BIKE: CAMPO hearing tomorrow

[rcbaker]

[Here is the leaflet I worked up to pass out at the toll road hearing at the
LBJ autorium tomorrow. Toll roads are poison for bikes, needless to say. If
you want to speak try to sign up before 6 pm. -- Roger]


The Toll Roads to Hell are
paved with ...

The truth about the $2.2 Billion TxDOT/CTRMA toll road
proposal  -- by Roger Baker


FACT: Toll roads are special interest politics chasing the deteriorating
economics of status quo road-building, land use policy, and land
investments.

Roads in Texas are guided by politics, usually benefiting the real estate or road
construction industry. In fact, the Chair of Citizens for Mobility now promoting
these roads is Pete Winstead, who previously served as director of the Texas
Turnpike Authority while at the same time heading the Real Estate Council of
Austin, a real estate lobby Group. If that is not a conflict of interest, then what is
a conflict?

The groups that recently agreed to unite in support of  the $2.2 billion proposal
are typical special interests linked to roads and real estate; œThe Greater Austin
Chamber of Commerce, the Real Estate Council of Austin, the Capitol Area
Transportation Coalition, the Austin Commercial Real Estate Society, the
Dripping Springs Chamber of Commerce and the Association of General
Contractors have endorsed or are in support of the toll plan, according to
Citizens for Mobility, a privately financed advocacy group. œ -- Austin Business
Journal , Friday May  7, 2004.

TxDOT is a bureaucracy that often dominates local road policy by threatening
to withhold funds if local governments do not go along with the policies it
prefers. Now TxDOT wants to dramatically shift Its state policy from traditional
pay-as-you-go roads to deficit spending backed by tax free municipal revenue
bonds. Many downsides to this policy are apparent. Rick Perry's Trans-Texas
Corridor Plan is a statewide plan that matches this $2.2 billion toll road package
with $180 billion roads of its own, also requiring a massive statewide shift to
deficit spending. You can read about the many problems associated with trying
to perpetuate road-building as usual, based on deficit spending, at the following
website: www.corridorwatch.org

FACT: The claim that free roads will always be available as an alternative
to these toll roads is not very realistic in practice.

The proof of this fact is that obviously no bond houses would be willing to lend
money to build toll roads if large numbers of drivers would find it practical to
avoid the tolls for common everyday use. The free roads are essentially frontage
roads with lots of stop lights to be built along the sides of the existing roads,
which are now proposed to be tolled. The promise of a free alternative is being
used as a political sweetener to get the roads approved, but the reality is that the
roads would not pay if very many people could use this alternative successfully.
The reality is that many current drivers in the Austin area will end up paying an
extra $5-10 per day for tolls -- in addition to higher gasoline prices as far as
anyone can see into the future. This combination of  new cost factors is likely to
change travel patterns over a period of time, which makes these roads risky
long-range investments.


FACT: Roads do not cure traffic congestion problems; you cannot build
your way out of congestion and no American city has yet succeeded in
doing so!

As they say, if you dig yourself into a hole, it is best to stop digging. By
comparison,  TxDOT™s approach might be compared to borrowing the money to
buy a bigger shovel. The most fundamental reason that congestion has gotten
worse in most metropolitan areas of the United States, and Austin especially, is
not because of a lack of roads so much as unsustainable sprawl development
that constantly becomes costlier per capita over time.

Ringing our cities with ever-expanding layers of low density sprawl is not an
affordable policy in the long run. Naturally the special interests that thrive on
this mode of development will strive to pursue currently profitable trends
despite the unsustainable funding implications. WalMart-ization and suburban
sprawl make car trips necessary for virtually every trip away from home.

Moreover, in the case of the Austin area, the growth trends being used to justify
the future travel demand for the toll roads are actually a mindless extension of
the suburbanization trends of the 1990's boom decade -- based on the local
expansion of the high tech industry, and particularly the growth of Dell
Computer in Williamson County. Toll roads amount to a public subsidy for
future infrastructure based on both the magnitude of growth and the growth
distribution patterns of the past. That may be good for the special interests often
associated with roads, but not for average property taxpaying citizens.

FACT: Rising gasoline and fuel costs threaten municipal revenue bond
default.

The United States is essentially addicted to cheap imported oil to power nearly
all its transportation. Even with every world oil producer pumping oil at the
maximum rate possible, the US cost of imported oil is now about $40 a barrel.
What is more, this situation will only get worse with time according to a
growing consensus of experts. We have not discovered any giant new oil fields
since the 1970™s and we are now using about four times as much as we are
finding worldwide. Hydrogen car hype notwithstanding, there is no practical
substitute for fossil fuel. An increase in fuel costs will inflate the costs of food
and most other living costs.  The only practical solution to the problem is
through slow improvements in fuel economy as they try to drive less and shift to
smaller cars, as we saw in the energy crisis of the 1970˜s. Gambling on the fact
that current trends will remain the same over the decades of the proposed toll
road bonds is a likely recipe for financial disaster.

However, the œofficial statement presented to the bond houses on the first
group of toll road bonds (CTTP) stated that the bonds seemed to be good
investments  so long as œFederal and state tax increases will not increase to the
extent that, together with fuel price increases, pump prices do not exceed $2.50
per gallon¦ (and furthermore) No radical changes in travel modes, which
would drastically curtail motor vehicle use, is expected during the forecast
period (this meaning the 40 year life of the bonds!)

