Despite Legal Assaults Roy LaVerne Brooks stays on ballot in Tarrant County

By Faith Chatham - Feb. 25, 2010
Former Texas State Democratic Vice Chair Roy LaVerne Brooks wins second round of strategic legal assault by financier Dick Abrams. Unable to get County Chair Steve Maxwell to remove Ms. Brooks from the Tarrant County Democratic Primary Ballot so that he could run unopposed for Justice of the Peace, Pct. 6, Democratic donor and bundler, Dick Abrams brought suit in District Court. Abrams' suit against Roy LaVerne Brooks and Tarrant County Democratic Chair Steve Maxwell was dismissed with prejudice Friday. (aka - don't refile this case)

The contrast between the two candidates is stark. Abrams, former C.E.O. / C.O.B. of failed Surety Bank and Surety Holding, engendered support of Democratic incumbents and some Democratic "want-a-be's" by writing substantial checks to most incumbents and Democratic Clubs, creating a buzz about him being a "viable candidate." Simple Google searches bring up numerous Federal S.E.C. and Comptroller of the Currency documents chronicling Abrams less than stellar performance at the helm of Surety Bank and its holding company. Those touting how "viable" avoid mentioning that Abrams was barred from banking for failure to comply with Federal Banking laws! He settled with the Comptroller of the Currency by agreeing not to participate in any capacity in any federal funded housing, federal loans, banks, or savings and loans because of fiduciary irregularities, misrepresentation of fact on Federal Reports, and failure to follow Federal Law, and the use of bank premises for “for profit endeavors by board members and members of the family of board members.” However, because he can write max allowable checks to high profile candidates some think that he deserved to be the nominee.

In contrast, a Google search on Roy LaVerne Brooks profiles a Democratic Party activist, community servant and civic leader who was named the "Outstanding Woman Citizen of Fort Worth" and inducted into the "Texas Hall of Fame" for 30 years of civic leadership and consistent service to her hometown and the State of Texas. Brooks, a graduate of Prairie View A&M, with M.A. in Divinity from Southwestern, has chaired the handicap transportation authority (MI.T.S.A.C) in Fort Worth and served as Vice-Chair of the Fort Worth "T". Conservative with her finances, Ms. Brooks does not have as deep pockets as her opponent. The contrast between a social workers' salary and the check-writing resources of her opponent are substantial.
Abrams' lawsuit drained much of Brooks "Get out the Vote" resources. None of the newspapers or television stations are mentioning that Texas or Federal Law does not prohibit individuals who are barred from banking for violations of Federal Law from running for (and possibly winning) judicial seats in Texas, or election as State Representatives and State Senators.

Contributions to the Brooks Campaign can be made on-line at WWW.BROOKSFORJP6.ORG. $35.00 can reach half of the registered voters in the precinct by robocall. The primary is March 2nd. Act now if you want to support a qualified woman candidate for public office. The Court ruled that the people have the right to decide who their nominee should be. Money will determine whether the voters get to learn about the differences in the two candidates.

I am not pretending to be unbiased. I know Roy LaVerne Brooks and admire and respect her for her lifetime of service, incredible leadership skills, and understanding of the challenges facing individuals who come before the bench in that Justice of the Peace Precinct. If Mr. Abrams had chosen to campaign to win rather than to use the courts to remove his opponent, this race would probably have avoided my radar. As I examined the court documents, signatures on the petitions, candidate’s credentials, and the needs of the precinct, sharp contrast between the candidates convinced me that Roy LaVerne Brooks is the candidate who can truly best serve the people as Justice of the Peace. The way to build the party is to bring honor to it by fielding and electing people whose life reflects consistent integrity, service and honor. Roy LaVerne Brooks is a woman of integrity, and possesses a heart for the people and the intellect and discernment to do the job.

Gas pipelines have few rules, property owners discover - Companies can - and do - build where they wish

By JAY PARSONS - The Dallas Morning News - Tuesday, January 29, 2008

GRAYSON COUNTY – The roar of an uninvited bulldozer woke up George and Barbara Woodroof on a recent Tuesday morning. Mr. Woodroof took a last look outside his bedroom window at the hill covered with oak trees.

A week later, bulldozers had cleared hundreds of trees and a wide swath of nature on the couple's property to make way for a 36-inch-wide, high-pressure natural gas line that passes 290 feet from their home.
The Woodroofs don't want the pipeline, but they can't stop Houston-based Energy Transfer Partners from taking their land. Neither can county or state officials. Neither can most courts.

