAMIREZ:  And I want to thank you for any consideration that you may be having on some of these applications that will have a huge historic impact on our county and also, I believe, the region and State of Texas and all the commerce that winds up in other parts of our nation.  I know that you guys have a hard decision and I want to tell you thank you for all the hard work that you do and also the work of your staff who have been very, very responsive in working with us as a partner on this project.

Any questions that I can answer, I'll be happy to.

I've got to recognize that I have a team of folks from our region with us:  Commissioner Palacios who serves with me on the commissioners court, he is the senior member of the court but not in age; also have Chairman Dennis Bertelson who is the chairman of the RMA down there who is with us; Mr. Mike O'Connell who is one of our appointments to that board; the director, Godfrey Garza who does an outstanding job of moving us forward and in the right direction; and Mr. Jacinto Garza who is one of the lead engineers that does outstanding work in our region.

And with that said, I'll be short.

MR. HOUGHTON:  Is this your first project in the RMA?

JUDGE RAMIREZ:  This would make history, yes, sir.

MR. HOUGHTON:  So this is history here.

JUDGE RAMIREZ:  Yes, sir.

MR. HOUGHTON:  Outstanding.  Thanks for your leadership.

JUDGE RAMIREZ:  I really appreciate the time that you have given us when we come up here just to go ahead and beg.

MR. HOLMES:  Judge, it's nice to help those who are helping themselves.

MR. HOUGHTON:  Yes.

JUDGE RAMIREZ:  Well, we look forward to a partnership with your blessing.

MS. DELISI:  Thanks, Judge.

JUDGE RAMIREZ:  Yes, ma'am, thank you.

MS. DELISI:  Mayor Bill Jones from the lovely City of Temple.

MAYOR JONES:  Good morning, commissioners, Madame Chair, Mr. Saenz, Mr. Polson.

I'm coming to you today, we're on the list, we're sad that we're on the alternate list but we stand ready to move up should the opportunity present itself.  My city manager, David Blackburn and I, come today again with appreciation of the great work that the staff has done, both at the state level here in Austin and in the Waco District under Amadeo Saenz and the great work that is done for all of us in our area as well as the work that you do in the State of Texas.

So appreciate your consideration and we certainly look forward to moving up; should the opportunity present itself, we stand ready to move forward with this project.  Thank you very much.

MS. DELISI:  Thank you.  David Garza.

MR. GARZA:  Good morning, Chairwoman and commissioners.  If it would be okay with you, I'd like to invite Commissioner John Wood to come up, he's part of the tag team.

MS. DELISI:  Oh, sure, absolutely.  Commissioner Wood, come on up.

MR. GARZA:  It was refreshing to hear Mr. Wolf this morning and what might transpire, and I want to just mention one thing in that respect is that don't forget we're partners from the bottom up with the RMA system that we have and we are critical components of success for your agency if we can build on some of your projects.

So with that being said, I would like to introduce Commissioner John Wood, but I would just like to thank you in advance for this project and for funding this project.  This project is a badly needed project in our county, it will reduce congestion and improve safety for the local passenger vehicular traffic and also for the traffic in the commercial arena, providing connection between the port of Los Tomates Bridge, the Veterans Bridge, to the Port of Brownsville which will improve the international movement of goods between Mexico and the U.S. in the rest of the United States.

It also will improve the safety issues that we have.  We have six zones in the current route now that we have school zones and there's 6.3 million tons of goods that travel that route yearly to the port between the bridge and the port, so this relief route will be a tremendous help for us.  Of course, air quality will improve because currently there's 15 stops that 18-wheelers have to make on that road that cause the safety concerns and quality of life issues that we have.

We're going to provide, of course, much better egress for police, fire and EMS services to that corridor on tat existing overweight route that we have today, and increase connectivity to I-69, even if it's signs and placards, we appreciate that, Commissioner, and we will keep your gate open always and make sure that you're not disturbed in getting to your area over there.

(General laughter.)

MR. GARZA:  Of course the length of crossing times will decrease and the access to the foreign trade zone at the airport will be more accessible, so there's numerous benefits that this will bring to the table, and we are and want to be your partners.

