TEXAS DEPARTMENT OF TRANSPORTATION

COMMISSION MEETING

Ric Williamson Hearing Room Dewitt Greer Building 125 East 11th Street Austin, Texas

Thursday, December 13, 2012

COMMISSION MEMBERS:

Ted Houghton, Chair Jeff Austin III William Meadows Jeff Moseley Fred Underwood

STAFF:

Phil Wilson, Executive Director John A. Barton, Deputy Executive Director Jeff Graham, General Counsel Rose Walker, Chief Clerk Kristen Webb, Chief Minute Order Clerk

ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 2

I N D E X

AGENDA ITEM PAGE

CONVENE MEETING 7

1. Safety Briefing 7

2. Approval of Minutes of the November 15, 2012 19 meeting of the Texas Transportation Commission

3. Discussion Item 19 Discussion of ongoing studies to identify transportation projects that will significantly reduce levels of congestion on the state's most congested roadways, as required by the General Appropriations Act

4. Transportation Planning a. Panama Canal Report 24 b. Task Force on Texas' Energy Sector Roadway 44 Needs Report c. I-69 Advisory Committee Report 57 d. Approve the Gulf Intracoastal Waterway 72 Report (MO)

5. Aviation 83 Various Counties - Award federal and state grant funding for airport improvement projects at various locations (MO)

6. Public Transportation a. Various Counties - Award Federal §5316, 84 Job Access Reverse Commute (JARC) grant program funds to various transit providers (MO) b. Various Counties - Award federal §5311 85 funds, Nonurbanized Area Formula Program for FY 2013 (MO) c. Hays, Travis and Williamson Counties - 98 Award STP funds through the §5311 grant program to the Capital Area Rural Transportation System for the purchase of buses (MO)

7. Promulgation of Administrative Rules Under Title 43, Texas Administrative Code, and the Administrative Procedure Act, Government Code, Chapter 2001: a. Final Adoption (1) Chapter 9 - Contract and Grant 88 Management (MO) Amendments to §9.4, Civil Rights -

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Title VI Compliance (General) b. Proposed Adoption (1) Chapter 5 - Finance and Chapter 23 - 89 Travel Information (MO) Amendments to §5.42, Definitions, and §5.44, Exceptions (Payment of Fees for Department Goods and Services); the Repeal of §23.27, Magazine Ancillary Products (Texas Highways Magazine); New Subchapter D, Promotional Product Program, New §§23.51-23.59; and New Subchapter E, Merchandising Program, New §§23.101-23.105

8. Office of Compliance and Ethics Report 91

9. Toll Roads a. Denton and Dallas Counties - Approve the 92 selection of the proposer who submitted the best value proposal to develop, design, construct, and, potentially maintain the I-35E Managed Lanes Project, from I-635 in Dallas County to US 380 in Denton County, and authorize the executive director of the department to execute a comprehensive development agreement with the selected proposer (MO) b. Harris, Montgomery, and Chambers Counties - 106 Establish toll rate tables for portions of SH 99 (Grand Parkway) consisting of the tolled portion of Segment D in Harris County, and Segments E, F-1, F-2, and G; establish new rate tables for Grand Parkway Segment I-2, replacing the rates previously set by the commission; establish a toll escalation policy for six segments of the Grand Parkway consistent with the terms and conditions of the Market Valuation Waiver Agreement (MVWA) and authorize the chairman of the commission to execute a toll rate agreement between the commission and Grand Parkway Transportation Corporation (GPTC) (MO) c. Grand Parkway Report - Annual report on 107 the status of projects and activities undertaken during the preceding 12 months

10. Transportation Development Credits 114 Red River County - Award transportation development credits to provide the non-federal match associated with the paving of CR 3230 and CR 3240 connecting FM 1158 and FM 1159 northeast of the city of Clarksville (MO)

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11. Unified Transportation Program (UTP) 115 Approve updates to the 2013 UTP (MO)

12. Contracts Award or reject contracts for maintenance, highway and building construction a. Highway Maintenance and Department 117 Building Construction (see attached itemized list) (MO) b. Highway and Transportation Enhancement 117 Building Construction (see attached itemized list) (MO)

13. Eminent Domain Proceedings 120 Various Counties - Authorize the filing of condemnation proceedings to acquire real property by eminent domain for non-controlled and controlled access highways (see attached list) (MO)

14. Routine Minute Orders 121 a. Donations to the Department (1) Project Management Office - Consider a donation from the Association for the Advancement of Cost Engineers (AACE) for a department employee=s travel expenses to attend the 2013 Winter Workshop in Lake Tahoe, Nevada on February 20-25, 2013 (MO) (2) Austin District - Consider a donation from The Lookout Development Group, Inc., for the ROW, design and construction of a right turn deceleration lane and left turn lane on RM 1431 at the proposed Crystal Falls West development (Phase 1) and upon build-out of the development, a right turn deceleration lane on RM 1431 at Nameless Road (Phase 2) (MO) (3) Austin District - Consider a donation from Masonwood 71, Ltd, for the design and construction of a right turn deceleration lane on SH 71 at the proposed Bella Colinas development (MO) (4) Bryan District - Consider a donation from College Station Marketplace, LP, for the design and construction of a deceleration right-turn lane from the SH 6 southbound frontage road onto Arrington Road to access the new commercial subdivision of Tower Point (MO)

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(5) Houston District - Consider a donation from 5P Development, for the design and construction of two (2) deceleration turn lanes from FM 1960 at Deerbrook Park Boulevard to the donor=s development in Harris County (MO) (6) Houston District - Consider a donation from LaTour Partners, for the design and construction of a deceleration lane from BW 8 at Vista Road to the Vista Commercial Park Development in Harris County (MO) (7) Laredo District - Consider a donation from Kickapoo Traditional Tribe of Texas for the costs associated with the construction of a traffic signal at the intersection of FM 1021 and Tierra Soberana Blvd., in Eagle Pass, Texas (MO) (8) Odessa District - Consider a donation from Western National Bank to offset department direct and indirect costs for the installation of a traffic signal at the intersection of SP 558 (Faudree Road) and Eastridge Drive in the City of Odessa (MO) (9) Yoakum District - Consider a donation from Walmart, for the design and construction of a storm sewer system and the revised signing and striping associated with the driveways for the proposed Walmart on BU59T across from the Teakwood Drive intersection in Victoria, Texas (MO) b. Right of Way Dispositions and Donations Denton County - SH 121 at Blair Oaks Road in The Colony - Consider the exchange of drainage easements (MO) c. Highway Designations Erath County - Designate a segment of County Road 351 in the city of Dublin as SH 167 (MO) d. Redesignation of Access Rights Williamson County - Authorize the re-designation of access control along SH 45, approximately 4600 feet west of McNeil Road (O=Connor Road) to McNeil Road in order to move the access points on SH 45 for the property owned by Robinson Ranch, et. al, from their original locations to new locations (MO) e. Public Transportation (1) Galveston County - Award Federal §5310

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Funds, Formula Grants for the Enhanced Mobility of Seniors and Individuals with Disabilities Program (MO) (2) Montgomery County - Award transportation development credits to the City of Conroe (MO) f. Reports (1) Travis and Williamson Counties - Accept the Report of Actual Traffic and Revenue for the Central Texas Turnpike System (CTTS) (MO) (2) Report on Environmental Review of Projects g. Speed Zones Various Counties - Establish or alter regulatory and construction speed zones on various sections of highways in the state (MO)

15. Executive Session (none required) 121

OPEN COMMENT PERIOD (no commenters)

ADJOURN 123

ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 7

1 P R O C E E D I N G S

2 MR. HOUGHTON: Good morning. It is 9:00 a.m.

3 and I call to order the regular December 13, 2012 meeting

4 of the Texas Transportation Commission. Note for the

5 record that public notice of this meeting, containing all

6 items on the agenda, was filed with the Secretary of State

7 at 3:59 p.m. on December 5, 2012.

8 And I ask, as is customary, please turn off

9 your communication devices or put them in the silent mode.

10 And if you wish to address the commission,

11 there are two types of cards: yellow and blue, yellow on

12 a specific item, blue in the open session. Regardless of

13 the color, you must sign a card and sign up to speak.

14 Before I turn the mike over and we start, I'll

15 give this to Phil Wilson for our safety briefing.

16 MR. WILSON: Thank you, Chair. I would like to

17 ask Deputy Executive Director John Barton to come forward

18 and provide a quick safety briefing. John.

19 MR. BARTON: Thank you, Director Wilson,

20 Commissioners, Chairman. For the record, my name is John

21 Barton, and I, as Mr. Wilson said, have the pleasure of

22 serving as the deputy executive director for the state's

23 Texas Department of Transportation.

24 Briefly, this morning I just wanted to applaud

25 the commission and Director Wilson again for their ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 8

1 leadership in safety. It is making a cultural difference

2 in the department, and I'm proud to report that to date

3 within the department our injuries and incidents have been

4 trending downward in the correct direction, and so we're

5 very proud of the work and applaud you for your

6 leadership.

7 This morning, as we have many guests joining

8 us, I just wanted to take an opportunity to remind all of

9 us that in the case of an emergency and we need to

10 evacuate this room, there are three exits: the back doors

11 which would exit into what we call our delegation room and

12 then allow you to turn to your left and get out through an

13 executive room into the hallway that many of you probably

14 used to enter the building, the exist into that hallway

15 directly, and then an exit here towards the back of the

16 dais. All of those would feed us out in towards the guard

17 station where we could exit the building, and if we need

18 to, we will gather across the street near the front of the

19 Capitol walkway in order to make sure that everyone is

20 safe.

21 If we have a bad weather event -- and I doubt

22 that we will today -- we would stay in this facility and

23 we would move into the hallways surrounding the guard

24 station to be in the interior of the building.

25 If there's a medical emergency, if you could ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 9

1 see the guard station, they have the ability to provide

2 first aid or to call for emergency medical services.

3 And if for any reason we do have an emergency

4 and need to take action on that, you will be notified by

5 either myself or someone else coming to the podium and

6 making sure that that announcement is made.

7 Again, if you do have a medical emergency and

8 need attention, if you would see the guard station, we'll

9 be happy to provide either first aid or get medical

10 assistance for you.

11 Thank you.

12 MR. WILSON: Thank you, John.

13 With the safety briefing completed, I'll hand

14 the gavel back to you, Mr. Chairman, to complete opening

15 remarks.

16 MR. HOUGHTON: And as customary, we will open

17 with remarks from the commission. Commissioner Moseley.

18 MR. MOSELEY: Chairman, members, good morning,

19 everyone.

20 What a delight to be here on this beautiful

21 December day, the end of our calendar year, and to see all

22 the accomplishments at this end of the year. I look

23 forward to working with each of you in the audience and

24 with our commission members and our team as we go into the

25 legislative session. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 10

1 It's fascinating that we find ourselves in this

2 time where there's very vibrant discussion about how to

3 fund mobility, and of course, we do not advocate any

4 position but we're pleased to be resources as you carry

5 forward that discussion. And it is a timely discussion

6 with Governor Perry and the lieutenant governor and other

7 leaders of the legislature raising certain questions about

8 how we go forward where there's so much demand for

9 capacity in our state, and clearly the model that we've

10 depended upon just isn't working like it has with the

11 efficiency of the internal combustion engine and the fact

12 that we've depended on the fuel tax.

13 So we look forward to that vigorous, robust

14 discussion and I think there are some very good solutions,

15 and I know that the legislature and leadership is up to

16 finding some good solutions, so look forward to working

17 with you as we go forward.

18 Thank you, Chairman. Thank you, members.

19 MR. AUSTIN: Good morning, everyone.

20 I know we have a busy agenda today and I kind

21 of look at with the Port Advisory, energy sector, Panama

22 Canal, just kind of summarize it, build it and they will

23 come. So thank you all for being here.

24 You know, speaking of the future of

25 transportation and there are many answers to be discussed ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 11

1 and cussed and to be looking at funding, and I know many

2 of you in this room will hopefully help bring us the

3 solutions because we have a long list of projects that you

4 all have identified that need to be done.

5 But the future of transportation, I'd like to

6 mention the Transportation Forum. Hopefully everyone in

7 here has had the opportunity to register. It's going to

8 be February 17 through 19 here in Austin at the Hilton. A

9 couple of speakers we would like to announce that have

10 already committed: our former commissioner and current

11 Senate Transportation chair, Robert Nichols will be there

12 on a panel; also, executive vice president and senior

13 economist from the Federal Reserve Bank of Dallas, Harvey

14 Rosenbaum. I don't know if you've had the opportunity to

15 listen to Harvey, but he really understands the Texas

16 economy and the importance of transportation

17 infrastructure and what makes it tick.

18 Last week I had the opportunity to stop by

19 Waco, the district office, and one thing that really

20 impressed me, I went back into the lab where they're

21 testing road materials, and there's a lot of testing that

22 goes on behind the scenes that many of the citizens never

23 really hear about, but what they're doing, taking

24 different combinations of materials, looking how long

25 they'll last, and I heard a congressman say we don't mind ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 12

1 spending money on transportation but we don't want to come

2 back and fix it two years later. And I'd say thank you to

3 the men and women who do a lot of testing and looking at

4 materials for all road conditions to make things much

5 safer for all of us.

6 And finally, you know, we're coming upon the

7 Christmas season and the holiday season, and whether you

8 are flying, driving, going by train, bicycle, whatever it

9 is, please be safe, watch out for what's happening on the

10 road. I know we've put up 3,000 signs of left lanes

11 passing only, we have distracted drivers, and please be

12 careful, please, please be careful. And thank you all for

13 being here.

14 MR. MEADOWS: Well, I'll have to continue the

15 good wishes for the holiday season. Happy holidays to

16 everyone here, and to my colleagues and to all the

17 employees at TxDOT. Season’s greetings, and emphasize

18 again that we all need to focus on safety as we go forward

19 through this holiday season so we can all enjoy it and

20 celebrate this time of year with our families.

21 As we approach the end of the year, this is our

22 last commission meeting of the year, I just thought it was

23 important for all of us, everyone at this dais as well as

24 everyone in this room and our local transportation

25 partners across the state, just pause for a moment and ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 13

1 reflect upon the successes that this agency has enjoyed

2 and the state has enjoyed in advancing transportation

3 projects over 2012. It is incredible. We have, working

4 with you all, advanced billions of dollars in projects,

5 important initiatives have advanced, like Panama Canal,

6 the shale reports, some of the reports we'll hear today.

7 It really is remarkable, and I think that TxDOT employees

8 need to know that this year they knocked the ball out of

9 the park, they really did, and we acknowledge that, we

10 recognize it and we appreciate it, and I know the citizens

11 of Texas that we all have the privilege to serve

12 appreciate the good work that they do.

13 Let me also say, just as a personal note, I

14 very much appreciate the employees in the Greer Building

15 that came together yesterday and hosted the holiday

16 luncheon for us. I know we all enjoyed having the

17 opportunity to visit with our employees and interact with

18 those people that we work with in a little bit different

19 setting or environment.

20 I also have to ask this question, and I've

21 really struggled with this since yesterday's lunch, and

22 that is when did the Aggie War Hymn become a traditional

23 Christmas carol?

24 (General laughter.)

25 MR. UNDERWOOD: I also have that question, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 14

1 Bill.

2 MR. MEADOWS: Only at TxDOT.

3 MR. UNDERWOOD: I associate myself with my

4 colleagues' remarks, except the last part about A&M, since

5 I have a brother-in-law that's an Aggie.

6 If you are going to be traveling this holiday

7 season, TxDOT wants you to drive safely. Texas motorists

8 can reduce fatalities and injuries by simply giving the

9 gift of a sober ride. TxDOT's holiday P-A-S-S, PASS,

10 Person Appointed to Stay Sober Campaign, encourages Texans

11 to make travel arrangements before consuming any alcohol.

12 If you would like more information on this, go to our

13 facebook page, facebook.com/txdot.

14 Also, I want to thank the men and women of

15 MoTran in the Midland-Odessa area for their efforts. I

16 appreciate the award from the mayor of Odessa and the

17 mayor of Lamesa, but the real reward should have gone to

18 Mike McAnnally and Doug Eichorst and their staff for all

19 the work that they did for those roads for 349 and 158. I

20 really appreciate it, and I was taking credit for their

21 hard work, but I want them to know, as they watch this,

22 thank you very much.

23 I'd be remiss, last year I gave gifts to my

24 fellow commissioners, it was Spam in a can, and I got a

25 little grief for that, so I've changed the program up, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 15

1 I've splurged a little bit this year. And while I'm

2 getting the gifts out, I don't know if you were watching

3 the elections this past November, but I just realized

4 there's no reason to hire genealogist to learn about your

5 family tree, all you have to do is run for public office.

6 (General laughter.)

7 MR. UNDERWOOD: For fellow Commissioner

8 Moseley -- I'm going to give them T-shirts that they can

9 wear -- Jeff's says: "I'm here because you broke

10 something." For Commissioner Austin it says: "Non-

11 flammable- challenge accepted." For my colleague Bill, it

12 says" "You read my T-shirt, that's enough social

13 interaction for today." And for our chair: "I have my

14 reasons." And for our executive director, I don't want to

15 leave our executive director out: "I do my own stunts."

16 MR. HOUGHTON: That's great.

17 MR. UNDERWOOD: And when you talk about A&M, I

18 don't know if you realize this, John Barton -- is John

19 still here? John, there are you. I thought about you,

20 and he always wears the Texas A&M tie, he's a very strong

21 supporter of A&M, I was really proud for the young man

22 that won Heisman Award from A&M, that is great. I don't

23 know if you realize it or not, but those students got so

24 excited, even got so excited, he passed away.