The reach of the gas-drilling boom in Denton and Tarrant counties extends to properties miles from the nearest gas wells, adding a twist to the long-running debate over Texas' eminent domain laws.

Gas companies often use eminent domain powers similar to governments' to acquire land for pipelines. But unlike government, for-profit businesses condemn land largely without oversight or democratic process. They don't typically go through public hearings, environmental reviews or impact studies. Gas companies need only to fill out a one-page form and pay landowners for whatever land they take – a system far more lax than federal standards.

Texas has more than 43,000 miles of intrastate pipelines – the most of any state in the country. And more are coming as production increases in the Barnett Shale – an expansive gas pocket beneath 18 counties, including Denton and Tarrant. Gas production soared from 79 billion cubic feet in 2000 to 698 billion in 2006.

"Right now the Barnett Shale is very prolific," said James Tobin, a natural gas analyst for the federal Energy Information Administration. "There are a lot of new pipelines being built in and out of there by a number of different companies."

Gas companies and some government officials say new pipelines provide a public service – expanding the market to increase supply and decrease costs for consumers.

Here in Grayson County, the Woodroofs and at least 29 other landowners are taking their only legal recourse – asking courts to force Energy Transfer to pay more for their land. The company is building a 140-mile pipeline connecting its gas wells to distribution plants in East Texas, a feeding point for gas going to other parts of the country.

An Energy Transfer spokeswoman said the company needs more pipelines to handle the Barnett Shale's production and uses eminent domain as a "last resort."


Eminent domain

Eminent domain has become a hot topic across the state. Texans are more familiar with eminent domain in the hands of government. The state uses that authority to make room for new roads. Arlington used it to clear land for the new Dallas Cowboys stadium.

A lesser-known provision allows for-profit businesses to condemn property to build utility lines, including valuable high-pressure gas lines. Almost any utility company can acquire eminent domain power with little government vetting – a system that allows private companies to operate more quickly and less democratically than government.

"It's a huge problem," said state Sen. Craig Estes, R-Wichita Falls, who represents Grayson County. "It's property rights fundamental to our freedom. It'll be on the top of our legislative agenda in '09."

Mr. Estes and others agree private companies should retain eminent domain authority but insist state laws tilt too heavily against landowners.

For pipelines crossing state lines, more stringent federal rules kick in. That approval process takes an average of 15 months and includes environmental studies and a public announcement, according to the Energy Information Administration.

But none of that happens in Texas. The Railroad Commission – the state agency that oversees pipelines – acts only as a safety inspector and records repository.

Gas companies can build lines almost anywhere, though they must follow basic safety rules. There's no review process and no incentive to move lines away from houses or bury them deeper to minimize the impact on future development. Nor are they encouraged to use existing utility easements, leaving instead an uncoordinated web often affecting more landowners.

"To [companies], hooking up wells and getting the commodity to the market is the first and foremost concern," said Pat Nugent, executive director of the Texas Pipeline Association, which represents pipeline companies. "If you have crews out there who run into bureaucratic red tape, they would have a real problem with that."

The result is that landowners – and public officials who represent them – often don't know about a pipeline until a surveyor knocks on their door to stake out a route.

"We need to get some laws in this state so the landowners have some rights again," Mr. Woodroof said.


Vetoed

In the last session, Mr. Estes supported House Bill 2006 to ensure that landowners receive fair-market prices in eminent domain cases. Property rights groups backed the bill. So did the Texas Pipeline Association. The bill passed 125-11 in the House and 29-1 in the Senate. But Gov. Rick Perry vetoed it, saying it would raise the cost of public projects by more than $1 billion.

"That was probably the biggest slap in the face that has ever happened to property owners in the state of Texas," said Joe Maley, organization director for the Texas Farm Bureau, which claims more than 400,000 members.

Mr. Perry did sign a related bill, known as the Landowner's Bill of Rights, which takes effect Friday. It assures "adequate compensation." But there are often two different definitions for it – the condemner's and the landowner's.

In the Woodroofs' case, Energy Transfer valued their 5.6 acres at $104,000. The Woodroofs valued it at $1.4 million, which takes into account estimated long-term damage to their remaining 470 acres. The price is being contested.

Property rights advocates say companies have little incentive to negotiate prices with landowners. Even if landowners win more money for the land taken, they can't recoup court and legal fees.