I do want to mention in the last two months and the next four months, Cameron County will be breaking ground on over $100 million worth of projects that we are partners with you on.  We've got the West Rail relocation project, we've got the port spur, we've got the switch yard relocation in Harlingen and Olmito, we have the Veterans Bridge expansion, we have the port access road project, and now the East Loop project.  So this will be over $100 million worth of projects that will be currently ongoing, are ongoing or will be ongoing in the time period of less than a year.  It's only been through the collaboration with you all and the efforts that you made to help us and the efforts that we've made locally to bring to the table worthwhile projects to help our community and the citizens.

And with that being said, I would just like to bring to you regards of our county judge who is not here today but he thanks you individually for the agenda item I hope will pass shortly, and we look forward to a groundbreaking in August, and which all of you will get an invitation, for the West Rail relocation project.  Any questions?

MR. HOUGHTON:  I just noticed that US 77 is on this project, is that, Amadeo, going to provide another link in building the I-69 or designating 77 as 69?  I see the designation of US 77, Commissioner Garza.

MR. SAENZ:  This project builds what's called the East Loop, it connects to US 77/83 at one of the international bridges and cuts across and allows better access to the port, and if I remember correctly, one of the federal studies designated some of that part of I-69.

MR. HOUGHTON:  So there will be a designation on that.

MR. SAENZ:  The more important part of this, as Commissioner Garza says, is the current route from the international bridge to the port that's designated as the overweight corridor goes through several school zones and this alternative route will eliminate that and allow it to be planned as a true truck route.

MR. WOOD:  Thank you.  My name is John Wood, I serve as Cameron County Commissioner of Precinct 2 in Brownsville.  Commissioners, Madame Chair, I appreciate the opportunity to be here and be here with my compatriot here who sits on the board with me at the commission.

I was listening with vigor this morning to Mr. Wolf and some of the comments he had to say, and as was noted, Texas is going to be a big gainer in the 2010 Census, we're going to be one of the biggest gainers in the United States, and along with that, throughout the State of Texas, certainly the border along Texas-Mexico is going to be one of the bigger gainers within the state, I believe, and I think we're going to see that for many years to come.

On behalf of myself and also on behalf of County Commissioner Sofia Benavidez which this project, State Highway 32 will actually be within her precinct and she was unable to be here today, I want to thank you for your consideration for this project and the other projects along the border and throughout the State of Texas.  Infrastructure is mightily important to all of us for issues, as Commissioner Garza talked about, the economic, environment and safety issues.

I also serve on a federal board called the Good Neighbor Environmental Board which has to do with environmental issues from Brownsville, Texas to San Diego, California along the U.S.-Mexico border.  It always gives me a lot of pride to attend my quarterly meetings and talk about how well Texas is doing and how well TxDOT does with infrastructure which creates the economic engine for the United States and Texas and Texas and Mexico to deal and to trade and how it improves the environment in our area.  Certainly air quality is one of the biggest environment issues that we have along the border, and the issue of safety, both manmade and natural disasters can create real problems with safety issues, safety is very important to all of us.

Our report annually goes to the president and Congress and we've highlighted several points that Texas has participated in to improve the environment along the border, and I want to thank you, each and every one of you, for the consideration for this project because it is going to improve our environment, our economy, and the safety for all of us.

I appreciate the opportunity to be here this morning.  Thank you.

MS. DELISI:  Thank you.  Sam Roberts.

MR. ROBERTS:  Good morning, Chair, commissioners. My name is Sam Roberts and I'm an assistant city manager with the City of Cedar Park, and I came here this morning to express our appreciation for your staff's recommendation on this project and the consideration by the commission on this project and to respectfully request your support for the project.  This is a very important project for Cedar Park and the surrounding area, including Round Rock and Lago Vista, it provides an important link from IH 35 to the 183A toll road and State Highway 183 also in Cedar Park, and we're very excited about the prospect of working with your staff on negotiating the necessary agreements if selected.

And with that, I'd be happy to answer any questions.

MS. DELISI:  Thank you very much.

MS. DELISI:  There's no one else to testify.  John, do you have anything else?

MR. BARTON:  No, ma'am, Madame Chair.  Again, staff would recommend your approval and I'd be happy to answer any questions you may have.

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. BARTON:  Thank you.

MR. SAENZ:  Thank you, John, and thank all the staff that did a great job in coordinating this and getting this done.

Agenda item number 7 deals with an amendment to the 2010 Unified Transportation Program, and John Barton will present this also.

MR. BARTON:  Thank you, Director Saenz.  Again for the record, my name is John Barton, the assistant executive director for Engineering Operations.  Item 7 that is before the commission today would amend the 2010 Unified Transportation Program that you adopted in April of 2010 at your commission meeting.