25 But I have a good friend that was one of the Junction boys ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 16

1 that helped me, and we were able to get Reveille and we've

2 stuffed Reveille for you so you can take it home. John,

3 let me give you Reveille.

4 (General laughter and applause.)

5 MR. UNDERWOOD: For all of those that don't

6 know in the back, the environmentalists or whatever, I'm

7 teasing, that's a stuffed animal, Reveille is in great

8 shape. And just for the record, John, I'm really proud of

9 your quarterback, so much so that we hired his coach, he's

10 now going to be the coach at Texas Tech.

11 You all have great, safe holidays. Thank you.

12 MR. HOUGHTON: I continue to understand why Ned

13 Holmes did not want to follow Fred Underwood. I echo the

14 sentiments of my fellow commissioners on most things.

15 As far as I guess you fired me, Coby, for

16 promoting the Transportation Forum, I haven't done well,

17 so you've enlisted other commissioners to do such. It's

18 in my script. But thank you. We do have a forum and we

19 look forward to seeing all of you there.

20 There's a couple of things very quickly. I

21 want to wish everyone a very, merry Christmas, happy

22 holidays, happy New Year, and we'll cover all of that, and

23 be safe out there, be very, very safe.

24 John was talking about, Commissioner Austin,

25 Interstate Highway 20 -- is that right, John? -- over in ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 17

1 the Tyler District where we closed the interstate down to

2 one lane both directions, I think, and they hired a DPS

3 officer to kind of slow traffic down, and my understanding

4 is that DPS officer went through a complete book of

5 tickets, and the minimum speed was at 85 miles an hour,

6 the highest speed was 104 miles an hour. So that's just

7 arrogance on people's part, but we've just got to remind

8 people to be safe, there are lives out there, there are

9 people in the roadway working on the roads on behalf of

10 the citizens of the State of Texas.

11 And I do want to echo remarks from the

12 commissioners about the accomplishments of this year have

13 been just phenomenal over the last year. Phil and his

14 team and John Barton and others have hit this ground

15 running hard and we have completed a lot, we have a lot to

16 show for it, but we still have many, many things to go.

17 Some of the things you'll see here today in the reports on

18 the Panama Canal that will tee things up for the

19 legislative session on what is next to come for this great

20 state.

21 A couple of personal notes. I was sent by the

22 White House a photo that I'm to hand to one of my fellow

23 commissioners who was invited to the White House, and at

24 the last minute there was a change in plans by the

25 administration, but they felt so bad that they had to pull ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 18

1 the invitation, they sent a picture of the First Family,

2 and they superimposed it to where it kind of looks like

3 the commissioner is there. But Mr. Meadows, I want to

4 hand you your official White House photo of the First

5 Family. I don't know if everyone can see that, but there

6 is a photo of the First Family and you. It's unfortunate

7 that they had to pull that invitation. They kind of look

8 down the contribution list and see who appointed

9 Commissioner Meadows to this commission, and they said,

10 You know what, we may want to bring somebody up here that

11 is like-minded. But they did send something for you,

12 Bill, they did feel bad at the end.

13 And the next personal note is --

14 MR. MEADOWS: Let me just say for the first

15 time in a long time I am speechless.

16 (General laughter.)

17 MR. HOUGHTON: Lauren Francis is leaving the

18 employment of the Texas Department of Transportation and

19 the commission as my able-bodied assistant and going back

20 to El Paso, God's country. A man has found her or she has

21 found the man and soon will be married, and we're going to

22 miss her. Tomorrow she packs up the U-Haul and heads on

23 out. Lauren, thank you for your service and good luck to

24 you.

25 (Applause.) ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 19

1 MR. HOUGHTON: Let me see, did I get

2 everything? Yes. The next order of business -- or the

3 first order of business is the minutes. You've all had a

4 chance to read the minutes, they're posted in your

5 material. Is there a motion to accept the minutes?

6 MR. AUSTIN: So moved.

7 MR. UNDERWOOD: Second.

8 MR. HOUGHTON: All in favor?

9 (A chorus of ayes.)

10 MR. HOUGHTON: Phil, it's all yours.

11 MR. WILSON: Thank you, Mr. Chairman.

12 First is item 3, a discussion of a Texas A&M

13 Transportation Institute study to reduce levels of

14 congestion on the state's most congested roadways.

15 Research and Technology Implementation director, Shannon

16 Crum, will introduce this item. Shannon.

17 MR. MEADOWS: What's up, Doc?

18 MS. CRUM: Good morning. Yes, I can't follow

19 that.

20 For the record, my name is Shannon Crum. I'm

21 the director of TxDOT's Research and Technology

22 Implementation Office. I was afraid I was going to blow

23 that because my title is shorter than it used to be.

24 The 82nd Legislature allocated $300 million in

25 Proposition 12 bond proceeds to relieve congestion on the ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 20

1 most congested road segments in the Dallas-Fort Worth,

2 Houston, Austin and San Antonio metropolitan areas. In

3 September 2011, TxDOT entered into a 24-month long

4 interagency contract with the Texas A&M Transportation

5 Institute to facilitate a program that determines which

6 projects would have the greatest impact on congestion,

7 economic benefits, user costs, safety and pavement

8 quality, identifies spending options to support the

9 completion of those projects, includes recommendations for

10 applying the best traffic and demand management

11 principles, and ensures open and transparent public

12 participation.

13 This morning, Tim Lomax, senior research

14 engineer from TTI, is here to present a summary of the

15 work that was completed during the project's first year

16 and present his work plan for the second year.

17 DR. LOMAX: Howdy. Tim Lomax, Texas A&M class

18 of '79. Proud to be here at Aggie Day at the commission.

19 (General laughter.)

20 DR. LOMAX: So I want to say particularly I

21 appreciate the work that your staff has done and the staff

22 of all the partners we've been working with in these four

23 areas. The MPOs, the transit agencies, the toll road

24 authorities, the cities, counties have been very diligent

25 at working with us and we certainly appreciate it. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 21

1 There's no way that we could have gotten to the point

2 where we are without their help.

3 So the first year I want to revise a little bit

4 the recommendations for project funding, $259 million

5 worth of projects in the first five months. Since then

6 we've allocated almost all of the rest of the $300

7 million, so you'll see a little bit of that coming before

8 you in the next several months.

9 We created a public engagement report that I

10 think is one of the significant products out of this.

11 Working with your staff and the staff of the projects,

12 we've uncovered, put into the report a lot of very good

13 practices for how to get the public engaged.

14 As an example, I think one of the case studies

15 that we're using is your US 290 project down in Houston.

16 I was at a public meeting last Tuesday and there were 250

17 people. Everybody who spoke against it, there were only

18 eight or ten people who spoke against the project, every

19 single one of them said we need this project, we want you

20 to do a little bit different thing, but it was all about

21 we need this project. I think the public engagement on

22 that project is what we should shoot for on all the

23 projects that transportation partners are doing around the

24 state, very good example.

25 We've also developed, as per the requirements ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 22

1 of the rider, eighty different strategies to improve

2 traffic, improve things like telecommuting, flexible work

3 hours, ride sharing, also looking at different funding

4 strategies that we're then going to map into the specific

5 corridor projects in the next several months. We've

6 developed some corridor descriptions, put together a

7 binder that has a bunch of information that we're going to

8 be distributing to you and to the legislature so that as

9 discussions move forward in this session, everybody will

10 have a common base of understanding.

11 Here in Austin we've spent some time looking at

12 the I-35 project with a number of other people, but

13 basically creating a computer simulation model that people

14 can use to test different assumptions and different ideas

15 about how the corridor might work now and in the future.

16 So as I said, we came into this presentation a

17 couple of weeks ago with $41 million in funding left to be

18 allocated. Last year the Houston-Galveston Area Council

19 Policy Committee allocated $30 million of that, so we've

20 got $11 million left and we've got very good plans for

21 those, we're in the process of setting up meetings to

22 allocate that. So all of the $300 million in project

23 funding will be allocated by the end of January, allocated

24 and approved by the end of January.

25 We've got a list of big projects that Senator ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 23

1 Williams wanted initially and we've continued to update

2 that. We're looking now at identifying some different

3 funding mechanisms that might be applicable to these

4 different kinds of projects. We're looking at developing

5 delay and economic benefits from those so that as we go

6 forward to talk to the public, we're not just talking

7 about how much they cost, we're talking about what they

8 can do for regular folks and for freight shippers, people

9 that are important to the economy.

10 We're looking at travel option strategies and

11 public engagement practices in all the areas to see how we

12 can get more out of the system, be more productive.

13 Director Wilson has helped with some of that with spurring

14 on Houston and Dallas to do some of those kinds of very

15 immediate what can we get out of the system we have kinds

16 of things. We're continuing to work here in Austin and

17 the other areas on looking at different strategies and

18 different design options, both in the near term and the

19 longer term.

20 We're also developing something to try to draw

21 out of the public-private partnerships that you are

22 working on. A lot of people have studied the contracting

23 and the arrangements, the institutional stuff, we're

24 looking more at the operational side, what should you and

25 the private sector partners be aware of as you're pursuing ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 24

1 some of these projects in terms of things like setting up

2 relationships with the police departments and projects

3 that you go through of who's going to respond to the crash

4 and who's in charge once you get there, very direct things

5 that might help the projects in the future.

6 We're also looking at some of the other

7 corridors in the top 50 but I think we've done a pretty

8 good job of looking at all the significant ones. We'll be

9 developing some more information but we don't anticipate

10 spending any of the $300 million on any of those sort of

11 lower ranked projects.

12 So with that, that concludes my presentation.

13 Are there any questions?

14 MR. HOUGHTON: Questions?

15 MR. MEADOWS: No. Thanks.

16 DR. LOMAX: Gig'em.

17 MR. WILSON: Now moving on to item 4a, the

18 Panama Canal report, director of Federal Affairs, Coby

19 Chase, will introduce this item.

20 MR. CHASE: Thank you. For the record, my name

21 is Coby Chase, director of Federal Affairs. I have

22 visited Texas A&M.

23 (General laughter.)

24 MR. CHASE: The commission and our executive

25 director asked that the agency form a group of experts and ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 25

1 stakeholders to advise the department on the state's

2 readiness to capitalize on the Panama Canal expansion. We

3 did that and we pulled together a group of experts from

4 across the state, and let me just go through the names

5 quickly. Harris County Judge Ed Emmett, who chaired it,

6 and Cameron County Judge Carlos Cascos, who was our vice

7 chair, and they'll both present the report to you in just

8 a minute.

9 We brought in: Joe Adams from Union Pacific;

10 Steve Boecking from Alliance Texas; Aaron Demerson and

11 Amir Mirabi from the Office of the Governor; Ken

12 Dierschke, the president of the Farm Bureau; John Esparza

13 from TMTA; Jim Greenwood from the Texas Oil and Gas

14 Association; James Griffin from the Harris County

15 Manufacturers Association; John LaRue from the Texas Ports

16 Association and Port of Corpus Christi. And John, are you

17 here? Thank you, John, thanks for helping out.

18 Fred Malesa from BNSF Railway; Carlton Schwab

19 from the Texas Economic Development Council; Jack Todd

20 from the Texas Association of Manufacturers. Jack, are

21 you here?

22 And Rigoberto Villareal from the City of

23 McAllen; and Colonel Leonard Waterworth from the Port of

24 Houston Authority. We also brought in TTI, Katie

25 Turnbull, who was the main consultant and who wrote the ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 26

1 report; Marty Rozell, who was the group facilitator; and

2 Marc Williams, from here at TxDOT, provided project

3 information relating to specific districts where we met;

4 and Eduardo Haggert was the project manager for this

5 effort from the International Relations Office; and Gus

6 Cancarly, who leads TxDOT's technical working group and is

7 also overseeing some other Panama Canal research,

8 participated; and Jay Bond in Government Relations kept

9 the legislature informed.

10 The group started meeting this past June and

11 held six public meetings at strategic points around the

12 state, and the result is today's report. And I would like

13 to say there will be a session on this at the

14 Transportation Forum in February that Judge Emmett is

15 helping us put together.

16 So without any more delay, let me introduce

17 Harris County Judge Ed Emmett, and then following his

18 portion of the report, he will bring up Judge Cascos.

19 Thank you.

20 JUDGE EMMETT: Well, thank you, Coby. I am Ed

21 Emmett, Harris County Judge, and it was my honor and

22 privilege to be able to chair the Panama Canal

23 Stakeholders Working Group.

24 Chairman Houghton and commissioners, I know I

25 get to go first and we have four reports today coming to ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 27

1 you. I think I can say with all candor these reports may

2 represent one of the finest hours of this commission

3 because they're looking forward. I know everybody talks

4 about roads being built, but for this organization to say

5 where do we need to be going in the future I think speaks

6 volumes about your leadership. So thank you for that.

7 Particular note, Commissioners Meadows and

8 Austin, I think you were responsible for forming the

9 Panama Canal Stakeholders Working Group, and we appreciate

10 that. That was good vision on your part.

11 Your staff was magnificent to work with, TTI

12 did a great job in keeping us between the lines as we

13 moved down the process.

14 And having said all that, we went in with, I

15 think, a general public perception of: Wow the Panama

16 Canal is going to be widened, it's going to be great,

17 we're going to have all these ships that are going to come

18 across the Pacific. That's not really the case, but that

19 does not detract in any way from the importance. The

20 simple reality is a lot of ships are still going to stop

21 at LA-Long Beach because it's eleven days to go past there

22 to come through the canal to get to the Texas Gulf Coast,

23 and it's eleven days back, and those of you who are in

24 business understand asset utilization, you're not going to

25 tie up assets. However, once we started looking at it, we ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 28

1 realized that the widening of the Panama Canal is going to

2 bring great benefit to the State of Texas, maybe not in

3 the way that was originally thought about.

4 So with that in mind, I would like to go

5 through our findings very, very briefly, and by way of

6 introduction, the Panama Canal Working Group getting to go

7 first dovetails very nicely with the energy report you're

8 going to get, the I-69 report that you're going to hear,

9 and the Gulf Intracoastal Waterway, because at the end of

10 today, I think there's going to be a lot of emphasis on

11 freight transportation and just how important it is.

12 And I'm really going to skip ahead and I'll

13 give credit where credit is due. Colonel Waterworth from

14 the Port of Houston came up with a little box with three

15 lines: Texas should invest in freight transportation

16 infrastructure; freight transportation infrastructure

17 investments grow commerce; commerce grows the tax base of

18 the state. That's really the take-away above everything

19 else, and the Panama Canal widening was the trigger that

20 caused us to look at it.

21 So with that in mind, we had three overarching

22 findings. First is that the Panama Canal expansion,

23 despite what I said about it's not going be the great

24 panacea that a lot of people thought, does represent

25 opportunities to expand Texas's position as the global ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 29

1 gateway for not only the nation but really for North

2 America, and so by providing that low-cost, reliable,

3 safe, secure, multimodal, environmentally sustainable

4 supply chain, the state can increase its global trade, and

5 I think we all came to the realization that our economic

6 future as Texans is inextricably tied to global commerce

7 and freight transportation.

8 The second overarching finding, when people

9 talked about the Panama Canal, they talked imports,

10 imports, imports, containers. We've all had those

11 conversations. In fact, exports are going to be huge, and

12 I'll give you one specific example. Currently, LNG

13 tankers cannot fit through the Panama Canal, the widened

14 locks will allow LNG tankers to fit, Asia needs natural

15 gas, we have Eagle-Ford Shale, Barnett Shale, we've got

16 gas, we've already had I believe the number is four LNG

17 facilities in Texas, pretty much all of them were planned

18 as import facilities, they're all being re-permitted as

19 export facilities, that's going to be a big boon to the

20 economy of the State of Texas.

21 But it's not just LNG. Coal exports, because

22 of the West Coast environmental concerns, more and more

23 coal exports are going to go off the Texas Gulf Coast.

24 And my favorite, pecans. You know, they're paying $3 a

25 pound for pecans in the shell in China, so agriculture ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 30

1 products -- and Mr. Dierschke's involvement was really

2 enlightening -- agriculture products that will go through

3 the Panama Canal as exports. So that finding about

4 exports I think was a key.

5 And then the third overarching finding was that

6 if we're really going to take advantage and increase our

7 global trade position in the subsequent economic

8 development, then we need to develop processes that

9 provide a transportation system that focuses on commerce,

10 including the Texas ports, the Gulf Intracoastal

11 Waterway -- and I'm going to have more to say about that

12 in just a moment -- the road system, the rail system and

13 the pipeline network. They all tie together, and I think

14 that that's what all of these reports this morning are

15 going to show, that the Texas Department of Transportation

16 is positioning itself to be in a leadership position for a

17 system, a freight transportation system.

18 So what recommendations do we have? Well,

19 first and foremost, TxDOT really should remain focused on

20 trade-related improvements. With all your partners, work

21 with the ports, make sure that global trade is in the

22 forefront.

23 Second, TxDOT should formalize the freight

24 discussion in transportation planning. The Moving Ahead

25 for Progress in the 21st Century Act, better known as ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 31

1 MAP-21, the latest federal transportation act,

2 specifically talks about the need for freight advisory

3 committees at the state level, and we would encourage you

4 to do that and develop Texas freight plan and use that

5 freight advisory committee.