Landowners also don't like the payment structure. Mineral rights owners receive a stream of royalty checks when companies drill a gas well. But when taking land to transfer that gas, companies write only a one-time check that landowners argue doesn't cover the long-term costs of developing around a pipeline.

"We're paying the price for the transportation of someone else's gas," said Sissy Shankles, who has three pipelines on separate easements on her land near Burleson.

Once a pipeline goes in, gas companies can limit what landowners put above it and up to 25 feet on either side of it. Pipeline companies said they will work with landowners, but some developers said the extra hurdles often raise costs.

"You think you own it, but you don't," said Bob Sanford, whose 440-acre property in Grayson County is being crossed by Energy Transfer.

Mr. Woodroof said he asked Energy Transfer to build the line farther south, away from his home. He also wanted a guarantee the pipes would be deeper than 3 feet to minimize the impact on future development. Both requests were denied, he said.

Energy Transfer "tries to work with landowners to accommodate requests when they can," spokeswoman Vicki Granado said, declining to discuss specifics. "In some cases, they can move lines, and in some cases they can't. As a company, they try really hard."

Mr. Woodroof said the company made no effort to work with him.

"The rules will change when someone hits a gas line and 10 houses burn down," said Michelle Jones, the Woodroofs' attorney. "That'll be when they do something."

Rules for building a gas pipeline in Texas
To build a pipeline in Texas, companies must:

Step 1: Fill out a one-page form, called a T-4, to obtain a permit from the Railroad Commission of Texas. Operators must renew the permit annually.

Step 2: Pick a route for the pipeline and request the affected landowners' permission to survey their properties. If landowners refuse, companies may sue for access. State or local government approval is not required.

Step 3: Make offers to landowners for taking easements up to 50 feet wide. If the two sides can't reach a deal, the company may condemn the property. At that point, a special commissioners court sets the price. Once a price is set, the company can begin construction – even if the landowner appeals. Landowners can contest only the price, not the company's right to their property. Landowners can't recover legal fees – even if courts rule in their favor.

Step 4: File a construction report with the Railroad Commission at least 30 days before work begins.

Step 5: Begin construction. Landowners retain access to the pipeline easements but are restricted in how that land can be used. Developers must obtain permission from pipeline companies to build roads or water lines over the pipelines. No structures can be built on top of a pipeline.

Note: Pipelines carrying toxic, so-called sour gas have additional restrictions.

SOURCE: Dallas Morning News research

Regulation of gas pipelines in Texas
Here's a look at the state's regulation of gas pipelines and the rights of affected landowners:

What's the issue? Energy companies can build pipelines almost anywhere without any government involvement or permission from landowners.

Who regulates gas pipelines? The Railroad Commission of Texas was established in 1891 to regulate the rail industry. But today's Railroad Commission has nothing to do with railroads, as that authority was transferred to the Texas Department of Transportation in 2005. Instead, the commission primarily oversees the energy industry.

What's the Railroad Commission's role? The commission's primary roles are to conduct pipeline safety evaluations and act as a records repository. If companies meet state standards and fill out the proper paperwork, the commission cannot stop a pipeline project or examine the proposed route before construction begins.

What rights do landowners have? Not many. Last year, the Legislature passed the Landowner's Bill of Rights, which becomes official Friday. The document spells out 10 rights, including the right to hire an attorney and the right to "adequate compensation," though the term is undefined. Landowners do not have the right to challenge the pipeline route, but they can go to a special commissioners court to seek more money from the pipeline company. Landowners can appeal that price through the court system but cannot recoup any legal fees.

Read more in the Dallas Morning News

TxDOT Critics Named to Sunset Review Commission-

By Martha Estes - Jan. 9, 2007
FYI: about the Commission
The Commission includes twelve members. The lieutenant governor and the speaker each appoint one public member and five members from their respective chambers. They also appoint alternating chairs and vice chairs for two-year terms. Legislative members serve four-year terms and public members serve two-year terms.

The Sunset process works by setting a date on which an agency will be abolished unless legislation is passed to continue its functions. This creates an opportunity for the Sunset Commission and the Legislature to study each agency closely and make fundamental changes to its mission or operations if necessary. This includes holding public hearings and issuing a final report of findings with recommendations as to whether the reviewed state agency's mandate will be renewed or expired.

Agencies are typically reviewed every twelve years and up to 30 agencies can go through the Sunset process each legislative session. Some of the agencies up for review this term are the Texas Department of Agriculture, the Texas Department of Insurance, the Texas Parks and Wildlife Department, the Texas Department of Public Safety, the Office of State-Federal Relations, the Texas Department of Transportation and the Texas Youth Commission.