During the adoption of that 2010 UTP, there were approximately $68 million that were in undistributed funds contained in Category 10 of the UTP.  Those funds were anticipated to be used to cover project costs that subsequently have been covered with earmarks and were not necessary due to cost underruns.  Therefore, the staff was asked to put forward a recommendation for a supplemental Category 12 program, if you will, to provide supplemental rehabilitation and mobility project funding for several projects across the state.

Those are shown, I believe, in the exhibits to your minute order, I also have them on the overhead here today and would like to just briefly mention those.  There are three mobility projects that are being recommended for funding from the commission's strategic category, Category 12.

One is in Austin, the Austin District and Travis County on State Highway 130 to provide some entrance and exit ramps from State Highway 130 to Cameron Road.  That's a growing area of the community in Travis County, there are not currently entrance and exit ramps in the north and southbound directions on the south side of Cameron Road, and this project would allow for the installation of those ramps.  It also would help serve the regional relief airport that is being constructed near that area.

The second project on the list is in the Pharr District in Willacy County, it is on US 77, also known as the I-69 study corridor area, it's one of the projects of the four that have been mentioned in previous staff discussions to the commission that are ready to implement when the environmental clearance is received later this year on the I-69 corridor, if you will, or US 77.  This is a project in the Raymondville community and would provide for an additional overpass and extension of the mainlanes to extend that expressway facility further north out of Cameron County into Willacy County.

And then the third mobility project is in the Dallas District in Kaufman County on State Highway 34 in the community of Terrell.  This would realign a section of State Highway 34 in that community, provide an overpass at a railroad crossing.  We have several safety and congestion related issues there and a project that that community has been working on for many, many years with the department and funding through this particular approval would allow that project to proceed.

We also have experienced, as you know, record winter events this year in terms of snowfall and cold weather in some areas of the state that don't historically see that kind of weather, so we've recommended that you consider the approval of six projects for additional rehabilitation of roadways that were damaged due to these winter events, with the exception of one.

There's a project in the Bryan District on State Highway 6 and it's the bypass, if you will, of the College Station and Bryan communities.  That particular roadway received significant damage during this winter's weather and is in much need of repair.

The second project on the list is in Galveston County and I cannot share with you that it's winter damage but we also had another weather-related event not too long ago, Hurricane Ike, and this is on State Highway 87 through the community of Galveston and would help rehabilitate that roadway and help Galveston continue its recovery.  And by the way, if you haven't been there, they are doing a great job and very proud of the work that they are doing to rebuild their community and Texas can be proud of Galveston and all that they've accomplished.

And then there are two projects in the Abilene District, one in Taylor County and one in Scurry County, on roadways that received damage due to the snowfall and ice events that we had in that part of the state this winter.  And then the last two projects are similar situations, one in the Amarillo District in Linscomb County on State Highway 15 and one in the Childress District in Briscoe County on State Highway 256, again sections of roadway that because of the weather that we had this winter are seeing severe distress and are in much need of repair.

So staff would recommend your approval of this minute order.  If you do so, these projects will be funded from Category 12 by the redistribution of these unobligated Category 10 funds, and I'll be happy to answer any questions you might have.

MS. DELISI:  Any questions?

MR. HOLMES:  Just a quick comment.  I'm glad to see that Galveston is on the list.  Hurricane Ike was really devastating and the help that they can get I think would be greatly appreciated and sorely needed.

MR. BARTON:  Thank you, Commissioner.

MR. HOUGHTON:  My question is a followup to the last one.  The one on US 77, is this part of the potential I-69?

MR. BARTON:  Yes, sir, and it gets us one step closer to that interstate type facility between I-37 in the Corpus Christi community and Brownsville in the south part of the state.

MR. HOUGHTON:  Thank you.

MR. SAENZ:  This was one of the projects that was identified yesterday in the discussion item presentation as one of the short-term projects that could be built.

MR. BARTON:  And I just might note, I think it is important to note that the RMA has requested and will be preparing the design work for that project and paying for it, so that that's not a state cost.

MR. HOUGHTON:  Who?

MR. BARTON:  The Cameron County RMA.

MR. HOUGHTON:  Have they agreed to that?

MR. BARTON:  Yes, sir.

MR. HOUGHTON:  Oh, they have.

MR. BARTON:  It's kind of interesting that Cameron County RMA is funding a project in Willacy County for the design of the project.