6 Third, dramatically increase the use of the

7 Gulf Intracoastal Waterway. Now, there's going to be a

8 whole other report on that later, so I don't want to get

9 into that too much, but our group came up with that

10 recommendation separate and apart from the GIWW report

11 itself. When we look at, take for example the Port of

12 Victoria, the immense growth that's going on there because

13 of the Eagle Ford Shale, trying to get things onto barges

14 and on the water. Barge transportation is efficient, it's

15 environmentally sound. So we are strongly recommending

16 that TxDOT put a renewed emphasis on the Gulf Intracoastal

17 Waterway, even to the extent, if at all possible, of

18 treating it like a highway. We are kind of at the mercy

19 of the federal government where the Intracoastal Waterway

20 is supposed to be twelve feet deep but in many places it's

21 only nine. Well, that just makes for inefficient use of

22 an asset and a resource.

23 So those are the first three recommendations we

24 have. I would like to call up my vice chair, Cameron

25 County Judge Cascos, and he'll come in from here. But ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 32

1 again, I would just leave you with a thought: the Panama

2 Canal was a trigger, it prompted the commissioners to

3 create this working group, it caused the staff and

4 everybody to really focus, and it has led us into things

5 that we didn't necessarily know it was going to lead us

6 into, but I think it's opened a lot of eyes of just what

7 we need to do for Texas to remain the leader not only in

8 the United States but globally in terms of global

9 transportation.

10 Judge Cascos.

11 JUDGE CASCOS: Thank you very much, Judge.

12 What an honor it was for me to assist Judge Emmett in this

13 endeavor.

14 And before I get to the serious stuff, you are

15 right, Commissioner Meadows, about the Aggie War Hymn

16 being the new Christmas carol, it took the place of Come

17 All Ye Faithful. We're going to hear about this Heisman

18 for the next hundred years, my God.

19 MR. AUSTIN: Just for the record, he is from

20 Tyler, really.

21 (General laughter.)

22 JUDGE CASCOS: Well, I tell you what, for

23 anybody from Texas to have won the Heisman is always a

24 proud moment, no matter what university you attend.

25 And that kind of happened with being on this ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 33

1 stakeholder group. We came to realize that we visited

2 just about all the ports along the coast and there was a

3 common denominator. We all acknowledged and we realized

4 that the competition was not between Brownsville and

5 Houston and Victoria and Corpus, the competition is

6 worldwide, the competition is not us, it's everybody else.

7 I want to compliment and commend the commission

8 for establishing this stakeholder group because I learned

9 a lot, and the one thing that I did learn is that every

10 port is investing money in their infrastructure. What I

11 also learned was that I want to encourage every TxDOT

12 commissioner to visit every port along the coast, because

13 no longer is TxDOT's responsibility just from the

14 retaining wall inward. I think we have to develop

15 coalitions and partnerships if we are going to maintain,

16 if we are going to compete in a global community.

17 One of the recommendations was to encourage the

18 Texas ports to continue with their infrastructure

19 improvements, and using TxDOT not only as a resource but

20 as a guide. You know, we heard from small counties about

21 the deterioration of their county roads because of the

22 impact that the larger trucks and the overweight trucks

23 are going to have once this Panama Canal becomes a

24 reality, so we need to assist local counties in their

25 endeavors to help maintain their county infrastructure. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 34

1 TxDOT should serve as a resource for Texas

2 ports, as I mentioned a few minutes ago. We should work

3 with not only Texas ports but our railroads. I think it's

4 important that we develop and create public-private

5 partnerships and work in harmony with all these entities.

6 Building on existing activities of the Texas Wide Open

7 for Business initiative is important. The Texas global

8 gateway concept will provide a one-stop, unified,

9 coordinated and comprehensive source of information on all

10 transportation modes in Texas.

11 Before the meeting I passed out cheat sheet and

12 it's called Texas Freight Facts. It's there for you to

13 look and read at your desire, but there's thirteen points

14 on that page, and when you get the opportunity, I want you

15 to really look at those because at the end of the day,

16 this is what the future is going to be. But there's a few

17 points that I will read, though.

18 The first one, the ability of the state to

19 compete and thrive in the global economy depends on the

20 strength of the state's freight transportation system.

21 The next point that I want to read is Texas is the global

22 gateway for international trade and U.S. trade with Mexico

23 and through its ports. Texas ports are the economic

24 engine for the state, nation and they dominate the Gulf of

25 Mexico trade. And the last point that I want to highlight ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 35

1 is Texas is the leading producer of oil and gas in this

2 nation. All the points are important on this little

3 sheet, but I wanted to highlight those specific because

4 that capsulizes the rest of the points on this sheet that

5 I turned over to you.

6 Before I leave the podium, I do want to

7 introduce Commissioner David Garza, who is here with me

8 from Cameron County who is on the I-69 Alliance, and I

9 also want to acknowledge a good county judge friend, Just

10 Thompson from Polk County. I haven't seen him in a while.

11 But I want to thank you again for your

12 leadership in putting this together and I encourage you to

13 continue with the freight advisory committee that we're

14 talking about, and we look forward to continue helping.

15 Thank you very much.

16 JUDGE EMMETT: One final point, there was to be

17 specific emphasis on land-side transportation, the various

18 projects, and you know better than anybody you have a lot

19 more projects that have been asked for than you can ever

20 do. This stakeholder working group actually came to the

21 conclusion that the State of Texas is in far better shape

22 than people might think to take advantage of whatever

23 comes not only through the Panama Canal but across the

24 Atlantic, whatever comes into our ports. The projects are

25 out there, they're lined up, they're teed up, whatever ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 36

1 phrase you want to use, and it's just a question of the

2 priorities that get set.

3 And so I do think what Judge Cascos said about

4 the ports really aren't competing with each other gives

5 you a perfect opportunity to work with your district

6 offices and say: Okay, let's prioritize, which one is

7 going to make the most impact to help us get that global

8 trade. There was some discussion -- we did not

9 necessarily put it in our report -- of whether or not

10 Texas was ready for NAFTA when NAFTA passed. We can say

11 that Texas is ready for the Panama Canal expansion. Are

12 there projects that need to be moved forward, moved up?

13 Absolutely. But they're there, they're ready.

14 So with that, I'll be happy to stop, you have

15 the report, we can answer questions. And I think I speak

16 for the entire working group, if any of you have questions

17 or your staff have questions a week, two weeks from now,

18 feel free to contact any of us and ask those questions.

19 So with that, thank you for giving us the opportunity this

20 morning and we're happy to make this presentation.

21 MR. HOUGHTON: Is there questions?

22 MR. AUSTIN: I just had a couple of comments.

23 Judge, and to the whole team, thank you all. This is

24 absolutely incredible.

25 One thing I heard you say in your opening ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 37

1 remarks of the first task force meeting is that we've got

2 to take care of what we have in Texas, and I think your

3 report that has come back really magnifies what Texas is

4 all about, we're multimodal. And if you look at

5 everything we have, I went back and I looked at our

6 strategic plan that we have online, buried in there is a

7 section on being multimodal and our focus on that. I

8 think what we're looking at today, what your report really

9 highlights is our need for increased attention because we

10 are a multimodal state.

11 And I do appreciate the recommendation to make

12 sure we visit all the ports. And as we look at going

13 forward, both federal and state legislation to improve

14 what we have with all of our multimodal facilities, that's

15 going to keep Texas moving. And I just want to say thank

16 you very much for your effort and your recommendations.

17 Thank you.

18 JUDGE EMMETT: The pleasure was ours. Were you

19 going to say something, Commissioner?

20 MR. MOSELEY: Yes, I'd like to.

21 JUDGE EMMETT: Okay. Clearly you can. I have

22 avoided weighing into the Texas A&M discussion since I

23 went to Rice, but I would remind all the Aggies and Johnny

24 Football that they do have to play Rice the first game

25 next year. I'm sure they're shaking. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 38

1 (General laughter.)

2 MR. MOSELEY: Well, what I have to say isn't

3 more important than that, but I appreciate, Judge Emmett,

4 your leadership, Judge Cascos. Thank you for this

5 wonderful report.

6 Of the ports that we have in Texas, how many of

7 them would have the capacity -- and I saw your

8 recommendation where we need to focus on increasing rail

9 capacity -- for sea to rail? And the reason I ask, as

10 much as we really celebrate the strength of our port

11 community, it seems like we have an emphasis on sea to

12 truck. Port of Houston, of course, receives about two

13 million boxes, I think, annually, compared to Long Beach

14 ten million boxes, and I think the number I heard is about

15 85 percent of those are moved by truck, so essentially,

16 Port of Houston is a truck port. I think I heard there

17 are two trains daily going to Chicago from Port of

18 Houston, but those are offloaded to trucks to go to the

19 train.

20 And so my question would be what can we do to

21 maybe focus on how to enhance the sea to rail which

22 seemingly would be a value add to our already strong truck

23 distribution.

24 JUDGE EMMETT: There's no question that some of

25 the ports, at least, need to employ what's called agile ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 39

1 ports technology where you offload straight from the ship

2 to the rail line. That's a decision to be made by the

3 port. What will drive that to a large extent, and a

4 discussion came up over what happens if container ships

5 start coming to the Port of Houston or Port of Freeport or

6 anywhere else, and half those containers have to go to

7 Dallas or need to go to Dallas, then an 8,000 TEU ship,

8 4,000 containers, if you take those off a ship and put

9 them on the road, that's 4,000 trucks.

10 The two railroads that were represented on our

11 working group did not hesitate to say if there become

12 regular container ship calls to a port, they will

13 implement the service to move those containers inland. It

14 makes all the sense in the world, and I think you can use

15 friendly persuasion more than anything else when it comes

16 to the railroads and to some of the trucking industry, but

17 it makes all the sense in the world to take it by train to

18 some point inland before you put it on the trucks to

19 distribute it.

20 MR. MOSELEY: Again, thank you. This is a

21 wonderful report. Really appreciate so much your work on

22 this.

23 JUDGE EMMETT: Thank you for the opportunity.

24 MR. MEADOWS: Judges, I would echo these

25 comments expressing appreciation. You know, this is one ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 40

1 of those situations where you look at it, and I think you

2 said it well, and that is this was getting the right

3 people together, and we did, at the very right time.

4 The fact is that, as you mentioned, the Panama

5 Canal and that opportunity created by that expanded

6 infrastructure was the trigger or the catalyst for this

7 discussion which is a discussion, as we pointed out at

8 that very first meeting, that we should be having anyway,

9 because we recognize and embrace the economic reality, the

10 economic ramifications, significant, positive

11 ramifications resulting from trade and our ability to

12 facilitate the flow of that trade in and out of the ports

13 of Texas is absolutely critical to this economy and to the

14 citizens.

15 And you all embraced it, you carried it forward

16 and you created a foundation from which we can continue

17 discussion and you effectively established guiding

18 principles in this report that enable us to then move

19 forward. We know what we have to do and I think we can do

20 it, and it's in large part thanks to your group.

21 JUDGE EMMETT: Thank you very much.

22 MR. HOUGHTON: Judge, a couple of questions.

23 What is the amount of traffic in the Intracoastal

24 commercial traffic? Does anybody know that?

25 JUDGE EMMETT: I think you're going to have a ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 41

1 whole report on that later on this morning. You're going

2 to have a whole report from the Gulf Intracoastal

3 Waterways similar working group will give you, so I

4 certainly don't want to say something and have them come

5 up and say he didn't know what he was talking about.

6 MR. WILSON: Herman is back there. Maybe

7 Herman knows. Herman, are you in the room?

8 MR. HOUGHTON: Herman, where are you? How many

9 freight barges up and down that waterway?

10 MR. WILSON: Come up to the microphone.

11 MR. HOUGHTON: You can tell he's a newbie,

12 first meeting.

13 MR. WILSON: Herman, please introduce yourself.

14 MR. DEUTSCH: Herman Deutsch, Maritime

15 director. Good morning to all of you, Director Wilson and

16 commissioners.

17 MR. HOUGHTON: You don't have to give the whole

18 report, it's just a question.

19 MR. DEUTSCH: I know. The number is about

20 52,000 barge trips every year.

21 MR. HOUGHTON: Fifty-two thousand. Do they pay

22 a fee?

23 MR. DEUTSCH: No, not yet.

24 MR. HOUGHTON: Not yet.

25 (General laughter.) ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 42

1 MR. HOUGHTON: So 52,000.

2 MR. DEUTSCH: We will give you some of the

3 numbers when we present this report.

4 MR. HOUGHTON: Okay. All right. Very good.

5 Judge, I'll ask you.

6 Come on, Bass, come on in here. Would you have

7 a problem as the owner of the largest, if not the largest

8 transportation system, toll road authorities in the

9 country, to use dollars for roads, dollars for

10 Intracoastal Waterway?

11 JUDGE EMMETT: No, I wouldn't. I think the

12 Intracoastal Waterway is so vitally important to the

13 economy of the state that I think it does deserve support,

14 particularly if we find ourselves constantly hat in hand

15 in Washington, D.C. saying are you going to dredge it, are

16 you not going to dredge it, are you going to keep the

17 canal. The statistics that are kept are so difficult to

18 keep up to date. The Eagle Ford Shale has just exploded

19 what's going on, and so the Corps of Engineers do a great

20 job -- this isn't a criticism of them -- but they're going

21 to constantly be behind; whereas, you're on the ground

22 here, the State of Texas and we understand the importance.

23 So personally -- and I'm not speaking for the

24 group or for Harris County Commissioners Court --

25 personally I think it's worth supporting. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 43

1 MR. HOUGHTON: Okay. Mr. Bass, can I ask you a

2 question? The question I have, James, based upon some of

3 the testimony you've heard here today, are there any funds

4 that are flexible enough to participate in deepening,

5 widening these types of transportation assets?

6 MR. BASS: For the record, I'm James Bass,

7 chief financial officer at TxDOT.

8 And yes, Mr. Chairman, we believe that the

9 eligible uses of the Texas Mobility Fund very well may

10 include publicly owned transportation assets which I think

11 would include the Intracoastal Waterway.

12 MR. HOUGHTON: So it would qualify.

13 MR. BASS: To date we have not. The Mobility

14 Fund has participated in highway and transit projects but

15 to date that has been the extent of its participation.

16 MR. HOUGHTON: Any questions of James?

17 MR. AUSTIN: James, this may be for you or the

18 judge. I know we took a tour of the Port of Houston and

19 my understanding, as we look at funds that are available,

20 the Port of Houston contributed, I believe, last year $125

21 million to the Harbor Maintenance Trust Fund and received

22 about $25 million back, and that's money that's used for

23 dredging. So with Texas being a donor state, there's some

24 things federally that we need to work on to address, as

25 well, to receive some federal participation. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 44

1 MR. HOUGHTON: Thanks, Mr. Bass.

2 MR. BASS: Thank you.

3 MR. HOUGHTON: Are there any other questions of

4 the county judges, Judge Emmett, Judge Cascos?

5 (No response.)

6 JUDGE EMMETT: If not, then I would leave you

7 with one thought: we do support the idea of the creation

8 of a freight advisory committee, and our members were

9 asked if we would be willing to sort of be the transition

10 to that, and the answer is yes, so whatever you want us to

11 do, just let us know.

12 MR. HOUGHTON: Well, I think we would echo that

13 and second that motion.

14 JUDGE EMMETT: Thank you.

15 MR. HOUGHTON: I want to thank you all for your

16 labor of love for the state and what you have done above

17 and beyond the call of duty. Thank you all very much.

18 MR. WILSON: Thank you, sir.

19 Next is item 4b, a report from the Task Force

20 on Texas' Energy Sector Roadway Needs. Deputy Executive

21 Director John Barton will present this item. John.

22 MR. BARTON: Good morning, Chairman Houghton,

23 commissioners, Director Wilson. Again for the record, my

24 name is John Barton, and I do have the honor as the

25 state's deputy executive director at TxDOT. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 45

1 This morning I'm honored to share with you a

2 brief report on the activities and conclusions of the task

3 force that you created to investigate the challenges

4 facing our state as a result of the rapidly growing energy

5 sector exploration and production activities that are

6 bring unprecedented economic benefit and value to the

7 State of Texas. I would note that in October there were

8 over 1,700 permits issued and that's up from 1,500 about

9 this time last year, so obviously, it's a tremendously

10 beneficial activity that's expanding as we speak.

11 While the task force was formed recently, in

12 March of 2012, the issue isn't something new. I recall

13 discussions that Commissioner Meadows had with myself and

14 other members of the administration back in 2008, and we

15 talked about the challenges that we were facing as the

16 Barnett Shale was beginning to blossom and the need to

17 identify solutions, and he encouraged us to come up with

18 plans to address the short-term, mid-term and long-range

19 needs of those areas of the state and the impacts that

20 this industry was having on our transportation

21 infrastructure.

22 And we realized that we needed to be more

23 intentional in that effort as we started to see this issue

24 grow in other areas of the state and that we needed to

25 adequately and thoughtfully consider the full extent of ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 46

1 the matter and to identify a rich list of alternatives to

2 respond to the challenges that this was creating for us,

3 so this task force was created.

4 We also realized that this was not an issue

5 that we should, nor even could, tackle on our own, and

6 thankfully, we had a lot of partners that were willing to

7 step up and join in this effort to take on the

8 responsibility of considering this matter. We knew that

9 in order to do the best work that we could, we needed to

10 involve the other state agencies that have a role to play,

11 we needed to reach out to our local community partners at

12 local governments that were also grappling with this huge

13 issue, and of course, engage the industry that was

14 creating these jobs and this growth in the economy.