Also FYI: about the Members
On October 9, 2007 Speaker Tom Craddick (Midland) announced the appointments of #1 Rep. Linda Harper-Brown (Irving) and #2 Rep. Carl Isett (Lubbock) and the reappointment of #3 Ike Sugg of San Angelo, a public member of the Commission. Isett will serve as chair of the Commission.
#4 Rep. Lois Kolkhorst (Brenham), #5 Rep. Ruth McClendon Jones (San Antonio), and #6 Rep. Dan Flynn (Van) are members serving the last two years of their four-year terms (2009). Before Rep. Kolkhorst's prominent role in the opposition to the TTC footprint in the 2007 Legislative Session she was the expected Chair for the Sunset Commission.

Note: We need to keep in mind that Sen. Hegar carried the battle in the Senate for the Eminent Domain/Private Property Rights bill # 2006 to protect property owners in Condemnation. It had great support in both chambers and was vetoed by Perry.

Read more at Working for Accountable Government



TxDOT critics appointed to key state commission
By Will Lutz - The Dallas Blog - Tue, Jan 8, 2008

Rep. Linda Harper-Brown (Irving) and Rep. Carl Isett (Lubbock)Rep. Linda Harper-Brown (Irving) and Rep. Carl Isett (Lubbock by Will Lutz http://www.dallasblog.com/200801081001536/dallas-blog/txdot-critics-appointed-to-key-state-commission.html
Lt. Gov. David Dewhurst today announced his appointments to the Sunset Advisory Commission, and his appointments could spell trouble for the current brass at the Texas Department of Transportation.

Dewhurst appointed the following people: #1 Sen. Glenn Hegar (R-Katy), #2 Sen. Juan "Chuy" Hinojosa (D-McAllen), and #3 Michael Stevens as a public appointee. Dewhurst designated Hegar as the vice chairman of the commission -- the lead Senator on the Sunset Advisory Commission. The appointments are important because the Sunset Advisory Commission is scheduled to review the often controversial Texas Department of Transportation in 2009.

Hegar made stopping the corridor one of the key themes of his successful Senate race in 2006.

Stevens is known for his work on the Governor's Business Council and for chairing the council's Transportation Task Force. The Task Force released a report critical of Department of Transportation's estimated costs of building roads in metropolitan areas.

The Sunset Advisory Commission was originally created to determine if state agencies needed abolition or consolidation. But its mandate has since been expanded to examine how to improve the structure of state agencies. The commission's recommendations become drafted in bill form and then those bills are considered by the Legislature in the next legislative session.

Hegar, Stevens, and Hinojosa join #4 Sens. Bob Deuell (R-Greenville), #5 Kim Brimer (R-Arlington), and #6 Craig Estes (R-Wichita Falls) who are serving the last two years of their four-year terms. Hegar and Hinojosa were appointed to four-year terms, and Stevens was appointed to a two-year term. They join six appointees of the House speaker on the commission."I truly appreciate the willingness of all three of these individuals to serve on this important commission," Dewhurst said. "I know each of them will provide knowledgeable and thought-provoking contributions as the Sunset Advisory Commission undertakes the review of some of our most important state agencies."
Read more in the Dallas Blog

Texas Toll Party urges voters to VOTE NO on Proposition 12

By Sal Costello - Texas Toll Party - Oct. 22, 2007

Prop 12: Beware of the Hungry Tax Wolf in Sheep's Clothing.
VOTE NO on Prop 12!


The revenue hungry "Tax Wolf" is rearing its ugly head again with Proposition 12, which is carefully crafted to trick Texans to vote for debt, future tax increases and toll roads paid for with our tax dollars (an unaccountable double tax).

In recent years, TxDOT has claimed they’ve run out of money, while they spend billions of our tax dollars to shift our public highways to toll roads and push the equally unpopular Trans Texas Corridor (TTC). Also to blame are Texas legislators, who have diverted billions of our tax dollars intended for transportation, into their pet projects, while they allow TxDOT, a rogue agency, to run amuck.

The State Auditor caught TxDOT inflating it’s needs by $45 billion dollars this year and TxDOT continues to ignore the public by spending millions of our tax dollars on an ad campaign to sell us toll roads and TaxTags.

