Commentary

Reason.org
March 16, 2007

Debunking Claims About Texas Toll Roads
Republicans dish false information about public-private partnerships in Texas
By Peter Samuel

There's a lot of wild and woolly talk in Texas about the threat of private toll roads right now. It wouldn't be so surprising if it were coming only from property owners feeling threatened or from the usual groups who oppose anything involving automobiles. What's weird is how some conservatives are joining the anti-toll road groups and adding to the confusion with misinformation.

State Sen. Jane Nelson (R-Lewisville), for example explained her support for a two-year freeze on toll concessions in a statement on her website, every single sentence of which is false. She says of the toll concessions: "non-compete clauses prevent the state from building roads that would compete..."

In fact, section 11.3.1.1 of the State Highway 130 5 and 6 concession contract says that TxDOT will have "the unfettered right in its sole discretion at any time and without liability to... add capacity..."

The state may have to compensate the concessionaire if he can show the added capacity beyond that provided for in existing plans damaged toll revenues. An identical clause is in the State Highway 121 concession.

Nelson's statement also claims next that "buy-back provisions require us to repay the up-front money." I've read and searched through both concessions signed to date. No such provisions for repayment exist.

Then she says "the operators have unlimited authority to raise toll rates." That is untrue, too. Exhibit 4 of the 130 5 and 6 concession titled “Toll Regulation” has three pages describing the formula for regulating maximum toll rates. The 121 contract has similar provisions which spell out limits to toll rates set by the concessionaire.

Nelson speaks of a "rush" to build toll roads. To those of us who have been following the process it hasn't been a rush, but a protracted process over several years. For each and every project expressions of interest have been solicited, briefings given, statements of qualifications submitted, qualified companies invited to make proposals, proposals assessed, preferred concessionaires evaluated, and negotiations undertaken.

Of course the common criticism of government is that it takes forever to get things done so I suppose the charge they are in a "rush" here to provide new roads could be taken as a compliment. I've had my own criticisms of TxDOT's approach. I don't think they've ever developed any coherent rationale for the mixing of tax monies and toll financing, and they have been secretive at times. However when those secrets have been busted open - as in the case of the State Highway 130 5 and 6 concession - no scandal has emerged. The state auditor's report didn't find any huge problems in the Corridors program, just some improvements of process that are needed.

State Sen. Robert Nichols (R-Jacksonville), lead sponsor of the freeze legislation, says "We must closely evaluate private toll contract provisions before we sign away half a century of control of our transportation system."

Those contract provisions are available on TxDOT's website for download and evaluation, and yes the senators should evaluate them, because it is crystal clear they have not done so to date. If they had read them - admittedly they are hard reading - they would see that they maintain public control. What they turn over to private operators is the right to operate the toll business side of the highways they build - the right to raise the capital, to employ operations staff and to collect tolls - all under terms laid down by the state.

The objection to “foreign” companies running a toll business in Texas is ridiculous. We drive foreign made cars, running largely on foreign fuel, watch TVs made in foreign countries, wear clothes manufactured overseas, and enjoy a standard of living and way of life based on international trade. It happens that companies in Spain, Australia, France and Italy have done toll roads as a business much longer than any company in the U.S. Certainly, their interests are in making a buck, just like American companies, but they have to work within our rules.

Ownership, policing and security on the roads will remain fully under state control.

The freeze is a fraud. It will halt the whole toll concessioning process in which Texas has shown the way to the rest of America in harness the private sector to public purposes. By all means you should scrutinize and debate and amend, but reject this freeze.

Peter Samuel is editor of TollRoadsNews.com and a research fellow at Reason Foundation. Reason's transportation research and commentary is available here.