15 We also knew it was important for us to make

16 sure that the public was engaged in a meaningful way so

17 that they could understand what was going on, they would

18 have access to the information that we were gathering, and

19 so this task force intentionally moved their meetings

20 around the state in order to provide them easy access to

21 our meetings and to be engaged in those conversations.

22 We also formed several subcommittees to delve

23 into some of the details of the matter a little more

24 deeply than the full committee could do and to think about

25 the complexities of those issues, and in doing so, they ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 47

1 had numerous meetings that they also held of the

2 respective subcommittees to gather that information.

3 When we first formed this task force, none of

4 us, the commission, Phil Wilson, who spearheaded this

5 effort, nor myself understood the willingness of the

6 parties that were interested in this to engage and

7 participate in a meaningful way on the task force, and it

8 was truly a collaborative effort of many dedicated

9 partners that are shown on the screen here.

10 That task force was led by Commissioner Fred

11 Underwood and Phil Wilson, our executive director, and the

12 group also boasts representation of numerous industry

13 organizations, as well as our other sister state agencies

14 that have a vested interest and public responsibility

15 associated with this issue, as well as local governments

16 and citizen advocacy groups. So it was a very diverse

17 and, I think, very well thought out group.

18 It didn't take long for the task force to

19 realize that there were several key issues that were

20 facing us that needed to be considered and evaluated, and

21 to simply state what they were: it's to protect and

22 enhance the safety of the traveling public, as well as the

23 industry in the areas of the state where this activity is

24 underway; to ensure that the public is engaged and

25 informed in a meaningful way about what the industry is ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 48

1 doing, how it is growing and our response to it as it

2 continues to grow; finding ways to provide sources of

3 funds to address the needs for improved infrastructure to

4 support this industry and to keep it healthy into the

5 future; and identifying and exploiting any emerging

6 technologies or innovations that might help to avoid,

7 prevent or reduce the impacts of these activities on the

8 transportation infrastructure.

9 The safety and public awareness subcommittee

10 looked into this issue and created a website that was

11 dedicated to sharing information about the industry, many

12 of its players and the activities underway, and the

13 state's efforts to help support the infrastructure that,

14 as I said, would keep these industries healthy into the

15 future, as well as just to keep the public engaged and

16 informed so they could ask questions and get additional

17 information.

18 This subcommittee also realized that it was

19 important for us to embark on a program to educate the

20 public about this issue in the fashion of other successful

21 programs that the department has been able to manage for

22 the public, such as the Don't Mess With Texas program, the

23 Click It or Ticket program, and other programs like that,

24 that would help us to keep them informed and improve the

25 safety of travel in these areas of the state where this ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 49

1 activity is underway. And so as you can see on this

2 slide, through the successful activity of hiring Sherry

3 Matthews, an advertising firm, to work with us, we have

4 been working to develop a public awareness campaign to

5 educate and inform the public of the need to be smart and

6 to drive safe in these areas.

7 As you can see, I think these efforts have

8 resulted in many creative ideas and I'm confident they

9 will help improve safety as we start to deploy this

10 program across the state. I'm pleased to tell you that

11 we'll be launching these types of campaigns on billboards,

12 television and newspaper ads, radio spots in the Permian

13 Basin and the Eagle Ford Shale areas early next week or

14 shortly thereafter, and then having that migrate across

15 the state in the other areas where we have these

16 activities underway over the next several months.

17 The area that received the most attention, as

18 you can imagine, is the area that involves finding ways to

19 generate revenues to address the needs for improvement on

20 state and county roads and bridges to respond to the

21 growth in this industry. There were numerous ideas that

22 were discussed by the subcommittee formed to look into

23 this and I believe all of them have the potential to

24 provide significant opportunities for us to consider as a

25 state. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 50

1 It's important to note that neither the task

2 force nor the department or any of the agencies or

3 entities involved are endorsing or recommending any of

4 these concepts, rather, we're just simply offering them up

5 for a topic of discussion as the legislature soon will

6 reconvene in the 83rd session. These ideas range from

7 using existing or new fees on a variety of users that are

8 associated with the industry to exploring ways to leverage

9 public and private funds that may exist.

10 And one idea that's emerged since this task

11 force subcommittee has been able to meet is the discussion

12 of what's known as a road use maintenance agreement. This

13 is a concept that is currently being used in other states

14 that are seeing similar oil and gas exploration

15 activities; namely, Ohio and West Virginia have deployed

16 this concept in their states.

17 And it's basically a partnership between the

18 industry and the state and local governments where the

19 industry and the local governments assess the

20 transportation needs to drill, produce and then maintain a

21 well, they evaluate the improvements that need to be made

22 on those roadway assets, and then the industry works with

23 those communities, either at the county or state level, to

24 make those improvements, to maintain those roadways during

25 the drilling and production of those wells, and then to ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 51

1 return those roadways and bridges to a minimal standard

2 that was determined before any of the activity started.

3 In Texas, a road use maintenance agreement may

4 be an option that should be added to the list of those

5 that are on this slide and contained in the report, and so

6 I just wanted to mention that while the subcommittee has

7 not been able to address this yet, Director Wilson has

8 asked us to reconvene that subcommittee to talk about

9 potentially adding the road use maintenance agreement as

10 one additional alternative that could be considered.

11 When we looked at innovation and prevention, we

12 realized that it could be possible to take steps as we

13 move forward to help reduce or prevent some of the impacts

14 that we have been seeing here today. These range from

15 considering better ways to use our existing roadway right

16 of ways for the delivery of product through pipelines, to

17 revising our current driveway access standards that are

18 associated with access to and from our roadways to better

19 prevent the deterioration of traffic that enters and exits

20 a roadway on the roadway itself.

21 And the range and scope of these suggestions

22 that this subcommittee came up with I'm sure will help us

23 to improve not only the way we manage this issue but to

24 reduce the impacts that the traffic associated with the

25 growing industry will have on our system into the future, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 52

1 and I think that they are very diverse and creative and we

2 are encouraging this subcommittee to continue to explore

3 these and other options as we move forward.

4 So in conclusion, let me just share that I

5 believe the work of this task force has been

6 extraordinary. I've been pleased to be a small part of

7 it. The partnership between the industry, our local and

8 state government organizations has been phenomenal. I

9 think it's served us well and should serve as a model for

10 others that are grappling with these types of issues. And

11 while the task force focused primarily on roads and

12 bridges in the vicinity of energy industry activities, the

13 task force also recognized that this is an issue of

14 statewide significance.

15 And so it's not one that goes without being

16 related to those things that Judge Emmett and others have

17 discussed associated with the Panama Canal and how those

18 movements of commodities and cargoes flow into and out of

19 the State of Texas. I think it's also dependent upon the

20 continued development and expansion and Interstate 69 and

21 other corridors such as it -- and you'll soon hear a

22 report about I-69 from another task force -- and as

23 already has been mentioned, it's intricately connected to

24 the Gulf Intracoastal Waterway and how we might be able to

25 improve efficiencies for the use of that asset to move ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 53

1 products into and out of these regions as they continue to

2 grow and expand, and help reduce the choking of our

3 roadway infrastructure that these particular activities

4 currently have been causing.

5 So those conclude my remarks on this report. I

6 would be happy to answer any questions that you may have.

7 And thanks and gig'em from John Barton, proudest member

8 of the Fighting Texas Aggie class of 1985. And by the

9 way, Reveille has been known to bite those that attack her

10 owners.

11 (General laughter.)

12 MR. UNDERWOOD: One thing I want to remind my

13 fellow commissioners and the legislature, as we go forward

14 with this, we need help in those energy areas, not only

15 for state roads but for the county roads. They have

16 similar problems, so we need to be working in concert

17 together as we come up with some legislative solution to

18 fund these.

19 MR. AUSTIN: I just want to follow up on

20 Commissioner Underwood's comments. We have an exception

21 item that we've requested in our LAR of $1.6 billion.

22 $400 million is to fix right now the immediate needs, and

23 a lot of these needs were identified through this report,

24 and the other $1.2 billion will be spread out, $600- over

25 each of the next two years to try to get ahead and fix ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 54

1 some things. And I applaud the task force of really

2 helping us identify what those are. I know I drive some

3 of the roads of East Texas and South Texas, and they're in

4 bad shape, but this industry and the revenues that are

5 generated are so important to the state, we can't afford

6 not to fix them.

7 MR. MEADOWS: I just want to thank my colleague

8 for taking such a leadership role on this. I don't think

9 people recognize how much travel, the series of meetings

10 that you had all over the state in areas most acutely and

11 significantly impacted by this activity. And as you

12 mentioned to me yesterday, which I think is an integral

13 part of the question, and that is that -- I don't think

14 people realize this -- approximately 85 percent of the

15 state roadway system was constructed between 1942 and

16 1972, so those roadways are carrying a burden today that

17 they truly were not designed to carry, particularly with

18 regard to the weights and the loads and the overall

19 pressures. But anyway, Fred, I know we all appreciate

20 your effort on this.

21 MR. UNDERWOOD: I can't accept that. Thank

22 you, though, Bill. The real work was done by John Barton

23 and his staff, and also Phil. I appreciate everything you

24 did, Phil, for our meetings. Because Phil would go not

25 only to the meetings but he'd be meeting with leaders and ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 55

1 community leaders throughout the areas wherever we were

2 and hearing their other problems, as well as what we there

3 for, our main purpose. And so thank you, Phil. I

4 appreciate it.

5 So thank you, though. I do appreciate it,

6 Bill.

7 MR. HOUGHTON: So John, amongst not only the

8 committee itself but the energy industry, is there

9 unanimity as to something needs to be done?

10 MR. BARTON: I think without question, all of

11 the participants, the public, the industry that were

12 associated with the task force and those even beyond it,

13 local governments and every state elected official we

14 talked to agreed that something needs to be done. This

15 industry is too vitally important to the future of the

16 state and its economic health, we have to sustain an

17 infrastructure that will support it.

18 MR. HOUGHTON: This will take legislation,

19 obviously, to get those dollars from where they're coming

20 from to take care of this issue.

21 MR. BARTON: And unlike Herman, I'm not going

22 to predict whether a fee will be assessed or not, so I'll

23 have to counsel one of our newer employees on that.

24 (General laughter.)

25 MR. BARTON: But it will take the leadership of ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 56

1 the state's elected officials to try to resolve and find

2 out a solution to this.

3 MR. WILSON: Just to add thanks to John and

4 everyone for their great work, and Commissioner Underwood.

5 One of the unique things that's come out, as John

6 mentioned at the outset, is if there is an opportunity for

7 this new maintenance agreement program, it would not

8 require dollars through our LAR which is good news. We

9 have the $400 million, Commissioner Austin, you talked

10 about, the other $1.2-, we think that could be identified

11 through these partnering agreements with the companies and

12 with the counties to address both their needs. So we're

13 very interested in the policy ramifications and what that

14 could mean, which would also not require general revenue

15 or other new funding per se, but more of a directed

16 program on specific roads.

17 MR. HOUGHTON: And this still takes

18 legislation.

19 MR. WILSON: You'd still need a statutory

20 change to allow that to take place, and we think we have a

21 template that John and I are working on with the team on

22 what West Virginia and Ohio have done that started

23 initially as coal legislation and is modified to shale

24 play so they had a precedent established on that, and sort

25 of from a public policy standpoint we think has real merit ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 57

1 to bring to the commission for consideration as a possible

2 informational aspect to the legislature.

3 MR. HOUGHTON: Any other questions?

4 (No response.)

5 MR. HOUGHTON: My thanks to you, John, Phil,

6 and Commissioner Underwood for taking the lead.

7 MR. WILSON: Now item 4c, the I-69 Advisory

8 Committee report. This item will be introduced by the

9 director of Planning, Marc Williams. Marc.

10 MR. WILLIAMS: Good morning, commissioners,

11 Phil. Again for the record, my name is Marc Williams,

12 director of Planning for the Texas Department of

13 Transportation.

14 Item number 4c, I-69 Advisory Committee report.

15 As a little bit of background, the I-69 segment and

16 statewide advisory committees were created by the

17 commission in 2008 and they began meeting in April of

18 2009. And when the committees started their work back in

19 2009, there was no funding dedicated to I-69 project

20 development or any roads in Texas designated as I-69.

21 Since that time we have had and really been privileged to

22 work with dozens of citizen planners serving on both the

23 segment and the advisory committees who have really been

24 the eyes and ears within their communities and talking

25 with their neighbors and fellow citizens about the ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 58

1 regions' transportation needs and challenges and what

2 their vision was for I-69.

3 And really, one of the tireless leaders

4 throughout that effort, along with all of the individuals

5 who have served on that committee, has been Judy Hawley,

6 who has been serving as the statewide chair of the I-69

7 Advisory Committee, and Ms. Hawley is here to present the

8 findings and recommendations from the advisory committee's

9 report.

10 MS. HAWLEY: Thank you. As always, it's a

11 pleasure to be here before you. For the record, I'm Judy

12 Hawley, chair of the statewide advisory committee for the

13 I-69. And good friend Judge Thompson is giving you our

14 report so that you have one as we go over our

15 presentation.

16 First of all, I want to tell you, you guys are

17 good. I can't think of too many people that I know that

18 could have drafted and convinced hundreds of the busiest

19 people I know, the county judges, the mayors, the CEOs of

20 businesses, the heads of the EDCs, the chamber executives,

21 the Farm Bureau leaders from the entire northeast corner

22 of Texas all the way down to Laredo in the Valley to

23 participate in a project for four years, literally,

24 thousands of volunteer hours, to come up with this report.

25 They stayed the course, they kept after it. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 59

1 Our charge was to build a consensus on I-69,

2 some 800 miles, not an easy deal, yet these people through

3 lots and lots of heated discussions, many, many

4 compromises were made. And Commissioner Austin asked me

5 yesterday were there surprises. There was a surprise

6 almost every meeting when people who had been at

7 loggerheads could come together in a common solution to

8 move I-69 forward. It's been an amazing process, and I

9 congratulate this commission and the commissions before

10 you because you've established a template for moving very

11 difficult planning processes forward for the entire state.

12 Marc did a good job of kind of outlining

13 things, but before I get started, I've got a lot of people

14 where who have been working on I-69, along with me and you

15 all, for many years, and I'd like those people who were

16 either TxDOT employees and/or volunteers to stand if

17 you've had anything to do with I-69 ever.

18 (Applause.)

19 MS. HAWLEY: So it's on behalf of this group

20 that I am here today with this report.

21 The advisory committee, Marc is right, you

22 appointed us some four years ago. About six months after

23 you appointed the advisory committee, you put the real

24 boots on the ground and you appointed the segment

25 committees, and you divided the state up into five sort of ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 60

1 geographic, somewhat arbitrary but mostly made sense,

2 sections. And then those segment committees were to take

3 this enormous 800-mile swath of proposed highway and

4 divide that into manageable projects, and what's

5 remarkable is they did.

6 I'd like to show you slide one, let's do that

7 one first, if we may. The segment committees had a couple

8 of tasks. They were to develop some recommendations,

9 fairly benign, safety, connectivity and increased

10 mobility. But the second part of what they did is what

11 was really the amazing part of this process. They

12 conducted public outreach, but they contacted over 5,000

13 citizens and received comments from them. Many, many

14 outreach activities, many, many engagements with the local

15 people who were concerned about historic buildings, the

16 people who were concerned about ranches, the people who

17 were concerned about funeral homes, the people who were

18 concerned about access to their businesses, and on and on

19 and on, in the process of developing their priorities.

20 Let's go to the next slide, please. And this

21 is where the advisory committee then came in. The

22 advisory committee developed seven sort of guiding

23 principles to take us through the process and to give some

24 direction to our segment committees, and mostly to guide

25 how we proceeded with TxDOT. And I have to let you know ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 61

1 that your support and the support of the very professional

2 people you have with TxDOT organization enabled those

3 volunteers who worked on this report to truly make

4 progress and literally get miles and miles and miles of I-

5 69 dedicated and signed when it seemed impossible.

6 A couple of things that we identified right

7 off, and that is that I-69 is predominantly a freight

8 corridor. I'm proud to be here on freight day in front of

9 the commission because that's really what this is about,

10 this is about moving freight. From almost the first day

11 we came together it was about moving freight, it was about

12 prosperity in Texas, it was about creating jobs in Texas,

13 and I-69 was absolutely critical to being able to move

14 forward in that capacity.

15 When we first came together, we knew the Panama

16 Canal was coming, we knew that we had NAFTA, we

17 anticipated a CAFTA, those things were sort of on the

18 horizon. But I will tell you, four years ago we had no

19 idea of the impact of the Eagle Ford Shale. We had

20 absolutely no idea that what we had initially thought of

21 as LNG being something we were going to import was going

22 to be then LNG we were going to export -- totally

23 different infrastructure needs.

24 All of that changed just in those four years,

25 so what we realized was that our task wasn't just to ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 62

1 create some freight recommendations for today, but to have

2 the flexibility in this report to continue onward because

3 those freight needs in Texas were going to change.

4 Second thing was we wanted to work smart.

5 There were already a lot of highways out there in Texas

6 that were going to be part of the 69 system that were

7 close to interstate standards, so working with what we

8 already had, upgrading whatever we needed to to interstate

9 standards, our goal was to get I-69 signed as quickly as

10 possible, so let's take the shortest, most prudent way to

11 get there. And so the commission and FHWA, all of us

12 working collaboratively were able to do that, again, just

13 moving forward as quickly as we could.