Proposition 12 is the largest proposed new debt on the ballot this year. It would authorize up to $5 billion dollars of state road debt to be repaid with general revenue, instead of dedicated transportation funds. Yet another accountability breech as TxDOT is eager to become an unaccountable taxing authority.

In 2001, Prop 15 (the first Tax Wolf in sheep's clothing) was put on the ballot and politicos promised it would help solve our transportation crisis by estab lishing the Texas Mobility Fund. Texans trusted TxDOT and le! gislator s and voted for "mobility" and Prop 15 became a constitutional amendment. Much like this years Prop 12, the ballot language of Prop 15 did not openly inform voters that TxDOT would use Texas Mobility Fund exclusively to shift our freeways to toll ways. Prop 15 took accountability and the will of the people out of the equation - so special interests could seize OUR LAND and OUR ROADS for profit.

Don’t be fooled again, help stop the tax wolf and vote NO on Prop 12 - get everyone you know out to the polls! Early voting begins Monday Oct 22. Election day is Nov 6th.

Sal Costello is founder of People for Efficient Transportation. People for Efficient Transportation PAC (PET PAC) is a not-for-profit political action committee registered with the Texas Ethics Commission. PET PAC is not tax deductible.

City of Mansfield changes Debt Collectors due to questionable political campaign contribution

City Council plans to consider hiring new debt collector
By ROBERT CADWALLADER - Special to the Star-Telegram - Oct. 22, 2007
MANSFIELD -- The City Council tonight will consider hiring a Round Rock-based law firm to replace the city's fired debt collector.

The staff has recommended McCreary, Veselka, Bragg & Allen, which collects delinquent property taxes or court fees and fines for about 450 taxing jurisdictions statewide. The firm has no collection clients in Tarrant or Dallas counties.

The council terminated the city's contract with Linebarger, Goggan, Blair & Sampson of Fort Worth on Sept. 28, taking issue with a $2,000 campaign contribution the firm made to Mayor Barton Scott after his election in May. The move apparently did not violate local or state campaign finance laws, but the council called it inappropriate and also voiced concerns about investigations of Linebarger contributions in other cities.

Scott, who blamed council politics for Linebarger's firing, said he will question the recommendation for McCreary because the staff did not conduct a full selection process, including advertising for proposals.

"When we start playing political games with vendors, we are not acting in the best interests of the citizens," Scott said.

Staff officials said they didn't advertise for proposals because the process would have taken at least 90 days. The city has no one collecting back taxes.

As a corporation, McCreary is prohibited by law from making political contributions, a McCreary official said. Although individual employees are allowed to donate to local candidates, no employees will donate to Mansfield public officials, President Harvey Allen said.

That could become the law in Mansfield anyway. A council subcommittee is considering revising the city's ethics ordinance.

"I will tell you, we as a firm get virtually no solicitations for campaign contributions from anybody," Allen said. "And I think that's because we have the reputation of not doing it."

Linebarger, as a limited liability partnership, is allowed to make political contributions.
Read more in the Fort Worth Star Telegram

NTTA TRAFFIC ADVISORY - IH-35 E closing

By Sam Lopez - NTTA - Oct. 16, 2007

There will be some temporary closures at the south end of the Dallas North Tollway this weekend, so that construction crews can switch traffic onto new portions of roadway.

The northbound IH-35E entrance ramp to the Tollway will be closed on Sunday, October 21 from 12:01 a.m. until 6 a.m. The Harry Hines Boulevard and McKinnon Street entrances to the Tollway will also be temporarily closed. Motorists wanting to travel north on the Tollway may enter the facility via the Wycliff Avenue Main Lane Toll Plaza or any other entrance ramps north of that location. From 6 a.m. until 2 p.m. on Sunday, only one lane will be open northbound on the Tollway from Harry Hines Blvd./ McKinnon St. to the Wycliff Avenue Main Lane Toll Plaza.

Southbound traffic will also be affected as only one lane will be open from Wycliff Avenue to Harry Hines Blvd./McKinnon St. from 10 p.m. on Saturday, Oct. 20 until 2 p.m. on Sunday, Oct. 21.

The southbound Tollway exit ramp to IH-35E will not be affected.

Texas leads nation in number of water polluters

By R.A. DYER - Star-Telegram staff writer - Fri. Oct. 12, 2007
AUSTIN -- Texas led the nation in the number of facilities discharging pollution at levels exceeding federal clean water guidelines, according to a new report from an environmental watchdog group.

