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Below is the HillCo client report from the August 26 House Transportation Committee hearing.

The committee met to consider the following issues and interim charges:
 

  • Implementation of recent legislation pertaining to oversize/overweight vehicle permitting and enforcement.
  • Implementation of recent legislation pertaining to a single combined vehicle inspection and registration sticker.
  • Information on grade crossings.
  • Monitor the usage of state funds by the Texas Department of Transportation (TxDOT) for improving road quality in areas impacted by Energy Sector activities.
  • Monitor the implementation of the "Turn-Back Program" by the Texas Department of Transportation, specifically its fiscal impact to municipalities and taxpayers.
  • Examine county authority to utilize tax increment financing and transportation reinvestment zones to fund transportation projects.
  • Conduct legislative oversight and monitoring of the agencies and programs under the committee’s jurisdiction and the implementation of relevant legislation passed by the 83rd Legislature.

 
Opening Remarks
 

  • Chairman Larry Phillips asked Rep. Joe Pickett about how much Proposition 1 would make available for transportation if passed by voters
    • Pickett responded that it looks like $1.7 billion would be the first transfer
  • Phillips asked about the set of principles adopted by the House Select Committee on Transportation Funding, Expenditures and Finance and sent to the Texas Transportation Commission for consideration
    • Basically it made some ground-up recommendations; more of a reminder to the commission that there needs to be flexibility in formula funding; also asked the commission what they are going to need going forward to help transportation infrastructure development be more of a partnership

 
Jeff Moseley, Commissioner, Texas Transportation Commission

  • Appreciates the leadership on Proposition 1 efforts
  • In the coming appropriation request $5 billion in additional funding for mobility, safety and energy saving needs will be requested
  • TxDOT will also a request for rail, gulf intercostal waterways and port funding

 
Rail Grade Crossing Maintenance, Safety & Closures
 
Robert Travis, Manager of Rail Highway Safety, TxDOT

  • The rail safety section is more involved with direct day to day safety aspects; engineering agreements with railroads to improve safety at rail/highway crossings
  • Phillips asked if that includes just state highways or city highways as well
    • Statewide inventory of all physical railroad crossings in state and municipal systems; also manages federal railroad signals
  • Phillips asked how many employees are in the department
    • Around 23-25
  • Phillips asked if railroads have the right to close roads that go over their tracks
    • There is nothing that prevents them from that but there is a state law that says a railroad must maintain a crossing
    • Mostly there are agreements between railroads and municipalities to close roads when needed
    • If the railroad decides to close a crossing they can enter an agreement with the municipality; the state gets involved if either party asks for federal signal funds for signal work
  • Phillips asked if there is state oversight of those funds
    • Federal safety funds are managed through TxDOT
  • Phillips asked if there are notification requirements if a road will be closed
    • Legally they need to notify the federal railroad administration; there are generally informal discussions between the railroad and the state
  • Phillips asked if there must be public notice to the community
    • Municipalities are required to do that
  • Phillips asked if there has been a situation where the city objected
    • The only instance of that has been in Van Alstyne recently
  • Phillips asked if the city can issue a fine for that
    • AG Abbott gave a ruling that federal interstate commerce preempts state law so there is no action the state can take regarding a railroad blocking off a crossing
  • Phillips asked if there are any suggestions for action the legislature should take concerning that process
    • Will get back to the committee on that
  • Phillips asked if the department’s focus is to find ways to enhance rail in order to get more freight off the roads and onto rail
    • Yes; the rail division is keenly focused on how to work with railroads and local communities to develop capacity and look for improvements that have not been thought of