14 Third thing that kind of came out of that was

15 we needed to change and have more flexibility with some of

16 our design and our construction processes. It's a little

17 bit different when you're in a rural area with an

18 interstate than when you're in an urban area. So again,

19 working with FHWA and with TxDOT staff, we found some

20 flexibility to move this project forward.

21 And probably the key piece that turned the

22 corner on being able to get things signed was we were

23 successful in getting Congress to change some language

24 that allowed segments of I-69 projects, when they met

25 interstate standards, to go ahead and be designated as I- ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 63

1 69. And because of sort of those three things, we now

2 have over 200 miles of I-69 signed and dedicated and

3 official I-69 Texas in the state. This is something we

4 would have never envisioned four years ago, and we are

5 already there and anticipating many, many more miles in

6 the next few years. So it's that kind of resourcefulness

7 from the commission, from the TxDOT employees and from

8 those volunteers who worked to be able to get us to that

9 point.

10 The third point that I'd like to make, and this

11 is really the heart of the matter, I know the slide is a

12 little bit busy but the busy is part of the good part, the

13 busy shows you the projects that are currently funded and

14 are under construction or proposed to be under

15 construction along the I-69 route. And you will see

16 there's some $638 million that you all have already put

17 into the funding stream for I-69. So obviously, the

18 recommendation is let's continue to move forward on those

19 projects.

20 The next slide shows you the priorities. So

21 each one of those segment committees for the projects that

22 weren't already funded, they prioritized what they thought

23 within their communities were most critical to move

24 forward subsequently, and it has a little higher price

25 tag, as you might imagine, close to $8 billion. But what ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 64

1 it does for you all and for your employees and certainly

2 for the communities is it establishes our priorities based

3 on what we know now about how best to move forward with

4 this. So as funding becomes available, you've already got

5 the roadmap of what those communities have already

6 achieved consensus on prioritizing.

7 And then finally, and this might be the most

8 important one because this is probably the most nebulous,

9 and these are those pieces that have to continue to move

10 forward. They may be just in the environmental stage,

11 they may be just in the planning process, but these are

12 prioritized by those segment committees, pieces that we

13 have to keep in the queue wherever they are and keep it

14 dancing so that as funding becomes available and those

15 projects are mature, they can also fold into the system.

16 So those are the three maps that have come out of this

17 labor of love from your committees.

18 The fourth point I'd like to make is that you

19 have thousands and thousands of people now who I-69 is

20 just a household word. They know about I-69, it's

21 important to them. All of us are asked: when is that

22 highway going to be ready; when is this going to be

23 signed; what's the next stage; the project in Falfurrias,

24 is that part of the I-69 system. We get these questions

25 all the time. So the hard work is done, I-69 is branded, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 65

1 people believe in it and they want it.

2 The next piece, the implementation, that's what

3 requires the funding. But you've got people now, you've

4 got a whole army of folks out there that know we need

5 transportation funding that didn't know we needed it four

6 years ago. We're going into a legislative session. What

7 better time to take this army of people who know the need

8 for freight corridors in the State of Texas and launch

9 them on to their senators, their legislators, and even

10 their congressional delegation to let them know the

11 importance of a sustainable and innovative and creative

12 funding system for transportation in Texas.

13 We're primed, we're ready, and I think because

14 of the information that has come out of this report,

15 citizen-driven, community-driven, you've got some people

16 that really understand the criticality of funding freight

17 corridors like this in the State of Texas.

18 I ask you to stay the course. You have built

19 confidence in this process because you have funded these

20 pieces, these recommendations that have emerged from these

21 citizen, community-directed initiatives. Stay the course,

22 continue to fund, continue to do what you can with your

23 resources and we will continue to do what we can with our

24 resources to get I-69 built.

25 Thank you very much for your attention, and ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 66

1 thank you for your faith in us, the citizen-driven

2 initiatives that were able to present this report. So

3 thank you, and I'll take any questions that you might

4 have.

5 MR. HOUGHTON: Thanks, Judy, very much.

6 Does anybody have any questions of Judy,

7 comments? Commissioner Moseley.

8 MR. MOSELEY: Thank you so much for this

9 wonderful presentation, and what a great culmination of

10 work. So I complement you and all the hard work that has

11 gone into this. Very impressive. And we look forward to

12 seeing the next four years. I think it will be just as

13 dramatic, if not more so, as we go forward.

14 I'm just curious, you have three terminus to

15 the roadway, Laredo and then Pharr and Brownsville, how

16 will the signage designate, as you're coming down to the

17 fork in the road there?

18 MS. HAWLEY: It will be I-69 Texas East, I-69

19 Texas West. You know, I don't know that that's actually

20 been decided.

21 John, do we have any guidance on that yet?

22 Marc?

23 MR. WILLIAMS: We've been working with AASHTO,

24 who is actually the entity nationally that designates

25 them. According to Congress they designated them as ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 67

1 I-69E, I-69C, and I-69W.

2 MR. MOSELEY: Okay. Congratulations. Thank

3 you for all the hard work.

4 MS. HAWLEY: Thank you. Very excited about it.

5 MR. AUSTIN: Judy, wow, thank you. What a

6 tremendous report. The thing that you kept driving home

7 and the point you kept driving home, this was grassroots-

8 driven, and you pulled together the CEOs of the

9 counties -- as you talked about at the beginning, if you

10 want something done, you pull together the CEOs of

11 industry -- we have the CEOs of the counties, many

12 business folks up and down the entire route from Texarkana

13 to Brownsville, and what a tremendous report.

14 Since the last legislative session, it is open,

15 we have signage up, it's valid, it's visible, and I really

16 want to applaud everyone that's been a part of this. But

17 just because we have this, that doesn't mean this is going

18 to go on a shelf. This is a blueprint of building a

19 house, of building a road, building an interstate that we

20 haven't had the opportunity to do in Texas for a long

21 time. And as you look at this entire route, this is our

22 port-to-port route, not just the inland ports that will

23 help provide different connectivity, but we want to

24 continue this on.

25 I've asked the chair that we consider re- ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 68

1 upping, reappointing the advisory committee to continue

2 this because we're going to need your help, we're going to

3 need the help of every person that was on the segment

4 committees because now that this report has been compiled,

5 we need the advice of how to implement it and educate

6 what's happening in each of the communities.

7 I think of some of the recent meetings with the

8 public outreach and hearings. Moscow, this community came

9 forward and said we have a solution the way we want to see

10 it done, and it will come back around. We couldn't have

11 done that, that came from the community. I look at what's

12 happening with Laredo. They have met and decided we want

13 to advance a section that's one of the priorities here,

14 and they're considering a transportation reinvestment zone

15 to help fund and advance their project. We have tools

16 available that many of the cities, counties can utilize,

17 and we want to be a partner.

18 And as I talk about the TRZs, we are very close

19 to bringing someone onboard to work with Ben Asher and

20 James Bass that will focus on transportation reinvestment

21 zones that can help bring solutions.

22 I'll kind of follow up on Commissioner

23 Moseley's question about the numbering. As we look at the

24 section, Interstate 69 really goes up when it hits East

25 Texas, Timpson-Tenaha, and it goes back up through ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 69

1 Louisiana and back up into Indiana, well, the section that

2 goes from that point north in Texas that is very important

3 to us, I think we're going to brand that 369. I think

4 we've got the preliminary designation from AASHTO to do

5 that, so there will be some numbering changes, but it's

6 all part of the entire I-69 corridor.

7 And Judge Thompson, with what you've done,

8 Jennifer, with the I-69 Alliance, you and your members

9 have been a tremendous resource, not only at the state

10 level but at the federal level, of helping change some of

11 the language federally and bring recognition to this

12 entire corridor. We really, really appreciate your

13 efforts and I know you'll continue. So thank you all very

14 much.

15 MR. MEADOWS: I don't know how many times we

16 say thank you, but it's still not enough. I mean, that's

17 enough said. You all have done great work and we

18 recognize it and we really do appreciate the countless

19 hours, the time that you spent advancing this really

20 important project.

21 MS. HAWLEY: Appreciate that. Thank you.

22 MR. HOUGHTON: Judy, thank you. And four

23 years, Commissioner Moseley? I think this will be a

24 little longer than that.

25 MS. HAWLEY: Sometimes it seems like it. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 70

1 MR. HOUGHTON: Judge Thompson, those trips to

2 East Texas and the Valley and Victoria and Houston.

3 We do want to keep you active. We have a

4 legislative session that's going to be very, very

5 important to the future of I-69.

6 MS. HAWLEY: Why don't you come on up here and

7 join me, Judge Thompson.

8 MR. HOUGHTON: It's going to be very important

9 to the I-69 corridor, I think, this session, and we would

10 hope we can keep you all together as a group and march

11 forward on seeing the reality of this corridor.

12 JUDGE THOMPSON: Just on behalf to the

13 alliance, we would support the recommendation. We think

14 that the advisory committee has done a great job. Now

15 we've got to build it and hopefully you will see fit to

16 continue their operation.

17 From the alliance's perspective, for over 20

18 years we've worked with this group, with TxDOT, and we

19 feel like we're partners in an effort that will have

20 impact on Texas and North America and the world long past

21 our useful or our political lives, and so we're really

22 excited about the future. Thank you.

23 It's great to see those signs going up. We'll

24 tell you for some of you that have not been on the

25 commission long, our friend from El Paso was our lead ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 71

1 supporter for many years, has many scars, many hickeys on

2 him from those trips, but even farther back, 20 how many

3 years ago, Phil?

4 MR. WILSON: Twenty-one.

5 JUDGE THOMPSON: Twenty-one years ago, Phil and

6 myself and then Senator Phil Graham put up some of the

7 first I-69 future route. So there are still some of us

8 dinosaurs hanging around to try to see this thing become a

9 reality, and it is becoming a reality. What a wonderful

10 thing to see it happen. So thanks for all of your

11 support.

12 MR. HOUGHTON: Well, I can tell you that your

13 continued involvement will be very important in the next

14 couple of years to get this thing really solidified and

15 some of the assets that are planned actually seeing

16 concrete being poured.

17 JUDGE THOMPSON: And we're proud of Judy. She

18 is one of our own.

19 MR. HOUGHTON: Absolutely.

20 (Applause.)

21 JUDGE THOMPSON: Anyway, thank you.

22 MS. HAWLEY: Thank you.

23 I would just like to add one more comment, and

24 that is that I'm so proud of this commission for looking

25 freight needs as a system, and all the reports today ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 72

1 really show that you are really moving forward with system

2 planning, with the Gulf Coast Intracoastal Waterway, with

3 the ports, with I-69. We've kind of been the lone rangers

4 out there for a long time on moving freight, and it isn't

5 just about us, it's about all of those multimodal pieces,

6 and today's commission meeting just really validates the

7 work of what you're doing, so thank you.

8 MR. HOUGHTON: Thanks a lot.

9 MR. WILSON: Mr. Chairman, I would just like to

10 take and echo that under your direction we have hired two

11 new people in the past six months -- actually the past 60

12 days -- where we now have a Maritime director, which we

13 didn't have before, who is going to have the oversight of

14 the ports and Gulf Intracoastal Waterway relationships and

15 working on a strategy, and then a Freight Planning

16 director. This is new for TxDOT and they both have

17 started, and I think takes that vision the commission has

18 directed us with to go forward with making us very

19 multimodal. So thank you.

20 Our next item is item 4d, the approval of the

21 Gulf Intracoastal Waterway report. This item will be

22 presented by Maritime Division director, Herman Deutsch,

23 and Herman joined us two weeks ago, so let's please

24 welcome Herman. Thank you.

25 MR. DEUTSCH: Thank you, Director Wilson, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 73

1 Chairman, commissioners. Good morning to you all. For

2 the record, my name is Herman Deutsch, and I have the

3 privilege of serving as TxDOT Maritime Division director.

4 First of all, I want to emphasize and to

5 clarify on my previous comments regarding the Gulf

6 Intracoastal Waterway that there are no fees to use it,

7 and I emphasize we have had no discussions or studies

8 about user fees.

9 With that, let me turn the discussion to the

10 Gulf Intracoastal Waterway report. Again, item 4d,

11 request the commission to approve the Gulf Intracoastal

12 Waterway report. The Gulf Intracoastal Waterway is an

13 important component of the Texas multimodal transportation

14 system. The department is a non-federal sponsor of the

15 GIWW and works closely with the U.S. Army Corps of

16 Engineers on the GIWW and other Texas waterway issues.

17 State law requires the commission to continually evaluate

18 the impact of the Gulf Intracoastal Waterway on the state

19 and to publish and present a report to each regular

20 session of the legislature.

21 On this slide we describe what is the GIWW

22 important. It serves as a link between Texas deep and

23 shallow ports in its 400 miles along the coast and acts as

24 a gateway for the Texas petrochemical industry. It is

25 part of the multimodal transportation system which keeps ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 74

1 hazardous materials off of the highways. On an annual

2 basis it sees over 73 million tons of cargo and about

3 52,000 barges with a commercial value of over $52 billion.

4 Barge transportation provides fuel efficiency, is

5 environmentally friendly, and it's also the safest mode of

6 transportation.

7 What are the critical issues for the GIWW? It

8 is not being maintained for authorized dimensions, which

9 are 125 feet wide by twelve feet deep, due to a lack of

10 funding. This is creating costly inefficiencies and lost

11 business opportunities for uses of the waterway. There's

12 need to be adequate placement areas for dredged materials

13 and these placement areas need to be made available and

14 properly maintained. Shoreside developments are

15 increasingly encroaching on the waterway, and the Brazos

16 River floodgates and the Colorado River locks are

17 antiquated and inefficient.

18 What do we need to do for the GIWW? We can

19 recognize it as one of the modes of transportation in the

20 I-69 corridor. We need to find $60 million of additional

21 funding for the Corps of Engineers to dredge to the

22 authorized depth and width. We need to find an additional

23 $40 million a year to maintain a depth of twelve feet

24 because without this additional funding, a one foot

25 restriction is costing approximately $98 million in ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 75

1 increased transportation costs. We also need to keep

2 working closely with the Corps, ports, the federal, state

3 and local governments and the maritime industry to ensure

4 appropriate funding and adequate utilization of the Gulf

5 Intracoastal Waterway.

6 And now I'm going to turn a little bit over to

7 the Texas ports. We have more than 26 ports within our

8 great state. Texas is number one for maritime commerce,

9 seeing 565 million tons per year of cargo and one-fifth of

10 the U.S. maritime freight and vessel loading. Ports have

11 over 12,000 deep sea vessel calls and over 500,000 cruise

12 passengers a year. Texas ports support $277 billion per

13 year in economic activity which equates to 25 percent of

14 the total state gross domestic product, and more than $6

15 billion a year in state and local taxes. The maritime

16 industry generates over 1.4 million related jobs in the

17 State of Texas.

18 Currently, there is around $35 billion of

19 private investment planned for improving landside

20 infrastructure and expansion of the industrial base along

21 the Texas coast. This investment in Texas ports is

22 intended to account for external factors such as expansion

23 of the Panama Canal, increasing in the Gulf of Mexico and

24 Brazil oil reserves and the expansion of oil and gas

25 reserves from the Eagle Ford Shale. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 76

1 What are the issues for the Texas ports? Our

2 ports lack sufficient funding for dredging,

3 infrastructure, construction and maintenance, security and

4 intermodal links. As reported in Fiscal Year 2011, the

5 federal government collected $200 million from the harbor

6 Maintenance Tax from Texas alone and only gave back $70

7 million to the Corps of Engineers for dredging Texas ports

8 and waterways. Some of the key factors will be expansion

9 of the Panama Canal, expected to be completed by 2015, and

10 competition from other U.S. ports and international.

11 It's being projected that by the year 2030

12 Texas will have a 40 percent increase in population to

13 about 45 million people, and we're expecting to see about

14 a 53 percent increase to about 766 million tons per year

15 of cargo being transported through our Texas ports and

16 waterways.

17 The future for Texas' maritime transportation

18 system is challenging and will need the close

19 collaboration of public and private sectors to find

20 funding mechanisms to keep its competitiveness. TxDOT

21 offers to work closely with all the stakeholders, being a

22 resource and partner with our ports, the maritime industry

23 and federal, state and local governments. By doing so,

24 this will allow us to identify funding opportunities,

25 promote maritime development, and intermodal connectivity ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 77

1 which will keep us competitive in the world markets

2 supporting Texas' economic growth and the job creation.

3 The staff recommends the approval of the minute

4 order.

5 MR. HOUGHTON: Any questions of Herman?

6 Herman, I have one question. What part of East Texas are

7 you from?

8 MR. DEUTSCH: I am from Spring.

9 (General laughter.)

10 MR. HOUGHTON: Go ahead.

11 MR. AUSTIN: I want to go back to your previous

12 slide, and you said Texas ports paid in $200 million to

13 the Harbor Maintenance Trust Fund and we received about

14 $70 million back, and that doesn't include anything that

15 we can spend that money on or any of those ports on the

16 Intracoastal. That's correct. Right?

17 MR. HOUGHTON: What was the question?

18 MR. AUSTIN: That money that's received back,

19 can that money be used on the Intracoastal?

20 MR. DEUTSCH: Well, of the $70 million that

21 Texas received back, $25 million is used by the Corps to

22 dredge the GIWW.