MR. HOUGHTON:  Great, isn't that nice.  I would send Judge Cascos our love and affection.

MR. HOLMES:  I would actually send it to the rest of the state.  Take a look at what Hidalgo and Cameron County are doing to help themselves and they've been real leaders, and the rest of the state could take a page out of their play book.

MR. BARTON:  Staff recommends your approval.

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. BARTON:  Thank you, commissioners.

MR. SAENZ:  Thank you, John.

Agenda item number 8, commissioners, deals with the final adoption of the 2011-2015 Strategic plan, and Mary Meyland will present a minute order for you.

MS. MEYLAND:  Good morning, commission.  It is my pleasure, I'm Mary Meyland, currently your director of Strategic Planning and Performance Management.

Before we actually go through the motions of adopting the document that we've been working on with you for the last nine months, I think it's important that we pause for just a moment and bring forward for your consideration the issues, comments, concerns that were presented in the Grant Thornton MOR concerning the Strategic Plan and basically all the work that we've done collectively over the last nine months.  So I have a very short presentation to kind of highlight those issues for you this morning so that you can make some decisions whether or not we want to move forward with the draft as it is.

The first thing I want to bring to your consideration is the time constraints.  We began this process last September with you and have been very rigorous in the identification of the issues concerning the goals and our performance measures and we're moving forward towards that, but we are working towards this July 2 deadline which is set in law and that's why we're here today to try to get some direction to move forward and hopefully just to send the document as we've prepared, and I have a copy in front of me to show you, but we just wanted to make sure that we don't have a lot of time to make some really detailed improvements or changes but we can submit it by the 2nd with your directions.

Basically, the three issues that we were able to pull together from the detail that was in the MOR was the concerns about the mission statement, the fact that in previous years we have had what would be considered two or dual strategic plans and has created some confusion, and then some concerns about our overall vision and the lack thereof or the clarity thereof, and Mr. Wolf mentioned some things this morning that I thought was very interesting and very timely concerning the same concerns that GT put in their document.

The first thing I wanted to address with you this morning is the fact that we worked with you to create a mission statement and GT brought to your attention back in March of this year that they had some concerns with our mission statement and they proposed their own mission statement.  And we want to let you know today if that's something you want to proceed with as it is or if you want to consider adopting GT's proposed statement, and I put in front of you on the slide basically the two different statements.

The concerns, and I'll go over those briefly, is that our current mission statement is broad and it lets stakeholders set basically unrealistic expectations of TxDOT.  It does not prioritize TxDOT activities, though I will tell you that we did go through a prioritization of our goals to kind of help assist the ideal prioritization of our activities.  So even though it may not be stated specifically in the mission statement, we did do, and if you'll recall, prioritize the six goals that you have that describe the mission.

The third issue that GT has brought up with our current mission statement is that they believe that our mission should match up with the funding that it receives and that our mission statement, again being so broad in concept, is not really being tied down to the constraints that we've made very public but we have kind of addressed in our prioritization of our goals, one being the organizational concerns and the second one being our maintenance and safety.

Their recommendation in their version basically provides a narrowing of the scope, reflects TxDOT's priority areas and its limited funding.  Primarily by the last two statements highlighted there, it shows a mechanism by which we will accomplish the mission through maintaining and through collaboration which we've seen this morning.

The second issue is more targeted towards the framework for organizational recommendations to monitor their impacts.

So primarily you see the differences, I propose that for your consideration today before we get your final approval.

The second item was the concern that they raised about the existence of two strategic plans.  Previous years we've had an LBB version which is our guiding document for the request for our budgets and that's required statutorily and that's basically this nice black-and-white pdf and we'll be publishing it and sending it across the street July 2.  Previously we've taken excerpts out of this document and called it our Strategic Plan for basically public consumption and public communication.  So it does appear that we would have two plans.

We've already decided that this year for our plan, our current plan which will be 11-15 that you'll either approve today or tell us to modify accordingly, will be the only Strategic Plan and that if we publish something publicly, it will only be in the version of an executive summary to highlight those issues that are most prominent and concern to the public which is the guiding documents, the gold documents, the statements we call our directional statements.

And lastly was the vision issue that GT highlighted.  Basically two general weaknesses in our vision statement is it's not clear to the overall vision, no connection to the agency strategic direction.  And we propose two options.  Knowing that this is a much bigger charge in total than what we can probably accomplish in the next week before we get this document ready for submittal that we would consider re-visioning in the next version of the Strategic Plan and maybe capture some of the issues that Mr. Wolf brought forward as our agency's inability to create a vision and execute a new vision, maybe that's something that could be considered in the new ongoing update of the Statewide Long Range Plan as well.  So those are two options available for the vision concerns.

