Funding Texas Highways

[Here is something I posted on the ANC (Austin Neighborhoods Council list) yesterday, intended to raise the key issue of just where TxDOT plans to go to borrow the half billion dollars they need but don’t have, to build the roads they still want.

The roads in TxDOT’s new “financially constrained” TIP plan are very nearly the same toll roads they wanted earlier, but now with a billion dollars suddenly shaved off the cost.

How can you POSSIBLY plan a road without knowing the interest rate on your loan and thus the tolls and the toll revenues needed to pay back the loans? Are costs not a vital and integral part of the planning?

TxDOT evades this key issue by assuming that money will appear when they will turn over the issue of financing to the CTRMA. The CTRMA will wave a magic wand and the roads TxDOT wants will somehow be affordable and bankers will be lined up to offer the loans to build the roads.

The truth is that the CTRMA is an unelected puppet agency closely controlled by TxDOT, and functions as a sort of financial firewall, so that when the toll road bonds default due to rising energy costs, TxDOT won’t have to bail out the roads. The angry bond lenders will have to try to squeeze the money out of the CTRMA.

But this only shifts the question of where the CTRMA is going to find lenders stupid enough to bankroll roads designed to facilitate many decades of hypothetical future sprawl growth.

As I see it, these roads are a publicly funded roadway construction bubble struggling to prop up a suburban sprawl home building bubble.

Has anyone noticed that Mayor Will Wynn, who has started to channel Al Gore on the topic of global warming (and McCracken here too), never mentions global warming at the CAMPO meetings? Even though these roads are a giant leap in the direction of making global warming worse. In this way Wynn reminds me of a preacher preaching against sin on Sunday but occupied in sinning the rest of the week. — Roger]

************************************

I basically agree that transportation shapes the city and its issues in many ways. In all large growing cities, car mobility breaks down, and this syndrome leads to gentrification, which is another hot button issue on this list.

Traffic and congestion are directly tied to land use and mixed use development and smart growth issues. In other words transportation/land use policies are tied to most neighborhood issues in one way or another.

Since car congestion generally keeps getting worse as car-centric cities grow, public transportation is eventually forced to play a mobility-preserving role, as the only other important option available (even bikes become unsafe where cars rule). Light rail doesn’t work as well as it could in Houston, but its better than nothing as a new alternative; they did it for lack of any better alternative now that car congestion is insoluble.

And it is also true that TxDOT and the road lobby are now engaged in a strong and well-funded political campaign to pressure CAMPO to approve about a billion dollars worth of toll roads for construction on Oct. 12.

These would if built permanently change the future of Austin by hugely subsidizing travel to and between the suburbs. Some core city roads like US 183 and 71 to the airport will be tolled by the CTRMA to help generate the cash to build other more directly sprawl- stimulating roads like US 290 W, which is largely designed to stimulate new development in Hays County.

Only federal environmental regulations are slowing down the letting of these road contracts (when you change a free road to a toll road, federal regulations force you to redo the environmental studies, which takes years).

You can surmise that from all the spots on KUT being sponsored by ‘TakeOnTraffic’, which is the Chamber of Commerce’s wing of the road lobby. The road lobby is supported by many special interests, but in particular the big road contractors and their local beneficiaries, the land developers and the banking interests.

Whenever there are big money and special interests involved, they often tend to win out in Texas. Even in Austin, as those involved in fighting WalMart at Northcross can see. And in the latter case they are a relatively united neighborhood group.

If the road lobby wins and TxDOT builds its big sprawl-magnet toll roads extending along both ends of US 290, then we local taxpayers will be on the hook if anything goes wrong. There are serious local bond-lender penalties if the traffic doesn’t show up and the bonds default. (Tony Sanchez’s public/private toll road in South Texas defaulted, forcing TxDOT to bail it out with public money).

The big problem with actually building the toll road network that TxDOT and the road lobby are now trying to get approved is that these roads are based on a combination of easy credit, cheap oil, and stupid bond lenders!

Their construction costs and the funding shortfalls both have been skyrocketing. The funding gap announced by TxDOT to CAMPO went up a billion dollars in one month! Most of the funding gap is ironically because we are fighting a war in Iraq (to satisfy what Bush has termed our “addiction” to oil).