 
Elizabeth Grindstaff, Vice President, Texas Pacifico Railroad

  • Texas Pacifico operates a stretch of track that is 390 miles long and owned by the state
  • Customer base is only as far west as Fort Stockton
  • Formerly operated as the South Orient Railroad; Texas purchased the infrastructure from them for around $10 million
  • The lease with the state of Texas is 40 years with 5 ten year extensions
  • In 2012 a large increase in traffic was seen and growth is happening very rapidly because of movement of frack sand
    • Until it can be moved through pipelines that traffic is expected to remain steady
  • Commodities are around 91% sand and 6% crude
  • There are opportunities for Texas Pacifico with the changes at Pemex regarding exploration and privatization within Mexico’s oil industry
  • The bridge at Presidio needs some improvements to rebuild infrastructure that was burned; waiting on federal funds
  • Working on a market study with the Texas A&M Transportation Institute (TTI) regarding expanded opportunities
  • Pickett asked about the timeframe for completing the bridge
    • It is a pre-cast concrete design; should be a six month construction process; should be operable at some point in 2016
  • Pickett asked if a presidential permit is necessary
    • Will need a permit from the Corps of Engineers because of the levy that is managed by them
    • Probably less than $10 million in total costs
  • Pickett asked about the line being a model for other lines around the state
    • Erik Steavans, TxDOT Rail Director noted the South Orient represents a test lab for the state; the infrastructure put in place since 2009 has helped the line tremendously; one freight car holds about what 4 trucks can hold so it is significant; have taken 94,000 trucks off the roadway in that region
    • Where people invest in railroads there is about a 3 to 1 payback for those communities; provides opportunities for local communities to compete for industries; access to a Class 1 rail line can make investment more appealing
    • Can replicate what was done with the South Orient to provide new jobs and keep old jobs in a region
  • Phillips noted that is why it is so important to help the rail division; there is a lot of opportunity to receive federal grants; very limited with funds that the state can use for rail issues

 
TxDOT “Turnback” Program
 
Mark Marek, Director of Engineering Operations, TxDOT

  • Early discussion indicated the program should be cooperative between TxDOT and local governments
  • Participation in the program is voluntary
  • TxDOT will compensate local governments at the equivalent of one year’s worth of maintenance for these roads
  • Highways will retain their eligibility for federal funding
  • There was confusion about the program and a memorandum of understanding between TxDOT and TML was developed
  • Phillips noted it is good to see that state government can back up and involve stakeholders when the need arises

 
Jungus Jordan, Texas Municipal League

  • The initial reaction from cities was that the program was an unfunded mandate
  • Presented an opportunity for cities to work in partnership with TxDOT to make the program work
  • Rep. Debbie Riddle asked if the City of Houston is participating in the program
    • Those discussions have started; nothing is formally on the agenda at this point
    • One of the conditions of the MOU was to work with local MPOs to ensure mobility within and between cities is not restricted

 
Don Dixon, Resident

  • Believes TxDOT can do a better job with many of the turnback roads; probably cheaper than cities in many situations

 
State Funds for Roads Impacted by Energy Sector Activity
 
Mark Marek, Director of Engineering and Operations, TxDOT

  • The development of energy resources contributes to local economies and the state; it is a vital source of often scarce jobs
  • The energy sector also significantly impacts Texas roadways
  • TTI concluded statewide annual costs associated with energy sector activities is a minimum of $1 billion each year to the state and $1 billion to local governments
  • Armoring roads in advance of traffic would substantially reduce those costs
  • At least 7,490 miles of the state highway system have been directly affected by energy sector activities and are rated below TxDOT standards
  • HB 1025 (83R) specifically appropriated $225 million to TxDOT to improve energy sector roads and $224.5 million for TxDOT to distribute as grants to counties around the state for the same cause
  • TxDOT funded 37 projects and an additional 4 projects through regular funding
  • Projects are already well underway and are around 25% complete
  • Phillips asked how many of the 40 or so projects will be completed with the $225 million
    • All of them were funded with that money
  • Phillips noted the projects are mostly located in the Eagle Ford and Permian Basin; how were they determined
    • Looked at safety impacts, conditions of pavement and pavement width
  • Phillips asked how many of the projects are underway
    • 27 bundled into one design/build contract are 25% complete and of the remaining projects about half are underway
  • Phillips asked if there have been concerns with local communities about certain roads being left out
    • They have additional roadways they would like to see addressed; also concerned about future activity and where the industry may move next
  • Phillips asked about a TxDOT contract to monitor activity of the energy sector
    • TTI is doing some research and TxDOT is studying the situation internally
  • SB 1747 (83R) established the County Energy Transportation Reinvestment Zones (CETRZ); legislation included a direct allocation formula to determine grant amounts; TTC has adopted rules for the program and issued a call for projects; 191 grants to counties were awarded in April 2014; has been a tremendous help to those counties
  • Phillips noted that is a significant number of counties which have roads affected by the energy sector
  • Pickett asked if all 254 counties were able to apply
    • Some counties would have seen more cost to the local area than TxDOT would have provided but all counties were able to apply
  • Pickett asked what the largest project was of the 191
    • The largest grant went to Andrews County; a little over $9 million
  • Rep. Celia Israel asked if public-public partnerships were used in any of the county projects
    • There were a few instances in the Permian Basin where the counties wanted to improve or rehab a state roadway so state funding was tied in to address those issues