So finally, for your consideration today and hopefully signature, we are asking you to consider the adoption of the plan as it is today with our current mission statement that was approved generally and has been vetted through the public through multiple focus groups, we went back and re-surveyed the before and the after with the public, and we also have focus groups.  We feel very comfortable with the contents and comments that we received that we're doing the right thing and we're focusing on the right area.  Or we could adopt it as is, subject to any specific directional changes that you would like us to make in the content of the document, specifically maybe the mission statement.

And a second item that is very important is we've been charged and Amadeo has been charged to continue to move this organization and create it constructively, so the next part of this is making our Strategic Plan real and we were proposing to work on getting down into the trenches with our DDOR management and building action plans to execute the actual goals and strategies that you have provided for us in this document, and we were proposing to start to do that in July so that we would have things in place so we could start measuring towards our achievement of goals in September which is the beginning of our new fiscal year.

So we didn't want to move forward without taking the time this morning to explain this to you and give you the options to make some changes and/or directions for us.  Thank you.

MR. SAENZ:  The minute order, commission, really is staff is recommending that you adopt the Strategic Plan as was developed and preliminarily approved unless you all want to change the mission statement or any of the visioning.  As we will be going through the reorganization and restructuring, there will be some additional changes and the Strategic Plan will be updated before the next legislative cycle two years from now, so moving forward in this direction probably would be good and then the changes could be incorporated in our next update.

MS. DELISI:  Any questions or comments?

MR. HOLMES:  Did I understand correctly that we're mandated legislatively to act by July 2?

MR. SAENZ:  Yes, sir.

MR. HOLMES:  It seems to me that we obviously want to comply with legislative mandate.  Having said that, as we go through the reorganization and re-look at TxDOT, there may well be changes that occur as a result of that, and so I think whatever action we take today, we need to be mindful that it likely will be amended as we work through this process over the next six to 12 to 18 months, and so whatever we do today is not preempting action that may be taken in the next six to 18 months.  And so the question is whether we accept the Grant Thornton vision statement or continue with the current vision statement.

MR. SAENZ:  Yes, continue with the Strategic Plan as with the mission statement as was developed through your guidance, or do we change or put in the Grant Thornton mission statement into that Strategic Plan.

MR. HOUGHTON:  Go back to the Grant Thornton.

MS. MEYLAND:  It's the two mission statements.

MR. HOUGHTON:  Well, I'm going to go off of something Commissioner Holmes said to me and said to the audience regarding our partners from Hidalgo County and Cameron County which is reflected in the mission statement on the right that maintaining existing roadways and collaborating with the private and local entities which we just did, and they're to be applauded and that game plan and that model I hope other members around this state understand and take note that it's fun working in a collaborative way.

So I would amend the mission statement to reflect the one on the right regarding collaboration with private and local entities.

MR. HOLMES:  Is that a motion?

MR. HOUGHTON:  That is a motion.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MS. MEYLAND:  Thank you very much.

MR. SAENZ:  Thank you, Mary, and good job on putting together the Strategic Plan.

Agenda item number 9, commission, we are going to defer, so we're going to move on to agenda item number 10 which is the report on the actual traffic and revenue for the Central Texas Turnpike System, and Mark Tomlinson will present that report to you all.

MR. TOMLINSON:  Good morning, Mr. Saenz, commissioners.  My name is Mark Tomlinson, director of the Texas Turnpike Authority Division.

This minute order accepts the report of actual traffic and revenue for the Central Texas Turnpike System as of May 31, 2010, as required by our indenture of trust.  The report compares current traffic and revenue data with data from the prior fiscal year as well as projections from the 2002 traffic and revenue study.  Third Quarter CTTS results include a revenue increase of 17 percent over the same months in the prior year.  For the year-to-date, the CTTS has generated almost $49 million in revenue and the revenue has exceeded the prior year by 14.2 percent and projections by 9 percent.

I'll be happy to answer any questions you might have, but staff would recommend your approval of the minute order.

MR. HOLMES:  One quick question, Mark.  These are not accrual numbers, are they, these are actual cash receipts.

MR. TOMLINSON:  That's correct.