23 MR. HOUGHTON: Who is the recipient of the $70

24 million? How does it get back and to whom?

25 MR. DEUTSCH: In appropriations to the U.S. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 78

1 Corps of Engineers. They're the ones that dredge the

2 ports and dredge the waterways. In the case of the

3 Intracoastal Waterway they receive $25 million every year,

4 every year they receive less money, and next year for 2014

5 they will receive around $25 million for the Gulf

6 Intracoastal Waterway. On top of that, they need $40

7 million every year plus the $60 million that I just told

8 you for having dredge from the nine feet that we have in

9 some parts of the waterway to the twelve feet.

10 MR. HOUGHTON: Herman, or does anybody know,

11 how the maritime tax is assessed? What is the assessment,

12 how do they assess it?

13 MR. DEUTSCH: Well, in the case of the Harbor

14 Maintenance Tax, that is a tax that is supposed to be used

15 for dredging.

16 MR. HOUGHTON: I know. But how do they assess

17 it? Does Houston get an assessment, or is it per ship

18 that comes through? Is that the way they assess it,

19 Judge? I mean, you guys run the ports too, not only toll

20 roads but the port.

21 JUDGE EMMETT: I think we have somebody from

22 the port here. The short answer is there's a Harbor

23 Maintenance Tax that is paid but half of that, and I

24 forget whether it's the export or the import side, was

25 ruled unconstitutional, so that cut out half, but then we ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 79

1 are a donor state, but it is a Harbor Maintenance Tax

2 that's assessed on the ships that come in.

3 MR. HOUGHTON: On the ships coming in. Is it

4 tonnage?

5 MR. LaRUE: On the cargo. The judge is right,

6 it's only import.

7 MR. WILSON: Please state who you are for the

8 record.

9 MR. LaRUE: John LaRue, executive director of

10 Port of Corpus Christi.

11 It used to be on both imports and exports and

12 the Supreme Court ruled it unconstitutional on exports, so

13 now it's only on the import side, and it goes into the

14 Federal Treasury and they don't spend the full amount

15 they collect every year, they use it as a budget offset,

16 in effect. If you really want to look at it, there is a

17 fund there, it's not like the Highway Fund or the Airport

18 Fund where those are separate trust funds.

19 MR. AUSTIN: Are you saying that's a diversion?

20 MR. LaRUE: Yes, it is. They collect it and

21 they don't spend it. That's exactly what they do. And

22 the money goes to the Corps to use for maintenance and

23 dredging.

24 MR. HOUGHTON: John, do other ports experience

25 the same issues? ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 80

1 MR. LaRUE: The donor?

2 MR. HOUGHTON: Right.

3 MR. LaRUE: Well, it varies, obviously. Some

4 ports, there are ports in areas that require significant

5 dredging. Obviously, the Mississippi River is probably

6 the major recipient of federal dollars for dredging

7 because they have to dredge that and maintain that. But

8 some of the West Coast ports get zero dollars for

9 dredging, they're naturally deep, so they are not very

10 happy about this situation.

11 MR. HOUGHTON: They pay the tax but what comes

12 back. That's what my question is.

13 MR. LaRUE: Yes. Especially the ports in the

14 Northwest are taxed and they have to compete with the

15 Canadian ports who don't have that tax.

16 MR. HOUGHTON: Okay. Very good.

17 Herman, come on back up. Other questions from

18 the commission?

19 MR. MOSELEY: Chairman, I just wanted to

20 welcome Herman officially onboard. I'm so pleased you're

21 here. I think Phil Wilson bringing you onboard is

22 absolutely the right thing to do and the right time for

23 you to join us is now.

24 And Chairman, thank you for your line of

25 questions related to how to focus on revenues to enhance ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 81

1 the Intracoastal Waterway and the ports. Herman said

2 something in his report that I think is very, very

3 important for us as a point of context, and that is we

4 have a gross state product of $1.2 trillion, and based on

5 this presentation, we depend on the ports for one-fourth

6 of our gross state product, so it's worthy of our time and

7 effort to look for resources to enhance this wonderful

8 economic engine that we've, quite frankly, I think, taken

9 for granted, but it's a good time to come back and look at

10 how we can enhance the asset.

11 Thank you, Herman.

12 MR. DEUTSCH: Thank you, Commissioner Moseley.

13 MR. HOUGHTON: A little bit more clarity. Who

14 owns the Intracoastal Waterway? Do we, the State of

15 Texas?

16 MR. DEUTSCH: No. The federal government.

17 MR. HOUGHTON: They own it and they operate it.

18 MR. DEUTSCH: Yes.

19 MR. HOUGHTON: So is there an opportunity, or

20 would it take federal legislation to charge a fee?

21 MR. DEUTSCH: I think it would take federal

22 legislation.

23 MR. HOUGHTON: To charge a fee on the

24 Intracoastal.

25 MR. DEUTSCH: Yes. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 82

1 MR. HOUGHTON: Any other questions of Herman?

2 (No response.)

3 MR. HOUGHTON: Herman, welcome aboard.

4 MR. DEUTSCH: Thank you.

5 MR. HOUGHTON: And thank you for your report.

6 We need a vote to accept?

7 MR. WILSON: Yes, sir.

8 MR. HOUGHTON: Is there a motion?

9 MR. MOSELEY: I'll move to accept, Chairman.

10 MR. AUSTIN: Second.

11 MR. HOUGHTON: All in favor?

12 (A chorus of ayes.)

13 MR. HOUGHTON: Passes.

14 Is this it on the reports?

15 MR. WILSON: Yes.

16 MR. HOUGHTON: I would like to take a five-

17 minute break, I know some people would like to leave, and

18 then we'll get on with our regular agenda. So we have a

19 five-minute break, and I want to thank everyone for

20 coming.

21 (Whereupon, at 10:44 a.m., a brief recess was

22 taken.)

23 MR. HOUGHTON: We shall reconvene. It's 10:57.

24 The next item on the agenda, Mr. Wilson.

25 MR. WILSON: Yes, Mr. Chairman. Now moving to ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 83

1 item 5, the award of federal and state grant funding for

2 airport improvement projects. This item will be presented

3 by Aviation Division director, Dave Fulton. Dave.

4 MR. FULTON: For the record, my name is Dave

5 Fulton, director of the TxDOT Aviation Division.

6 This minute order contains a request for grant

7 funding approval for nine airport improvement projects.

8 The total estimated cost of all requests, as shown in

9 Exhibit A, is approximately $12.3 million: approximately

10 $9.2 million in federal funding, $1.9 million in state

11 funding, and $1.2 million in local funding.

12 A public hearing was held on November 8 of

13 2012. No comments were received. We would recommend

14 approval of this minute order.

15 MR. HOUGHTON: Questions of Dave? Motion?

16 MR. UNDERWOOD: So moved.

17 MR. HOUGHTON: Second?

18 MR. AUSTIN: Second.

19 MR. HOUGHTON: All in favor?

20 (A chorus of ayes.)

21 MR. FULTON: Thank you.

22 MR. HOUGHTON: Thanks, Dave.

23 MR. WILSON: Next in Public Transportation,

24 item 6a awards Job Access Reverse Commute Grant Program

25 funds to various transit providers. Public Transportation ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 84

1 Division Director Eric Gleason will present. Eric.

2 MR. GLEASON: Good morning. For the record,

3 I'm Eric Gleason, TxDOT's director of Public

4 Transportation.

5 Agenda item 6a awards just over $7.9 million in

6 prior year FTA Section 5316 Job Access Reverse Commute

7 Program funds and approximately 422,000 transportation

8 development credits to Texas public transportation

9 providers listed in Exhibit A.

10 Projects recommended for award were selected

11 from a competitive process announced by TxDOT on July 23,

12 2012. They provide funding to sustain successful existing

13 JARC efforts during a transition time frame for the

14 program under the current federal authorization MAP-21.

15 The transportation development credits are awarded to

16 support a variety of capital project needs, including

17 vehicle replacement, planning, preventative maintenance

18 and contracts for services. Used in this fashion, TDCs

19 support programs in communities to connect lower income

20 individuals to jobs and job training opportunities.

21 Staff recommends your approval of this minute

22 order.

23 MR. HOUGHTON: Questions of Eric?

24 MR. AUSTIN: I have one question. Eric, when

25 we give these back out for contracts for services, what ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 85

1 metrics do you come back and review: achieving a certain

2 level of service, are they achieving what they said they

3 would do?

4 MR. GLEASON: We don't have a rigorous review

5 of every single contract for service that is issued. With

6 respect to this program, we do look at ridership, we look

7 at trends, we look at support within the community, we

8 look at partnerships to see if they're being sustained, so

9 all those things factor into a successful program.

10 MR. HOUGHTON: Motion?

11 MR. MEADOWS: So moved.

12 MR. HOUGHTON: Second?

13 MR. UNDERWOOD: Second.

14 MR. HOUGHTON: All in favor?

15 (A chorus of ayes.)

16 MR. HOUGHTON: Thanks, Eric.

17 MR. WILSON: Item 6b awards federal funds to

18 rural public transportation providers. Eric will continue

19 to present.

20 MR. GLEASON: Thank you.

21 Agenda item 6b awards available and estimated

22 federal funding under the FTA formula grants for rural

23 areas program, Section 5311, to rural transit districts in

24 Texas identified in Exhibit A for general purpose rural

25 public transportation. The allocations in this award are ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 86

1 consistent with the formula for allocating Section 5311

2 funds in the Texas Administrative Code.

3 Two amounts of funding are identified for each

4 recipient. The first amount, under the column in the

5 exhibit titled Fiscal Year 2013 Available Allocation,

6 reflects the amount available under the current continuing

7 resolution for the first six months of Federal Fiscal Year

8 2013. The second amount is the total that each recipient

9 can expect to receive by formula, consistent with TAC

10 requirements for needs and performance, when the

11 additional Fiscal Year 2013 apportionment is received.

12 Subsequent commission action will be required for

13 allocation of additional program funds beyond the amounts

14 specified in this minute order.

15 Rural transit districts use these funds for

16 general program operating and capital needs. In 2012,

17 rural transit districts in Texas carried over 7 million

18 riders and provided over 33 million revenue miles of

19 service. They provide a critical network of mobility

20 services connecting rural communities and helping to

21 address congestion issues in rapidly growing areas of the

22 state.

23 Staff recommends your approval of this minute

24 order.

25 MR. HOUGHTON: Any questions? Motion? ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 87

1 MR. MEADOWS: So moved.

2 MR. UNDERWOOD: Second.

3 MR. HOUGHTON: All in favor?

4 (A chorus of ayes.)

5 MR. WILSON: Next is item 6c, awarding STP

6 funds to the Capital Area Rural Transportation System for

7 the purchase of buses. Eric, please continue.

8 MR. GLEASON: Agenda item 6c awards $880,000 in

9 federal funds under the FTA formula grants for rural areas

10 program, and 176,000 transportation development credits to

11 the Capital Area Rural Transportation System, also known

12 as CARTS, for the purchase of six commuter buses to

13 support intercity operations in the Austin region.

14 The Capital Area Metropolitan Planning

15 Organization has authorized the transfer of $880,000 in

16 Surface Transportation Program Metropolitan Mobility and

17 Rehabilitation funding to be administered under the FTA

18 Section 5311 grant program.

19 Staff recommends approval of this minute order.

20 MR. HOUGHTON: Is there a motion?

21 MR. UNDERWOOD: So moved.

22 MR. AUSTIN: Second.

23 MR. HOUGHTON: All in favor?

24 (A chorus of ayes.)

25 MR. HOUGHTON: Thank you. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 88

1 MR. GLEASON: Thank you.

2 MR. WILSON: Now moving on to the promulgation

3 of administrative rules, item 7a(1) is the final adoption

4 of amendments to Chapter 9, Contract and Grant Management.

5 Office of Civil Rights Division Director Ron Wilson will

6 present. Ron.

7 MR. RON WILSON: Chairman Houghton,

8 commissioners, Executive Director Wilson, we meet in my

9 good friend, Ric Williamson's room, and so I would rather

10 be very, very, very careful with that.

11 This rulemaking proposes amendments to the 43

12 Texas Administrative Code. The amendments will not change

13 the way TxDOT does business. The changes were the result

14 of the department's routine review of the Texas

15 Administrative Code.

16 We recommend adoption by the commission.

17 Now, UT grads will solicit members to sign a

18 petition to request Earl Campbell to join the UT Football

19 Team for its new class for the new season in the back

20 after I finish back here.

21 MR. HOUGHTON: So there's a recommendation.

22 Motion?

23 MR. UNDERWOOD: So moved.

24 MR. MEADOWS: Second.

25 MR. HOUGHTON: All in favor? ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 89

1 (A chorus of ayes.)

2 MR. HOUGHTON: Thanks, Ron.

3 MR. RON WILSON: Thank you, sir.

4 MR. AUSTIN: And for the record, he was talking

5 about the Tyler Rose.

6 MR. WILSON: Next is item 7b(1), the proposed

7 adoption of amendments to Chapter 5, Finance, and Chapter

8 23, Travel Information. Travel Information Director Margo

9 Richards will present. Margo.

10 MS. RICHARDS: Good morning. For the record,

11 I'm Margo Richards, director of the Travel Information

12 Division and proud Texas Aggie.

13 This minute order repeals Subchapter 23.27

14 regarding the sale of ancillary products through Texas

15 Highways Magazine. We are proposing new sections to

16 establish policies and procedures for the department's

17 sale of all ancillary products and promotional products.

18 New subchapters will allow the department to take

19 advantage of changes in the Federal Transportation

20 Reauthorization Bill, MAP-21, where the department is

21 authorized to offer products for sale at rest areas and

22 travel information centers.

23 These rules update the types of products

24 offered for sale and provides authority to establish a

25 merchandising program in which the department may solicit ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 90

1 proposals from one or more vendors to administer the

2 programs and secure retailers to sell products bearing the

3 department marks at no cost.

4 We recommend approval of this minute order.

5 MR. HOUGHTON: Wait, wait. The department

6 trademarks at no cost?

7 MS. RICHARDS: We have used the word "marks" to

8 say trademarks and that would be any of the brands or

9 marks under TxDOT's umbrella, so it could be Texas

10 Highways brand, it could be Don't Mess With Texas brand,

11 it could be --

12 MR. HOUGHTON: That's the one I'm thinking

13 about. At no cost.

14 MS. RICHARDS: Yes.

15 MR. HOUGHTON: We're giving our products away,

16 Wilson?

17 MS. RICHARDS: No. At no cost to the

18 department but it's a revenue-generating program for the

19 department.

20 MR. HOUGHTON: We're going to get a fee.

21 Right?

22 MS. RICHARDS: Yes.

23 MR. HOUGHTON: Okay. Good. Are there

24 questions of Margo, any questions? Motion?

25 MR. AUSTIN: So moved. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 91

1 MR. HOUGHTON: Second?

2 MR. UNDERWOOD: Second.

3 (A chorus of ayes.)

4 MR. HOUGHTON: Item 8 will be presented by

5 Suzanne Latimer, director of the Office of Compliance and

6 Ethics. She will make her monthly report of the

7 department's compliance and ethics report. Suzanne.

8 MS. LATIMER: Hello. Good morning. For the

9 record, I am Suzanne Latimer, director of the Office of

10 Compliance and Ethics for TxDOT, and proud Baylor Bear

11 graduate and home of the 2011 Heisman winner and awesome

12 quarterback of the Washington Redskins. I also have a

13 degree from the University of Texas.

14 MR. HOUGHTON: And that's old news.

15 (General laughter.)

16 MS. LATIMER: The purpose of this report is to

17 provide a summary of information related to complaints and

18 investigations for the month of November 2012.

19 Transportation Code 201.452 provides that the Compliance

20 Office has primary jurisdiction for oversight and

21 coordination of all investigations occurring on department

22 property or involving department employees.

23 Transportation Code 201.454 requires the director of the

24 Compliance Office to provide a monthly report to the

25 commission regarding investigations and a summary of ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 92

1 information relating to trends and recommendations.

2 The Human Resources Division Office of Civil

3 Rights and the Audit Office are assigned complaints to be

4 investigated and notify the Office of Compliance and

5 Ethics when investigations are initiated and completed.

6 The Office of Compliance and Ethics monitors those

7 investigations and all data is compiled by the Office of

8 Compliance and Ethics for reporting purposes.

9 There were 13 complaints received during the

10 month of November and 27 complaints were closed during

11 November. Allegations were substantiated in six of those

12 investigations.

13 No further action is needed. And sic'em,

14 Bears.

15 MR. HOUGHTON: That doesn't even sound right.

16 (General laughter.)

17 MR. WILSON: Moving on, next is item 9a,

18 approving the selection of the proposer who submitted the

19 best value proposal to develop, design, construct and

20 potentially maintain the I-35E Managed Lanes Project.

21 This item will be presented by Strategic Projects Division

22 Director Ed Pensock. Ed.

23 MR. PENSOCK: Good morning, Mr. Chairman,

24 commissioners, Director Wilson. For the record, Ed

25 Pensock, Strategic Projects Division of TxDOT. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 93

1 Item 9a requests your approval of conditional

2 award for the I-35E Managed Lanes Project.

3 MR. HOUGHTON: Conditional upon what?

4 MR. PENSOCK: Conditioned up several items.

5 First off, it would be conditioned upon final FHWA

6 approval, upon final Office of Attorney General finding of

7 legal sufficiency, upon final negotiations with the

8 awarded developer, and upon execution by Phil, if you so

9 deem it allowable.