FACT: The loss-of-funds-threat cited by TxDOT  as justification for
immediate approval of the toll roads is based on provably unrealistic
numbers.

TxDOT is using the argument that we could lose vast amounts of money to
areas like Dallas and Houston if we do not approve the $2.2 billion of toll roads
immediately to capture a big share of the Texas Mobility Fund. If you look at
the pie chart showing sources of funding, $161 million is proposed to come
from the Texas Mobility Fund. However according to the Texas comptroller,
this brand new state fund brought in only $12 million statewide between Sept
2003 and April 2004 (eight months). Thus the total revenue stream is only about
$20 million per year -- far short of the $250 million a year that TxDOT is
announcing as the basis for its $161million funding projections and being used
to argue for immediate approval (see Ben Wear˜s April 13 Austin Statesman
story on toll roads).

FACT: The CTRMA proposing the toll road package is an unelected body
that chose the roads on the basis of politics as opposed to  professional
traffic modeling and financial planning.

CAMPO is currently doing a 25 year long-range plan to update and replace its
year 2000 plan. This must happen every five years, under federal law. Yet the
$2.2 billion toll road package has not been included as part of this federally
mandated traffic modeling and revenue study process. The $2.2 billion toll road
package is being heavily lobbied by the special interests for immediate approval
without this careful study integrated comparison of all travel modes and impacts
and likely revenues and other transportation implications, and as normally
required by federal law, and as would be the case if these roads were part of the
normal planning process. These roads are the result of political pressure seeking
to pressure the planners and politicians into giving fast approval on the grounds
that we will lose money if we don™t approve them immediately.

FACT: It is not true that if the toll road bonds default, only Wall Street
investors will suffer.

The Travis County bailout of the Southwest Parkway a decade ago is local
proof that a default on bonds would seriously affect the credit rating of local
governments. The bond houses are willing to extend credit to local governments
only so long as they have a good track record of only issuing bonds for sound
investments. When NYC defaulted on its bonds in the 1970™s, the NYC banking
community took emergency action to pay off the investors so they could keep
on borrowing. There is a big price to be paid for all future bonds issued by local
governments if municipal revenue bonds default. That is why local governments
go to great lengths to try to repay bond investors and preserve the reputation of
local government borrowers on other bonds.

FACT: Bond houses and TxDOT financial advisors warn against the
transfer of CTTP money assumed to help pay for an unrelated toll road
bond package -- as the financial pie chart indicates.

The official transcript of the March 2004 Texas Transportation Commission
meeting documents this fact, and is posted on the TxDOT website. Not only
should cost savings from one group of bonded projects not be transferred to
other unrelated bonds, but the CTTP projects have savings only in the first
phase, which may well disappear as the project proceeds. If you look at the pie
chart being proposed by TxDOT and the CTRMA, $220 million is proposed to
be transferred from the CTTP projects to these new toll roads.

Here is what TxDOT™s Toll road authority director Phil Russell testified with
regard to the appropriateness of transferring these savings to the new roads;
œ¦our discussions with the bond market have indicated that they want that
money to stay on this project till we complete the constructions. And number
two, I wish I could stand up here and say that every time I come up here I'll
keep showing that that number is getting larger and larger, that it's going further
and further under budget. That obviously won't be the case; we'll suffer through
some of those where it drops and hopefully there will be other times where it
moves up, but it will vacillate up and down on these reports. We've also, I think,
tried to caution people against being too disappointed or too excited about these
quarterly reports. It's a long project, it's a five-year project, and I think on 130
we had four or five months now of construction activity, we're on time, and it's
still pretty early to have any sort of definitive conclusionsœ.

FACT: The pattern we see now is that interest rates are headed up and
many local governments issued bonds now seen as risky during the high
tech boom era of the 1990™s; they are now scrambling to issue even more
bonds to fight a rising tide of red ink.  What is more, toll roads have an
especially bad reputation within the municipal bond industry.

œ¦The biggest problems are toll roads. Of the 10 major ones constructed since
the mid-1990s, nearly half carry far less traffic than projected. Some $4 billion in
toll-road bonds risk default over the next five years unless they're refinanced,
estimates Robert H. Muller, a municipal bond analyst at J.P. Morgan Securities
Inc. Among the problem roads is the $200 million, 16-mile Southern Connector
in Greenville, S.C. Designed to steer traffic toward some private developers'
planned projects, the road opened just as the recession hit in February, 2001.
Drivers detour to avoid the $1.50 toll, so less than half the projected 28,000
commuters use it daily. Some blame consultants hired to assess the projects.
"There is a history of feasibility studies for toll roads being overly optimistic,"
says John J. Hallacy III, director of municipal bond research for Merrill Lynch &
Co. Greenville officials say the local economy will eventually generate the
traffic. But Richard Few Sr., chairman of Connector 2000 Assn., which oversaw
the road's financing and construction, concedes that investors wouldn't get much
in a default. Control of the road would revert to the state--not the
bondholders¦   http://www.cdfa.net/cdfa/press.nsf/pages/397  --  Dean Foust;
Business Week

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