 
Debbra Mamula, Texas Oil and Gas Association

  • Safety is the number one issue
  • Having a strong road infrastructure is very important
  • Want to help provide information so that decisions for prioritizing funding can be made
  • Supportive of the passage of Prop 1
  • TxDOT has done a really good job of implementing CETRZ program
  • Look forward to seeing improvements from those grants on county roads

 
Bob Bass, Texas County Judges and Commissioners Association

  • Rural counties continue to have 1950s era road systems
  • As state revenue was sent to counties during the last session, counties had to quickly come together to make projects ready
  • Counties have done a lot of internal prioritizing and grants have brought all counties a little closer into focus as far as their needs and interface with the state system
  • A lot of counties have adopted minimal plans to be eligible for the grants
  • Some counties are concerned about whether they can spend money out of CETRZ accounts for projects that are not transportation infrastructure but are related to transportation
  • Phillips noted he didn’t think all 254 counties would be eligible for the program and it is likely than many other legislators felt there would be a more narrow focus
    • The inclusion of the overweight truck aspect broadened the base of eligibility

 
Proposition 1
 
John Barton, Deputy Executive Director, TxDOT

  • There is a need to consider what the citizens of Texas would like to see if Prop 1 passes
  • Have formed a stakeholder working group to help with that; mostly elected officials:
    • Harris County Judge Ed Emmett, Wichita County Judge Woody Gossom, Midland County Judge Mike Bradford, Cameron County Judge Carlos Cascos, Collin County Judge Keith Self, Texas Municipal League President Jungus Jordan, Director of North Central Texas MPO Michael Morris, Texas Trucking Association Director John Esparza and Johnny Johnson former TTC member
  • Pickett noted there is concern about the funds flowing through formulas
    • The problem is not the formulas but how much of the funding will go to what formulas
  • Pickett asked if the focus of the group will be how much is put into Category 2 or bridge maintenance for example
    • The group will be listening to the legislature and the public to determine how the funds should be distributed and for what purposes
  • Pickett asked if locals are being asked to prioritize projects
    • Have encouraged all district staff to engage with MPOs and look at projects in their plans that are high priority; cannot tell a community how much money they will be getting but communities need to be thinking about what projects will be important to them
  • Phillips asked if the group is trying to determine what percentages will go to maintenance and determine other categories
    • The needs fall into four areas: safety, maintenance, congestion and connectivity
  • Rep. Mando Martinez noted the valley has infrastructure needs that should be a focus as well
  • Rep. Bobby Guerra noted there is a lot of road traffic to and from Mexico that needs to be taken into account when determining funding for South Texas

 
County Authority to Utilize Tax Increment Financing (TIFs) & Transportation Reinvestment Zones (TRZs)
 
Brian Cassidy, Partner, Locke Lord LLP

  • Have worked on TRZs for quite some time
  • In TRZs there are not tax increases just a dedication of taxes to a certain project; growth from the projects help to pay back the cost of the project
  • Would like to put counties on the same footing as cities in terms of leveraging revenue streams
  • Pickett noted there is still clarification that is necessary regarding what a county can do; requested an attorney general’s opinion in that regard but with the upcoming election it is hard to say when that response will come
    • That is why the constitutional amendment including counties would be helpful because it wouldn’t be an issue anymore