And the costs of the war are so great that they are forcing the feds to take back promised federal gas tax revenues. Plus road maintenance costs are going up and road paving done with asphalt has gone up sharply with the price of oil, since asphalt is derived from petroleum. In other words the road funding gap is largely due to oil.

So assume we tie the future of Austin to all these proposed but increasingly unaffordable toll roads, would congestion get any better? No, according to TxDOT and CAMPO, congestion will get much worse in Austin even if we do build these roads.

In other words, if there was ever a blue ribbon example of “costs too much, does too little”, it would be these $1.5 billion worth of toll roads that TxDOT and the road lobby are now heavily, and I believe desperately, promoting.

In this context, rail-bashing should be seen as an attempt to draw attention away from the far worse cost-benefit failings of the roads being proposed as the alternative to any rail.

Assuming we do find bankers actually willing to lend us the bond money at a cost we can afford, and all goes exactly as planned, then the resulting congestion will be far worse than today.

So we’re screwed, right?

No, because the price of oil and thus the cost of driving is going to go up much faster than the bonds can be paid off. I think most bond lenders can see that now.

But the other toll road bond killer is that current credit conditions are rather abruptly causing nearly all long term bond lenders to reevaluate the rose-tinted optimism behind these very kinds of projects. Remember that even in the easier-credit days when the CTRMA financed US183A, its bonds were rated little better than junk bonds.

But what will the proposed toll bond ratings and interest rate be two years from now when TxDOT finally gets its environmental clearances? Will we still find bond lenders willing to front cash for major new toll roads linked to TxDOT’s future sprawl development projections?

Below is a link that might be relevant to that question.

Roger Baker, Delwood II

************************************

After oil supplies dry up, what’s Plan B? Extreme scarcity could be disastrous for U.S. economy
Erica Etelson, San Francisco Chronicle
Sunday, August 26, 2007

When Hurricane Katrina struck two years ago, Americans learned just how ill-equipped the government is to respond effectively to natural disasters. But if you think the government’s response to Katrina was inept, brace yourself for peak oil.

Global oil production will hit its peak in the next few years, at which point oil prices will skyrocket and voracious consumers like the United States, China and Europe will quickly drain every last barrel they can afford to buy. Our per-capita oil consumption is double that of most European nations and more than triple Mexico’s, and shows no sign of slowing. As supplies dwindle, an economic disaster on a par with Katrina will start to unfold.

Global oil demand is at 84 million barrels a day and rising, and there are at most a trillion barrels’ worth still in the ground, most of which is very difficult and expensive to recover. Do the math, and you’ll see that the end of oil is, at most, 30 years away.

But long before oil actually runs out, economists and energy analysts warn that extreme scarcity will cause prices to soar so high that it will no longer be feasible to use petroleum on a wide scale. It is the imminence of this supply-demand shortfall that has people like National Petroleum Council member Matthew Simmons and Reps. Roscoe Bartlett, R-Md., and Tom Udall, D-N.M., worried – very worried – about our economy’s ability to withstand the end of oil.

Cheap and plentiful oil is the foundation of our economy. Everything from food production and distribution to the manufacture of clothing, footwear, medications and plastic goods relies heavily on petroleum. You name it, and we need oil to produce it, ship it and, in many cases, run it.

In February, the U.S. Government Accountability Office dropped a quiet little bombshell: a report on peak oil concluding that there is an urgent need for a swift, coordinated government strategy to assess and develop alternative energy technologies to avert “severe economic damage.”

The agency concluded: “(T)he United States, as the largest consumer of oil and one of the nations most heavily dependent on oil for transportation, may be especially vulnerable among the industrialized nations of the world.” Stark though its conclusion is, the GAO may in fact be understating the gravity of the situation.

The report followed on the heels of a 2005 peak oil risk management report commissioned by the Department of Energy, which warned of the “extremely damaging” and “chaotic” impacts that will ensue if “intensive,” “aggressive” and “expensive” mitigation measures are not put in place at least 10 years ahead of time. Both reports landed with a dull thud and have been dutifully ignored. In other words, there is no Plan B.

Source

This entry was posted in RagBlog. Bookmark the permalink.

Leave a Reply

Your email address will not be published.