MR. HOLMES:  Principally that pay-by-mail bit.

MR. TOMLINSON:  What we have collected to date.

MR. HOLMES:  You need a motion?  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. TOMLINSON:  Thank you.

MR. SAENZ:  Thank you, Mark.

Agenda item 11, commission, Brian Ragland will present our Obligation Limit Report.

MR. RAGLAND:  Thank you.  For the record, I'm Brian Ragland, director of the Finance Division.

This is the monthly Obligation Limit Report which gives you an update on where we stand year-to-date on our lettings.  As you can see, through the June letting we had let $823 million, remaining on the schedule for the year is $454 million which would indicate $322 million left on the table.  However, staff is diligently working to schedule those projects before the end of the year.  In fact, I think we're going to be coming to you with a minute order in July to make some adjustments to the allocations by district and by category so we can get those appropriate projects advanced into August.

Turning to the update on the motor fuel tax receipts, for the second month in a row we saw an up-tick of 3 percent over the same month last year, so that brings our year-to-date figure to negative 1 percent.  Hopefully that trend will continue.  To make a note, the diesel portion of those receipts were up almost 9 percent in those same two months, whereas, the gasoline was up a little over 1-1/2 percent, so almost a complete flip from what we had been seeing the previous six to eight months.

MR. HOLMES:  This is against projection as opposed to actual linked month from a year earlier?

MR. RAGLAND:  No.  It's against the same month the year earlier.

MR. HOLMES:  Then why does it say original projection?  Am I looking at the right chart?

MR. RAGLAND:  Let me catch up.  I'm sorry, the charts themselves, the two bar charts are against what we originally projected.  The actuals on the spreadsheet are against the previous year.

MR. HOLMES:  So we've got two different pieces.

MR. RAGLAND:  Yes.  I think we had originally projected a half a percent increase, so the net is 1-1/2.

MR. HOUGHTON:  Where do you come up with a half a percent projection?

MR. RAGLAND:  Well, that was just a conservative estimate based on historical trends and obviously we saw that those historical trends were kind of no good anymore, so we've since turned to splitting up the projection where we project diesel, the highest correlation we could find for diesel I believe was average retail sales, so our new cash forecasts are based on that index going forward, and we've still got the gasoline in there at .5 percent which we think that's a conservative estimate but we've still found some difficulty in finding an index that we could correlate that to.  We think the Comptroller's is maybe not as conservative as ours.

MR. HOUGHTON:  So based on the up-tick, we're minus one, our fiscal year ends August, will we have a fund balance at the end of the fiscal year?

MR. RAGLAND:  No ‑‑ well, we may, but we had originally ‑‑

MR. HOUGHTON:  Let's say we tick up another couple of ticks in July, August we'll be done, we'll be in the next fiscal year, my point is we have an up-tick in July and we have more revenue than what we anticipated based upon diesel, the economy coming back, people traveling on vacation.

MR. RAGLAND:  I don't think it can up-tick enough to exceed the original .5 percent we projected which went into our calculations for letting gaps, so we're going to have less than what we've projected, however, we've saved on administrative costs to offset that and we didn't have to affect our letting caps.

MR. HOUGHTON:  Well, administrative costs and bids coming in under the estimates.

MR. RAGLAND:  Well, administrative costs in FTEs and salaries and those things, plus bids coming in under the estimates.

MR. HOUGHTON:  All of those things.

MR. RAGLAND:  But we're trying to schedule projects to overcome the underruns on bids.

MR. HOUGHTON:  I'm just trying to get how do you throw the dart on the board.

MR. SAENZ:  As James has presented and Brian has done in the past is the projected '09 for our budget that's based on half a percent increase of '08 ‑‑ projected '10 is 1/2 increase of '09.  In the spreadsheet they're comparing '10 to '09 and we're still 1 percent below '09, so we're really 1-1/2 percent below our projection, we had projected '09 to go up half a percent.

As far as the construction projects, any underrun we've seen in the construction projects we've been trying to go back in the later months bring in more projects so we can meet our construction budget.  We think that we can make that 1-1/2 percent below the projection based on the savings that we have realized in administration with respect to reduction in FTEs, reduction in capital budgets and reduction and other savings that we've identified.

MR. RAGLAND:  A couple of months ago we were looking at being down 2 percent for the year which would have been 2-1/2 net.

MR. HOUGHTON:  But who knows why diesel rose 9 percent?