10 MR. HOUGHTON: Okay.

11 MR. PENSOCK: A little bit about the project.

12 It's 28 miles long, it stretches from Interstate Highway

13 635 north of downtown Dallas up into Denton County, and it

14 contemplates the construction of two managed lanes in the

15 median. On the furthest north segment from Tuberville

16 Road to US 380, the managed lanes section is deferred

17 until a later phase, but it does add a general purpose

18 lane in each direction. In a middle section from State

19 Highway 121 to Tuberville Road, it adds a general purpose

20 lane in each direction and the two reversible managed

21 lanes in the center median, and it also constructs new

22 frontage road bridges over Lake Lewisville which is a

23 significant point of the project. The far southern

24 section converts two existing HOV lanes to managed lanes.

25 A little bit of history. In January of 2012 we ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 94

1 issued a request for qualifications on the project. In

2 March of 2012 the local stakeholder committee, otherwise

3 known as an SB1420 committee, made its determination

4 recommending the project. In April of 2012 we short-

5 listed four proposer teams, and this morning we're

6 offering you to make a conditional award on the project.

7 In alphabetical order, the four short-listed

8 proposer teams that did provide final detailed proposals

9 were: AGL Constructors, equity members include Archer

10 Western Contractors, Granite Construction Company and Lane

11 Construction Company; second was Dallas to Denton

12 Constructors, including Zachry Construction Corporation

13 and SNC-Lavalin, Incorporated; third was IH 35E

14 Infrastructure, with equity members Ferrovial Agroman,

15 Webber, and Texas Sterling Construction; and fourth was

16 Northern Link Constructors, with equity members Fluor

17 Enterprises, Balfour Beatty Infrastructure, and Kiewit

18 Infrastructure.

19 Those proposals were evaluated with a pre-

20 established and rigorous procedure and with the goal of

21 determining the overall best value for the State of Texas.

22 Separate pass/fail evaluations, evaluations of the

23 technical proposal and evaluations of the price proposal

24 were completed. A team that's called and Evaluation,

25 Selection and Recommendation Committee oversaw the ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 95

1 evaluations and made a recommendation to a project

2 steering committee consisting of TxDOT administration

3 members. That steering committee is here standing before

4 you, represented by myself with the recommendation.

5 I will say it was a very complicated project

6 and a very complicated proposal to score. There are many

7 transportation issues, if you will, within the corridor to

8 be resolved, and the team came together and the proposers

9 came together to try to solve as many of those

10 transportation concerns and problems with the limited

11 resources as they possibly could.

12 The evaluation was based on a 70 percent

13 allotment on the base project price, 10 percent of the

14 evaluation was made by the prices for options on the

15 project -- and I'll talk about those options in a few

16 minutes -- the price for the capital maintenance agreement

17 consisted of 5 percent of the decision, and the technical

18 score consisted of 15 percent of the decision.

19 Again, extremely rigorous and thoughtful

20 evaluations were made. Before I recommend and request

21 your conditional award, does anybody have any questions

22 about the project?

23 MR. HOUGHTON: Is this a drum roll? Is this

24 kind of the equivalent to a drum roll?

25 MR. PENSOCK: We haven't got our acoustics yet ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 96

1 down on the power point, but we're trying to get the drum

2 roll in. Rose is working with us on the drum roll.

3 With no other questions on the project, I would

4 like to recommend the team of Archer Western Contractors,

5 Granite Construction and Lane Construction Company as the

6 best value team, and would request your approval of that

7 best value determination.

8 Extremely close competition. This is our third

9 big award this fiscal year, and this is by far the closest

10 one. Developers/contractors are really sharpening their

11 pencils and we spent a lot of time going through checking

12 and rechecking, very close competition from three very

13 qualified final proposals. We did receive a fourth final

14 proposal. We had a threshold of $850 million for the base

15 price of the project, and as described in the RFP, request

16 for proposals, if any of the base prices came in over $850

17 million, they would be deemed responsive proposals but

18 they would not be evaluated any further. Out of four

19 proposals, only one came in over that $850 million

20 threshold, three came in under that $850 million

21 threshold.

22 MR. HOUGHTON: What's the total project cost?

23 MR. PENSOCK: Can I jump to two slides in a

24 second? As a matter of fact, the contract before you has

25 a design and construction cost of approximately $849 ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 97

1 million, the 15 years of capital maintenance has a bid

2 price of $29 million, options one through nine have a bid

3 price of $287 million, and the maintenance increase if we

4 were to add those nine options would be $12 million.

5 The last three items, the capital maintenance

6 agreement, the options one through nine, and the

7 maintenance for options one through nine are at the

8 department's discretion on whether they can or should be

9 issued notices to proceed. So what we are asking you for

10 is award of at least an $849 million contract with options

11 that could run to a $1.177 billion contract.

12 Chairman, you asked about the total project

13 cost. What you see in front of you is the total contract

14 cost. If we add in right of way, which is not included in

15 this contract, if we add in future toll integration

16 services, if we add in some future utilities, if we add in

17 everything that we think it's going to take to get to the

18 project, I'd add about another $320 million to that price.

19 So the total project cost is going to be in the

20 neighborhood of about a billion and a half dollars, if we

21 choose to award all options and all maintenance

22 possibilities.

23 MR. HOUGHTON: Are you done, are you finished?

24 Have you got one more?

25 MR. PENSOCK: A couple more quickly. We talked ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 98

1 about nine options, and again, this was an extremely

2 complicated project, again, there were a lot of

3 transportation issues we were trying to solve, and the

4 team did a tremendous job of trying to bifurcate out those

5 options, cut out those options, such that we could get

6 down to an affordable project, a project that matched the

7 amount of available funds, and that's what the byproduct

8 of these nine options are. If additional funds are ever

9 identified in the not too distant future, then these nine

10 options could be change ordered into the contract.

11 Again, what you see in front of you, $287

12 million are bid prices for the construction of those nine

13 items. It's about another $90 million on right of way on

14 top of that for those nine options. Again, contract

15 prices are on the screen, not total project cost.

16 Next steps. As we talked about earlier,

17 negotiate the final terms of the design-build agreement

18 and the capital maintenance agreement with the best value

19 proposer, forward that contract to Federal Highway

20 Administration for concurrence with award. With that,

21 forward the packet to the Attorney General for legal

22 sufficiency review, notify Legislative Budget Board, and

23 then execute the agreement. We hope to start construction

24 in 2013 and we anticipate about 3-1/2 years of

25 construction duration. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 99

1 Again, I'd like to thank 48 very dedicated

2 people that spent most of the month and a half, two months

3 not doing anything other than evaluating this very large

4 project, and very dedicated staff of very good people that

5 helped us get here.

6 With that, I will be happy to try to address

7 any questions and recommend and request your approval of

8 this minute order.

9 MR. HOUGHTON: Any questions?

10 MR. UNDERWOOD: Ed, I want to make sure, Chair,

11 that I understand what we're voting on. We're voting to

12 do the design and construction of $849-.

13 MR. PENSOCK: Yes, sir.

14 MR. UNDERWOOD: That's it at this point in

15 time. Is that correct?

16 MR. PENSOCK: That is it, but the contract

17 would allow an addition of up to nine options for an

18 additional $287 million if you allocate those funds or if

19 the region comes up with those funds.

20 MR. UNDERWOOD: So what you're saying is you're

21 tying down a price of $1.177 billion, but at this point in

22 time TxDOT only has enough to cover the $849-.

23 MR. PENSOCK: Exactly right, yes, sir. That's

24 exactly right.

25 MR. UNDERWOOD: So we're not committing any ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 100

1 more than $849- at this point in time, and if we do get

2 ready to do the options, it will come back to the

3 commission to be able to vote on that, or not?

4 MR. PENSOCK: We'll have to find the money, and

5 depending on where that money is made available from, it

6 very well may take commission action to authorize those

7 funds.

8 MR. UNDERWOOD: So you're saying you don't know

9 if it will or will not then.

10 MR. PENSOCK: It would depend on where the

11 money comes from. If the region and the MPO finds money

12 out of their formulaic distribution --

13 MR. UNDERWOOD: -- or they want to move money

14 from one other project to this, then they can and it's

15 their option.

16 MR. PENSOCK: Yes, sir.

17 MR. UNDERWOOD: At this time all that we're

18 committing for TxDOT is $849 million, and we're tying down

19 the price to this company for that if the funds can be

20 brought forward by another party, so to speak.

21 MR. PENSOCK: Exactly, yes, sir.

22 MR. UNDERWOOD: Okay.

23 MR. MOSELEY: Chairman, kind of in the spirit

24 of Commissioner Underwood's question, I'd be interested to

25 know what mechanism is in place to receive donations of ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 101

1 right of way to hold down the cost of this initiative.

2 Are there opportunities for the private sector to

3 participate by donating right of way?

4 MR. PENSOCK: The department has the legal

5 ability and structure in place to accept those donations.

6 I believe that has to come in front of you before we can

7 accept those official donations. If I'm wrong, I would

8 request legal counsel to correct me. And we've always had

9 that ability; in the last recent five to ten years,

10 Commissioner, not many people donate much right of way.

11 MR. MOSELEY: And I think perhaps what I was

12 hoping the answer would be, and maybe it can become, is

13 that there would be a vigorous, aggressive communication

14 to the private sector that they can participate. We

15 certainly have this passive response, yes, legally we can

16 receive your donation of right of way, but it would be

17 wonderful if the North Central Texas COG and other allies

18 of this project would step forward, invite the private

19 sector to donate right of way, so that we can stretch the

20 dollars and the projects can be done more rapidly and more

21 cost effectively. And so that's what I would hope, we'd

22 invite maybe the COG to step up, or whoever, that MPO, and

23 open that dialogue so that we can more actively invite

24 that participation.

25 MR. PENSOCK: We will very definitely do that, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 102

1 Commissioner.

2 MR. MOSELEY: Thank you.

3 MR. AUSTIN: I want to follow up. Is that kind

4 of how the Grand Parkway Association was set up many years

5 ago?

6 MR. MOSELEY: That's my understanding, and

7 we're going to have a presentation in a little bit, but

8 it's my understanding that the former chair of the

9 commission, Bob Lanier, had that vision of setting up the

10 Grand Parkway Association to receive donated right of way,

11 and that that's still a part of their mission. But

12 there's certainly more work to be done across the state.

13 Maybe getting the message out is the beginning point.

14 MR. PENSOCK: Commissioner, you're exactly

15 right, and on the Grand Parkway project that you awarded

16 in September, we're working with several of the large

17 property owners on that very issue. Yes, sir.

18 MR. AUSTIN: The last comment I'd like to make

19 is really to the partners in Dallas and Denton County and

20 the region for all working together to finally make this

21 happen, because it took a lot of different funding

22 formulas to work that. And I know there was some

23 heartache, but it's being delivered now. Congratulations

24 to everybody that's been a part of it.

25 MR. PENSOCK: A lot of people spent a lot of ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 103

1 time trying to prioritize and define what was really

2 important, as Commissioner Meadows knows very well.

3 MR. HOUGHTON: Do you want to say something,

4 Commissioner Meadows? Please.

5 MR. MEADOWS: I was going to make a motion when

6 appropriate.

7 MR. HOUGHTON: Not yet, not yet. I have a

8 question. Go back to your points that you assigned.

9 You've got a little over two points between number one and

10 number two, and I saw that 70 percent of it was price.

11 Was the proposed winner a lowest price?

12 MR. PENSOCK: On this specific project, when

13 you took the price of the base contract, the price of the

14 options and the price of the capital maintenance agreement

15 into it, it actually came to 85 percent of the decision.

16 On the 70 points that were awarded for base price,

17 Commissioner, I will tell you that those three bids, on an

18 $850 million nominal cost project, were all within less

19 than $5 million. Incredibly close pricing. We've never

20 seen anything quite that close. I would have to say that

21 statistically those three prices within $5 million on an

22 $850 million deal were all about the same.

23 What was the deciding factor on this and

24 something for us to take forward, if we are able to

25 identify funds working with the region and working with ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 104

1 our partners on any of those options, the big spread came

2 on the pricing of those options, to be honest with you.

3 MR. HOUGHTON: Which resulted in?

4 MR. PENSOCK: Which resulted in a 2-1/2 point

5 difference.

6 MR. HOUGHTON: Okay. I'm waiting.

7 MR. MEADOWS: If it is now appropriate --

8 MR. HOUGHTON: It's a privileged motion from

9 the commissioner from the Metroplex.

10 MR. MEADOWS: -- I would like to move

11 approval. And I understand the hour is late today and I

12 really am going to be very brief, and there is not

13 sufficient time, I don't care how much time we have, to

14 thank all that have been involved in advancing what is, in

15 fact, another billion dollar, or closer thereto, success

16 for the State of Texas.

17 MR. HOUGHTON: Excuse me, Commissioner Meadows.

18 Are you going to have to amend your talking points about

19 the $15 billion of leveraged projects, do we go to $16

20 billion?

21 MR. MEADOWS: No. In fact, this would be

22 included in the $15.4 billion in great success for the

23 State of Texas, and I would say for all of the State of

24 Texas. Excuse me. Any other questions or comments at

25 this point? ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 105

1 MR. PENSOCK: The commissioner had faith that

2 the market would bid it and would be able to get it across

3 the goal line.

4 MR. MEADOWS: I think it's important to

5 recognize just for a moment the fact that the legislature

6 gave us, as the agency, the authority to advance this

7 project two years ago, and we are sitting here today with

8 a project of this magnitude and this complexity and this

9 agency working with the RTC, working with members of the

10 legislature, Denton County, Dallas County, Federal

11 Highways, go down the list of all the people that were

12 actively involved, proactively involved in making this a

13 reality in this extraordinarily short period of time,

14 given, again, the magnitude and the complexity of the

15 project, and I certainly acknowledge, I know we all do,

16 and appreciate every person's involvement in advancing it.

17 And with that, I'd make a motion to approve,

18 and answer any questions the chair might have pertaining

19 to that motion.

20 MR. HOUGHTON: Well, I do want to correct you

21 on your timeline. It was not two years ago, it was

22 roughly 19 months ago.

23 MR. PENSOCK: And the statute didn't come into

24 effect until September 1, so I would calculate 1.427

25 months. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 106

1 MR. HOUGHTON: What we have seen rolled out I

2 attribute to our staff and the consultants and the people

3 in the region. And I do accept that motion. Is there a

4 second?

5 MR. UNDERWOOD: Second.

6 MR. HOUGHTON: All in favor?

7 (A chorus of ayes.)

8 MR. PENSOCK: Thank you.

9 MR. WILSON: Moving on item 9b, establishing

10 toll rate tables for portions of State Highway 99. This

11 item will be presented by Toll Operations Division

12 Director Doug Woodall. Doug.

13 MR. WOODALL: Thank you, sir. For the record,

14 Doug Woodall, TxDOT's director of Toll Operations.

15 Item 9b establishes toll rates for six segments

16 of State Highway 99, Grand Parkway, consisting of the

17 tolled portion of Segment D, Segments E, F-1, F-2, G and

18 I-2. The rates for Segment I-2 in Chambers County replace

19 earlier rates established by the commission in July of

20 2011. Exhibit A to this minute order contains detailed

21 rate tables and toll escalation policy that is consistent

22 with the terms and conditions of the market valuation

23 waiver agreement.

24 This minute order also authorizes the chair of

25 the commission to execute a toll rate agreement with the ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 107

1 Grand Parkway Transportation Corporation. The toll rate

2 agreement is noted in Exhibit B to this minute order.

3 Staff recommends acceptance of this minute

4 order.

5 MR. MOSELEY: So moved.

6 MR. AUSTIN: Second.

7 MR. HOUGHTON: All in favor?

8 (A chorus of ayes.)

9 MR. HOUGHTON: Thanks, Doug.

10 MR. WOODALL: Thank you.

11 MR. WILSON: Item 9c is the Grand Parkway

12 annual report on the status of projects and activities

13 undertaken during the preceding twelve months. Director

14 of Planning Marc Williams will introduce this item. Marc.

15 MR. WILLIAMS: Again for the record, my name is

16 Marc Williams, director of Planning with the Texas

17 Department of Transportation.

18 Item 9c is the Grand Parkway Report, the annual

19 report on the status of projects and activities undertaken

20 during the preceding twelve months by the Grand Parkway

21 Association. The department's administrative rules

22 require the transportation corporation to appear annually

23 before the commission to report on the status of projects

24 and activities. The Grand Parkway Association is making

25 its annual presentation to satisfy this requirement, ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 108

1 joined here today by William F. Burge, who is the

2 president of the Grand Parkway Association Board of

3 Directors, along with David Gornett, executive director of

4 the Grand Parkway Association.

5 MR. BURGE: Mr. Chairman, fellow board members,

6 staff. My name is Billy Burge. I represent the longest

7 surviving member of the Grand Parkway Board.

8 Having said that, and in the interest of time

9 and since we don't have Ned to kick around anymore, and

10 Jeff is a dear friend, I will keep it shorter comments.

11 And it's reduced to this little card right here. This

12 card was issued to me, before I got all my DWIs, in 1991,

13 and it was the Grand Parkway on this side, and board

14 members asked that we have this because it was such a

15 moving target of all the things that we were to

16 accomplish, but we needed to sit down and tell somebody.

