Texas Toll Road Soup : The Environment, Federal Funding and Peak Oil

U.S. 281 N Toll Road near San Antonio.

'"It's been obvious to us from day one that TxDOT was willing to do and say anything to get a toll road on U.S. 281," said Terri Hall of Texans Uniting for Reform and Freedom.'

By Roger Baker / The Rag Blog / November 28, 2008

Four points about TXDot and the Texas toll road mess.

1.) First of all, everyone who follows Texas road politics knows that the environmental studies done by The Texas Department of Transportation (TxDOT) are shoddy. They always conclude that whatever roads TxDOT wants are needed and will have a minimal environmental impact.

Federal officials now seem to agree that TxDOT's studies have been substandard, after a citizen lawsuit forced the issue and after incriminating internal emails were revealed. The feds are now making the San Antonio's TxDOT district do their federally required studies over again. The project, the US 281 toll road, would of course stimulate proposed development over the Aquifer where SA gets its drinking water. This "mistake" cost TxDOT $8 million and a delay of three years, so they fired somebody at the bottom. Here is the full story on that.

"It's been obvious to us from day one that TxDOT was willing to do and say anything to get a toll road on U.S. 281," said Terri Hall of Texans Uniting for Reform and Freedom. "I don't think one biologist should take the fall. It should be management that pays the price."

Another hugely important fact, which is off-limits for TxDOT's environmental studies, is that the greenhouse gas emissions closely associated with sprawl development stimulated by new roads are causing irreversible climate change.

According to top climate scientists , this is a critical problem demanding immediate action.

2.) In the case of US 290 E, it has now been revealed that the consulting group that did the Traffic and Revenue studies for this road has quit the traffic forecasting business. Here are the details.

"...URS has established an international reputation as one of the leading consultants in toll financing. URS reports are fully acceptable to the financial community and rating agencies. In illustration of this, URS staff periodically gives seminars on toll road traffic and revenue forecasting to staffs of the three rating agencies... URS's greatest strength in traffic and revenue work was in the US south. The collapse of political support for toll financing in Texas may have been a factor in the closure of their T&R work..."

These forecasts are work that the bond rating agencies rely on to justify the road's ability to repay toll road bond debt. By not insuring its toll road bonds, the public would have to take the financial hit because the bond houses often respond to default by lowering the bond ratings for those local governments that participated in the bond sales. This is done in order to force the public to bail out the bond lenders.

The CTRMA (Central Texas Regional Mobility Authority) is refusing to reveal the US 290 E T&R studies on the grounds that the studies are still incomplete, in some sense, and therefore can be withheld by the CTRMA until just before the bond sales. The CTRMA's refusal to reveal this data indicates that the numbers probably don't look very good. More evidence is the fact that the US 290 E bonds are considered too expensive (meaning too risky) to be insured.

Meanwhile the CTRMA's bond counsel, J.P. Morgan Chase Securities is advising CAMPO to change its toll road financing policies through the CTRMA, but they are doing this consulting without any written contract, according to CTRMA director Heiligenstein.

This fundamental change in CAMPO's road funding policy to allow the transfer of funds within an undisclosed $1.5 billion toll road "system,” would violate the rules that were promised to the public and were unanimously adopted by CAMPO in Oct. 2007.

This change is being posted for a CAMPO vote next week. See agenda item 8 on CAMPO's Dec. 1 2008 agenda.

3.) The FHWA issued a stinging rebuke to TxDOT last year, and withdrew potential federal approval for its TIFIA loan on SH 121. This is the category for federal loans that the CTRMA is depending on for roughly a third of its toll road financing. (Without the TIFIA loans, the financing for the CTRMA's toll roads pretty much falls apart.)

"The letter announces:

-- withdrawal of the special exceptions program (SEP-15) waiver granted to expedite SH121 and two other unnamed highway projects for accelerated environmental clearance

-- withdrawal of approvals for TIFIA federal loan and Private Activity Bonds support

-- a request for reimbursement of the US Government for its expenses in incurred in considering and evaluating the TIFIA loan associated with SH121

-- no future federal funds for SH121

-- additional oversight and approval requirements for future Texas applications so long as Texas breach of federal law is not remedied

-- more "far reaching compliance measures" if Texas violates federal law again..."

4.) The private bond money on which the CTRMA was depending for about another third of its of its toll road funding has virtually disappeared. Things have changed a whole lot in the last few months. We're not operating under the Bush/Greenspan bubble with easy credit for long-range debt anymore. Yet this is the type of private funding that TxDOT, and now the CTRMA, were counting on to cover their huge funding shortfalls. Here and here are links that underline the fact that borrowing long-range funds for toll roads has now gotten extremely difficult:

Likely, Obama and the Democratic Congress will favor new transportation money to repair neglected US infrastructure, but it will likely come with new strings attached; being targeted for repair of existing facilities rather than building uninsured new toll roads. TxDOT is acting fast to try to capture what it can of these funds:

"Texas Department of Transportation officials have notified the state's Metropolitan Planning Organizations to begin identifying ‘ready to go’ projects that could qualify for a new $700 billion federal stimulus proposed this week by President-elect Barack Obama. The package is intended to boost employment by rebuilding infrastructure, modernizing schools, and strengthening the alternative energy industry..."

Meanwhile the 40 year toll road bonds are nearly certain to default. This is because world oil production is peaking with no affordable near-term energy or technology to replace oil. If electric cars should become widely available, they are unlikely to be cheap, would require a lot of new electrical power capacity, and both US consumers and the government are heavily in debt. If you are short of transportation money, urban rail in combination with smart growth policies are a much wiser option than new and widened roads.

World crude oil production practically stopped growing in 2005. Since then, steadily increasing world demand bid the oil price up to $147 a few months ago. Such high oil prices are like a tax on everything involving transportation. This burden has now triggered a severe world recession. Whenever the world economy recovers, oil prices will soar again as the world bids for a limited oil supply:

The peak oil crisis: the Crash of 2008

"...Despite the dramatic drop in oil prices during the last three months, recent developments have only made the supply and demand situation worse. Oil consumption in the U.S. has fallen by 1.8 million barrels a day (b/d) or nearly 9 percent as compared to last year due to a combination of high prices, a slowing economy, and the shortages resulting from the hurricanes that tore up Gulf coast production and refining last month. During September, however, Chinese imports increased by 2 million b/d as Beijing took advantage of the low prices to start building its strategic reserves -so much for falling American demand. The major oil forecasting agencies are now saying that the increase in worldwide demand for oil will slow from rates seen in recent years, but that worldwide oil consumption is still forecast to increase this year and next..."

The Rag Blog