MR. RAGLAND:  Not me.  I would hope it's the economy but there have been mixed reviews lately.  But diesel is more tied to the economy, whereas, the gasoline is not as much, it's more tied to fuel efficiency.

That's all I have, there's no action required on this item unless you have further questions.  Thank you.

MR. SAENZ:  Thank you, Brian.  And Brian, I know that you are working on a report that would show kind of the overall of where the savings in our budget have come in.  Could we be ready to present that next month?

MR. RAGLAND:  Yes.

MR. SAENZ:  So we can show the commission all the savings and how we were able to use to match the construction budget.

MR. RAGLAND:  We have a draft of that available. It's currently being reviewed, but it's based on a model that we saw that Virginia uses and it's on a cash basis so you don't get into the conversations about accruals, things that happened in one year and didn't get paid until another year.

MR. SAENZ:  You can add that to your report next month.

MR. RAGLAND:  You want to add it to this item?

MR. SAENZ:  Yes.

MR. HOUGHTON:  Brian, how many registered vehicles do we have in the State of Texas?

MR. SAENZ:  About 21 million.

MR. HOUGHTON:  And we have how many people?

MR. SIMMONS:  (Speaking from audience.)  That's 22- registration actions, not necessarily registered vehicles. That's the way they count them.

MR. RAGLAND:  And I don't have the numbers on registrations in here year-to-date, but I believe I saw that those were up about 5 percent.

MR. HOUGHTON:  More cars, more people, less revenue, diminishing returns.

MR. HOLMES:  Five percent relates to about $50 million.  Right?  And right now we're underruning actual gas tax receipts at about $21 million, $22 million, is that right, at the 1 percent number?

MR. RAGLAND:  That sounds about right.  When we were down 2 percent a couple of months ago, we were looking at about $60 million, I believe, so $20- to $30-.

MR. HOLMES:  Well, it's nice to see a couple of up months but we also need to take into consideration that 15 out of the last 24 months have been down months.  Maybe we've turned it.

MR. RAGLAND:  Thank you.

MR. SAENZ:  Thank you, Brian.

Agenda item number 12, commission, deals with our contracts, and Russel Lenz will present two minute orders today, our Highway Maintenance and Department Building Construction contracts and then he'll present the Transportation Enhancement and Building Construction contracts.

MR. LENZ:  Good morning, commission.  For the record, my name is Russel Lenz, I'm the director of the Construction Division.

Item 12(a)(1) is for the consideration of the award or rejection of Highway Maintenance and Department Building Construction contracts that were let on June 3 and 4.  We had 14 projects with an average number of bidders of 4.29, we had a 10.46 underrun, and staff recommends award of all these maintenance and building projects.

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. LENZ:  Item 12(a)(2) is also for the consideration of the award or rejection of Highway and Transportation Enhancement Building Construction contracts, also let on June 3 and 4, as well as the Fort Bend County job number 3203 that was deferred from the May 27, 2010 commission meeting and it's shown in Exhibit A.  We're presenting 68 projects with an average of 6.07 bidders per project and an overall underrun of 8.03 percent.  Staff recommends the award of all construction projects with the exception of Lamb County project number 0563-03-011, job number 3016.  We recommend that this project be rejected.

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

 

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  Thank you, Russel.

Agenda item 13, commissioners, are the routine minute orders.  You have already taken action on 13(c)(3).  Staff would recommend that you adopt all routine minute orders and would be happy to answer any questions if you have one on any particular minute order.

MS. DELISI:  Is there a motion?

MR. HOLMES:  So moved.

MR. HOUGHTON:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.

MR. SAENZ:  We don't have executive session.

MS. DELISI:  This completes all the action items on the agenda.  Is there anyone signed up for open comment?

MR. SAENZ:  No, ma'am.

MS. DELISI:  Is there any other business to come before the commission?  There being none, I will entertain a motion to adjourn.

MR. HOUGHTON:  So moved.

MR. HOLMES:  Second.

MS. DELISI:  All in favor?

(A chorus of ayes.)

MS. DELISI:  The motion passes.  Please note for the record that it is 10:58 a.m. and this meeting stands adjourned.

(Whereupon, at 10:58 a.m., the meeting was concluded.)

CERTIFICATE

MEETING OF: Texas Transportation Commission

LOCATION: Austin, Texas

DATE: June 24, 2010

I do hereby certify that the foregoing pages, numbers 1 through 90 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Nancy King before the Texas Transportation Commission.


 

 

 
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