17 They never really cared about who got the contracts, et

18 cetera, et cetera, they just said, When can we drive on

19 it?

20 And what this card says from '91 with a table

21 in the back, it goes through all of the gyrations that

22 we've done the last 20 years, it said that we will have

23 traffic running from the current beginning of the Grand

24 Parkway all the way up to Section G, which is the section

25 now under contract, 2012. So for 20 years we were about ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 109

1 2-1/2 years off and that is not bad, considering that

2 that's the majority of the 180 miles that we committed to.

3 So I'd just like to welcome Jeff aboard and

4 appreciate all of the relationship that we've shared with

5 TxDOT and the Grand Parkway Association. It's been a

6 pleasure to be a small part of it. And I'll turn it over

7 to David Gornett.

8 MR. GORNETT: Thank you, Mr. Burge.

9 For the record, my name is David Gornett,

10 executive director of the Grand Parkway Association. I'm

11 here to present the annual report of the association's

12 activities to the commission. Knowing that the hour is

13 late, I will try and keep this as brief as possible.

14 I have the privilege over the last year, two

15 years of working with the many dedicated staff here at

16 TxDOT as they brought forward Segments F-1, F-2 and G, as

17 well as Segment E last year. You've got a great team of

18 folks here that are working on the project, and it's truly

19 an honor to be associated with them.

20 Twenty-eight years ago the Grand Parkway

21 Association was formed. As Mr. Burge pointed out, we have

22 been working for quite a while, it's taken a while to get

23 this far, but you see a lot of progress has gone on.

24 During year 2012 we've had the DEIS for Segment B

25 approved, the FEIS for Segment C approved. Fort Bend ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 110

1 County awarded eight contracts for the construction of

2 overpasses in Segment D where Fort Bend County has primacy

3 there. That is in the areas where the freeway was not

4 constructed in the initial phase of construction in 1990

5 through 1993, so they're going back in and completing

6 those overpasses as a partner with TxDOT.

7 TxDOT awarded two additional direct connectors

8 at I-10; they opened two direct connectors at I-10 during

9 Fiscal '12. If you were to drive on the westbound to

10 southbound connector, I am told you are driving in the

11 highest point in Harris County that you can drive a car

12 through as you go up that direct connector and head south

13 on the Grand Parkway.

14 We have had the opportunity to see Segment E

15 construction continue and advance, even though we were

16 stalled for a bit with some archaeological remains. The

17 staff here worked through that with Harris County and

18 we've been able to get construction to now continue to

19 resume on Segment E, at least that portion right there at

20 Cypress Creek.

21 Segment F-1, F-2 and G, the RFP process was

22 completed. You actually awarded or conditionally awarded

23 the contract for F-1, F-2 and G during Fiscal '13.

24 Segments H and I-1, we're looking forward to advancing

25 that, we're working on the final environmental impact ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 111

1 statement now, and we've been collecting tolls, you've

2 been collecting tolls on Segment I-2 since November of

3 last year.

4 And this year, as we move into 2013, we look

5 forward to completing the Segments B, D, I, F, to getting

6 a record of decision on Segment C which will start the

7 clock on Fort Bend County with the timetable for them to

8 implement part of Segment C. They have two years from the

9 date of environmental documentation which we have

10 interpreted as the record of decision. Fort Bend County

11 plans on having its eight overpasses that it has under

12 construction completed in December of 2013. Segment E

13 will be completed in December of 2013.

14 And during 2013 we anticipate the completion

15 with Zachry Odebrecht Parkway Builders and that they will

16 be under construction on Segments F-1, F-2 and G. We also

17 have approval of the Phase 2 of Segment I-2 so that we can

18 advance that, add an additional bridge over Cedar Bayou

19 between Harris County and Chambers County to better move

20 traffic to and from the port region of Houston.

21 With that, that completes my short report, and

22 if you have any questions, I'd be glad to try to answer

23 them.

24 MR. HOUGHTON: Any questions, Commissioner

25 Moseley. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 112

1 MR. MOSELEY: Chairman, I just wanted to say

2 thanks to Billy Burge and David for their leadership.

3 Billy, thank you for your years of dedicated service. As

4 we talked earlier, I know this was a vision of dear friend

5 Bob Lanier. He could see the value of this 180-mile

6 reliever and now we really understand that vision with the

7 discussions on Panama Canal and Intracoastal. This is a

8 strategic corridor that serves the state's interests.

9 And David and I met yesterday and just wanted

10 to kind of commit to help. I know that there's a big task

11 of pushing this project to completion, and I guess the

12 good news, Chairman, is that with the most recent award of

13 bid to H.B. Zachry and Odebrecht, that the bid was

14 competitive such that there are funds available to

15 contemplate another section or perhaps acquiring the

16 balance of the right of way.

17 And what David and I were visiting about

18 yesterday is now more than ever would be a time to really

19 invite the donation of right of way which, again, was the

20 vision of creating the Grand Parkway Association. And I

21 think, David, you told me that Bob Lanier's vision was

22 that 70 to 75 percent of the right of way was kind of the

23 goal of donations, and so I want to commit to help you. I

24 think we're falling behind on that total.

25 But let's go back with some good news. The ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 113

1 good news, I think, is that we have, because of a very

2 competitive bid process, we've got funds available that

3 those dollars combined with donations of right of way,

4 combined with the good will of this region, we may be able

5 to significantly bring to completion sections of this

6 roadway that otherwise might have to sit another 25 or 30

7 years.

8 So I thank you. And if you want to respond,

9 David, feel free to do so, or Billy, but I appreciate what

10 you're doing.

11 MR. GORNETT: It's unfortunate. I noticed

12 Commissioner Brown was here earlier from Liberty County,

13 who has been a strong advocate of the Grand Parkway in the

14 Liberty County area. It would be good words for him to

15 hear as we look forward to working with Liberty County,

16 Chambers County and that to try to secure some donations

17 and to accelerate development of Segments H and I-1 with

18 these additional resources that are available.

19 MR. BURGE: Thank you, Jeff. That's words that

20 we knew would come from you, and I'm going to close right

21 now. But as you know, we've got the momentum going, and

22 this momentum, hopefully, as you said, is enough to take

23 up what is referred to as the weak links of this 180 in

24 terms of building it up, and if we can do that, just like

25 the Hardy Toll Road, once we tied that in to the loop ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 114

1 around the city, it works. So thank you again for your

2 commitment and your understanding.

3 Mr. Chairman, I saw you at Eddie V's last night

4 but I had my niece with me so I couldn't come over and say

5 hello. Didn't mean to ignore you.

6 MR. HOUGHTON: I saw your niece. Thank you,

7 Billy.

8 Any other questions? This is a report. Any

9 action? No action. Okay.

10 Thanks, David.

11 MR. MOSELEY: Thanks, David.

12 MR. WILSON: Next up is item 10 awarding

13 transportation development credits to Red River County.

14 This item will be presented by Direct of Planning Marc

15 Williams.

16 MR. WILLIAMS: Again for the record, Marc

17 Williams, director of Planning.

18 Item 10 is the award of transportation

19 development credits to Red River County. The award of the

20 transportation development credits will provide the non-

21 federal match associated with the paving of two county

22 roads connecting FM 1158 and 1159 northeast of the City of

23 Clarksville.

24 SAFETEA-LU authorized $1,001,475 in federal

25 earmark funds for the paving of these county roads ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 115

1 connecting these FM highways. This work is needed to

2 improve safety, as well as address some timber activity

3 that is occurring along that route. The Paris District is

4 requesting the discretionary award of the development

5 credits in an amount not to exceed $250,369 to be used as

6 the non-federal match associated with the earmark, and the

7 Paris District will be responsible for the paving

8 contract.

9 I'm available to answer any questions. Staff

10 recommends approval of this minute order.

11 MR. MOSELEY: So moved.

12 MR. MEADOWS: Second.

13 MR. HOUGHTON: All in favor?

14 (A chorus of ayes.)

15 MR. HOUGHTON: Thank you, Marc.

16 MR. WILSON: Item 11 is the approval of updates

17 to the 2013 Unified Transportation Program. Director of

18 Planning Marc Williams will continue. Marc.

19 MR. WILLIAMS: Once again, Marc Williams,

20 director of Planning.

21 Item 11 is the quarterly update of the Unified

22 Transportation Plan. The 2013 UTP was approved by the

23 commission on April 26 of 2012 and revisions to the 2013

24 UTP have been implemented by the commission on June 28 of

25 2013, August 30 of 2012, and October 25 of 2012. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 116

1 A public meeting was held on Thursday, October

2 18 of 2012 to discuss the 2013 UTP revisions and a formal

3 public hearing was conducted on Monday, November 5 of 2012

4 at 10:00 a.m. Comments were accepted until November 19 at

5 4:00 p.m. No comments were received.

6 The issues that are addressed in this update of

7 the UTP include funding level adjustments due to fund

8 transfer requests, reconciliation of Category 5 and

9 Category 7 federal funds to our transportation management

10 associations, revised project specific program lists to

11 authorize or de-authorize funding, updates to tier project

12 exhibits, and other minor revisions or technical

13 corrections.

14 I'm available to answer any questions, and

15 staff will recommend approval of this minute order.

16 MR. HOUGHTON: Motion?

17 MR. MOSELEY: So moved, Chairman.

18 MR. AUSTIN: Second.

19 MR. HOUGHTON: All in favor?

20 (A chorus of ayes.)

21 MR. WILSON: The next items are the award of

22 contracts for maintenance and department building

23 construction and highway construction contracts. John

24 Obr, Construction Division director, will present these

25 minute orders. Item 12a. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 117

1 MR. OBR: Good morning. For the record, I am

2 John Obr, director of the Construction Division.

3 Item 12a is for consideration of the award or

4 rejection of Highway Maintenance and Department Building

5 Construction contracts let on December 4 and 5 of 2012.

6 We present 28 projects today. The average number of bids

7 per project was 4.82; the low bid value was

8 $29,401,247.45; and we had an overall underrun of 8.3

9 percent.

10 Staff recommends award of all maintenance

11 projects.

12 MR. HOUGHTON: Motion? Questions on anything?

13 Motion?

14 MR. AUSTIN: So moved.

15 MR. UNDERWOOD: Second.

16 MR. HOUGHTON: All in favor?

17 (A chorus of ayes.)

18 MR. WILSON: John, please proceed with item

19 12b, construction contracts.

20 MR. OBR: Item 12b is for consideration of the

21 award or rejection of Highway and Transportation

22 Enhancement Building Construction contracts let on

23 December 4 and 5, 2012.

24 We present 67 projects today. The average

25 number of bids per project was 4.58; the low bid value was ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 118

1 $267,671,783.76; the awards are split as six projects in

2 Mobility totaling $111,315,847.31, and 61 projects in

3 Preservation totaling $156,355,936.45; we had an overall

4 underrun of 1.07 percent.

5 Staff recommends award of all construction

6 projects with the exception of the following: Tarrant

7 County project number HP 2008(345). This project was

8 deferred at November's commission meeting and at this time

9 we are requesting further deferral to January. The

10 project received eight bids. The low bid on this project

11 was 14.8 percent, or $2.9 million over the engineer's

12 estimate. The project is for miscellaneous work,

13 consisting of grading, paving, drainage, pavement

14 markings, signing, et cetera. The required railroad

15 agreements for this project are not yet finalized. An

16 additional month's deferral would afford the district the

17 time needed to finalize and execute the required

18 agreements. We are, therefore, recommending that the

19 decision to award or reject be deferred to the January

20 2013 commission meeting.

21 We also received a claim for an alleged bid

22 error this month from a McCulloch County project STP

23 2013(265). Three bids were received for this project.

24 The low bid on this project was 11.48 percent, or

25 $860,129.91 over the engineer's estimate. Within the time ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 119

1 allotted in the Texas Administrative Code, Title 43, Part

2 1, Chapter 9, Subchapter B, Rule 9.16, the contractor,

3 Prater Equipment Company, Inc., notified the department of

4 alleged error in their bid. In the presentation of their

5 bid, the contractor failed to include adequate labor and

6 equipment costs in their price for one of the major items

7 of the contract, item 247, Flex base and final position.

8 The contractor alleges that a mathematical

9 error occurred when transferring their final numbers from

10 a handwritten document to our electronic bidding system.

11 Our analysis of the bid in question reveals that the bid

12 does not appear to meet the criteria of a bid error as

13 outlined in Rule 916 of the TAC. Further, our analysis

14 revealed that in preparation of their bid, the contractor

15 failed to exercise ordinary care by failing to ensure that

16 all items of work had been included in their bid total.

17 Therefore, we are recommending award of this contract to

18 the apparent low bidder.

19 MR. HOUGHTON: Any questions of John? Is there

20 a motion?

21 MR. AUSTIN: I move we approve, Mr. Chairman.

22 MR. HOUGHTON: Second?

23 MR. MOSELEY: Second.

24 MR. HOUGHTON: All in favor?

25 (A chorus of ayes.) ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 120

1 MR. WILSON: That brings us to item 13, Eminent

2 Domain Proceedings. Right of Way Division Director John

3 Campbell will present this minute order.

4 MR. CAMPBELL: Good morning. For the record,

5 my name is John Campbell. I'm the director of the Right

6 of Way Division. I also am a native-born Aggie and I'm a

7 proud member of the class of 1984.

8 I'd like to present for your consideration this

9 morning item 13 which authorizes the filing of

10 condemnation proceedings necessary to progress the

11 acquisition of 10 non-controlled and 19 controlled access

12 parcels by the exercise of eminent domain for a total of

13 29 this month.

14 Staff recommends your approval of the minute

15 order.

16 MR. MOSELEY: Chairman, I move the Texas

17 Transportation Commission authorize the Texas Department

18 of Transportation to use the power of eminent domain to

19 acquire the properties described in the minute order set

20 forth in the agenda for the current month for

21 construction, reconstruction, maintenance, widening,

22 straightening, or extending the highway facilities listed

23 in the minute order as a part of the state highway system,

24 and that the first record vote applies to all units of

25 property to be condemned. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 121

1 MR. HOUGHTON: Is there a second?

2 MR. AUSTIN: Second.

3 MR. HOUGHTON: All in favor?

4 (A chorus of ayes.)

5 MR. HOUGHTON: Thank you, John.

6 MR. WILSON: Item 14 contains the routine

7 minute orders, including donations to the department,

8 right of way dispositions and donations, highway

9 designations, redesignation of access rights, public

10 transportation, reports and speed zones. Department staff

11 recommends the adoption of all of these items, and will be

12 happy to explain any of these individual items as needed.

13 MR. HOUGHTON: Any other business before the

14 commission? Do we have anything?

15 MR. AUSTIN: I move we approve this item.

16 MR. HOUGHTON: The routine minute orders.

17 MR. UNDERWOOD: Second.

18 MR. HOUGHTON: All in favor?

19 (A chorus of ayes.)

20 MR. HOUGHTON: Trying to jump ahead, trying to

21 get out of here before noon. Go ahead.

22 MR. WILSON: This concludes the action items on

23 today's agenda, so Mr. Chairman, I will hand the meeting

24 back to you.

25 MR. HOUGHTON: Thank you. And it's been a ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 122

1 wonderful year, I think, Bill, with what's happened in the

2 Metroplex today topping it off, I-35E.

3 Chairman's prerogative, John Barton, will you

4 please approach the podium? John, since the University of

5 Texas and the Texas A&M University do not play football

6 anymore -- it's unfortunate but that's the way it is --

7 there's a poll out back here that's currently burnt orange

8 and white, I think in commemoration and in honor of the

9 Heisman Trophy, that should go maroon and white. Can you

10 undertake that direction from the chair?

11 MR. BARTON: I will gladly accept that

12 directive from the chair.

13 MR. HOUGHTON: Thank you very much.

14 MR. AUSTIN: Mr. Chairman, we just named, in

15 Tyler, Earl Campbell Parkway. So John, are we going to

16 have to work and try to figure out something for the

17 Johnny Manziel Parkway too?

18 MR. HOUGHTON: Not yet.

19 MR. BARTON: Not yet. I think I would allow

20 him to finish his collegiate career first because he may

21 be, quite honestly -- I think that to date Archie Griffin

22 is the only Heisman Trophy winner that's won more than

23 one, and so I think that it may be fitting that we wait to

24 see if the one and only Johnny Manziel wins more. So

25 we'll have to wait until then. ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 123

1 MR. HOUGHTON: With that said, this completes

2 all the items on the agenda, and the most privileged

3 motion.

4 MR. AUSTIN: I move we adjourn.

5 MR. HOUGHTON: Is there a second?

6 MR. MOSELEY: Second.

7 MR. HOUGHTON: We are adjourned.

8 (Whereupon, at 11:49 a.m., the meeting was

9 concluded.)

ON THE RECORD REPORTING 12/13/2012 (512) 450-0342 124

1 C E R T I F I C A T E

2

3 MEETING OF: Texas Transportation Commission

4 LOCATION: Austin, Texas

5 DATE: December 13, 2012

6 I do hereby certify that the foregoing pages,

7 numbers 1 through 124, inclusive, are the true, accurate,

8 and complete transcript prepared from the verbal recording

9 made by electronic recording by Nancy H. King before the

10 Texas Transportation Commission. 11 12 13 14 15 16 12/27/2012 17 (Transcriber) (Date) 18 19 On the Record Reporting 20 3307 Northland, Suite 315 21 Austin, Texas 78731 22

23

ON THE RECORD REPORTING 12/13/2012 (512) 450-0342