 
Will Conley, Hays County Commissioner

  • Discussed projects using TRZs in the county
  • The TRZ tool has to be applied appropriately; some projects aren’t suited for that type of funding

 
Ashby Johnson, Executive Director, Capital Area MPO

  • Phillips asked about the MPO perspective on TRZs
    • In Houston the MPO wasn’t heavily involved but was starting to look at designating corridors

 
Don Lee, Executive Director, Texas Conference of Urban Counties

  • TIFs have been going on for quite some time; was very much an urban issue in inner cities to try to stimulate development in areas that were underperforming economically
  • Recent opinions by the attorney general do not implicate the vast majority of increment zones designated by cities; what is implicated is the county’s ability to designate an increment zone
  • Would like to try the constitutional amendment again with better language that is more easily understood by voters
  • Pickett agreed and hopes the legislature will allow for another constitutional amendment to be voted on

 
Duane Gordy, Executive Director, Community Development Education Foundation

  • Discussed his experience with TRZs and CETRZs
  • Counties need to identify demands and needs in advance of the need being there
  • Currently working with three counties on their budget process of how they are implementing CETRZs

 
Don Dixon, Resident

  • Putting the tax burden on the local residents through property taxes is not the way to expand the transportation system
  • Traditional funding methods should continue to be used

 
Implementation of a Single Vehicle Inspection/Registration Sticker
 
Whitney Brewster, Executive Director, Texas Department of Motor Vehicles

  • Working to ensure customers see a smooth transition to the single sticker program
  • When a person applies for registration or registration renewal, the electronic system will determine whether or not that vehicle has a valid inspection
  • Very much like the insurance verification process
  • If the system is down, the customer will be allowed to present proof of inspection given to them at the time of inspection
  • Because the inspection sticker is going away, the state’s portion of inspection fees will be collected at the time of registration
  • Agencies are implementing an educational media campaign
  • Rep. Allen Fletcher asked if there has been any increase in pay for inspection stations; will DPS continue their oversight of the stations
    • No, they will continue to make $7 for each inspection; yes, DPS will continue oversight

 
Les Findeisen, Texas Trucking Association

  • Some commercial vehicles and trailers that are registered in Texas but are not based here see a problem with the program
    • Phillips noted he has a problem with trucks based in Texas which have out of state license plates; that is an issue 
  • There is concern that trucks or trailers in North Dakota and other states which are registered in Texas but have no Texas inspection will not be in the database for DMV to look at for current inspection
  • Do not want this program to drive registration out of the state

 
Implementation of Legislation on Oversize/Overweight Vehicles
 
Whitney Brewster, Executive Director, Texas Department of Motor Vehicles

  • HB 2741 (83R) authorized the creation of three oversized and overweight permits
    • Concrete truck permits – 5,500 permits have been issued
    • Timber truck permits – 42 permits have been issued
    • Relief supply trucks – available during declared emergencies
  • The bill also increased the penalty for violating load zoned roadway regulations
  • Also gave DMV the authority to levy administrative penalties for overweight loads if they have not already been cited by law enforcement
  • Rep. Cindy Burkett noted these penalties are deposited into GR Fund 1; why not Fund 6
    • The law is silent on where those fees go and when that happens, funds default to Fund 1
  • Fletcher asked how those violators are found if they haven’t received citations
    • DMV does have an enforcement arm; most enforcement is done in partnership with DPS
    • DMV becomes aware of a violator and can determine if the loader is at fault and not the carrier; the new legislation allows DMV to go after the loader

 
Chris Nordloh, Texas Department of Public Safety

  • Have not heard any complaints on the new permits
  • Phillips asked if he has seen increased fines taking place
    • Yes; it has definitely gotten people’s attention
  • Phillips asked if people are getting more permits to avoid the penalties
    • Brewster noted there has been an uptick in the number of permits being issued