The Austin-based Environment Texas said that in 2005, 318 facilities in the state reported 1,340 incidents in which they discharged more pollution than permitted under the federal Clean Water Act. The group also reported that more than 53 percent of Texas' industrial and municipal facilities discharged more pollution in 2005 than permitted under the law.

"With so many facilities dumping so much pollution, no one should be surprised that more than half of Texas waterways are unsafe for swimming and fishing -- but we should be outraged," Environment Texas Citizen Outreach director Brad Hicks said in a statement.

Harris County was No. 1 among all U.S. counties for the most facilities that exceeded their Clean Water Act permits at least once, according to the report.

The report was released Thursday to commemorate the 35th anniversary next week of the Clean Water Act.

About the report

Using information from the U.S. Environmental Protection Agency gathered under the federal Freedom of Information Act, Environment Texas reviewed the extent of discharges for all facilities that exceeded their Clean Water Act permits in 2005. The director of Environment Texas said 2005 was the last full year for which comprehensive data was available.

In Tarrant County

During the study period, the only Tarrant County entity to report pollution discharges that exceeded the allowable levels was the city of Azle. The report lists seven such discharges by the municipality. Azle utility manager Rick White said the discharges occurred at a wastewater plant at Ash Creek and were largely due to malfunctioning equipment. He said the equipment supplier corrected the problem.

"Everybody has problems but we haven't had any significant problem since then," he said.

Other findings

Nationally, more than 3,600 major facilities, or 57 percent, exceeded their Clean Water Act limits at least once in 2005. The facilities exceeded the limits a total of 24,400 times during that period, which means that many exceeded their permits more than once and for more than one pollutant, according to the report.

Texas is not among the 10 states with the highest percentage of major facilities that exceeded their limits at least once. Those states are Maine, Massachusetts, Rhode Island, New Hampshire, Ohio, Connecticut, New York, North Dakota, California, and West Virginia.

Texas is among the 10 U.S. states with the most violations during that period. The others are Ohio, Pennsylvania, New York, California, Massachusetts, Louisiana, Tennessee, Alabama, and Florida.

The report also noted that California, Pennsylvania and Ohio were the states with at least 100 incidents that were at least 500 percent above the permitted level.

Pollution problems

More than 20,000 bodies of waters in the United States are too polluted to meet basic quality standards, according to the EPA.

Water pollution also caused more than 25,000 beach closings and advisory days in 2006, the most in 17 years, according to the report.

In 2006, more than half the states -- 32 -- had statewide fish consumption advisories in place because of toxic pollution, according to the report.

About 850 billion gallons of raw sewage is dumped into U.S. waterways each year, according to the report.

The Clean Water Act

Signed into law Oct. 18, 1972, the Clean Water Act set goals to have all U.S. waterways swimmable and fishable by 1983 and to eliminate all discharges of pollutants by 1985, according to information from Environment Texas. Under the law, facilities are called upon to report any improper discharges. Government regulators can then assess penalties, although in Texas they typically do not, according to a recent state auditor's report.

Read more

Double edged sword of private infrastructure financing

By Faith Chatham - July 24, 2007

Crossposted on EPLURIBUS MEDIA

Many lawmakers and local/regional governmental officals erupted in glee at the prospect of transferring financing of public infrastructure projects to private equity partners. The traditional group of public works hogs at the public money bins jumped cartwheels anticipating funding to flow more rapidly out of other pockets into theirs. Governor Rick Perry spent Texan's hard earned tax money to fly to Europe to court potential European and Australian partners. TxDOT repeated the same old lies: "There is no way to finance roads without tolls."  

To the public CDAs or Private Public Partnerships for toll roads is presented as being financed by private partners. When we look up close and get real personal and examine specific projects however, the facade doesn't hold up to scrunity. For example, Cintra, if awarded SH 121, would have invested about the same amount of money which Texas taxpayers have already invested in the project (state, federal dollars and local governments investment in right of way). The Federal Government would also loan the private partner additional fund and faciliate borrowing of billions of dollars of tax exempt money from other private lenders. A key phrase to note is tax exempt. That is another way of saying that the tax liabilty will be passed from these lenders to the rest of the taxpayers. Taxes never go away when they are "exempted". They are merely passed along to the next guy up (or more probably) down the ladder!

I've made a number of inquiries about these US government faciliated loans which the changes to U.S. Law allows to enable private equity partners to utilize on public works (highway toll roads) projects. I want to fully understand who holds the bag if the project fails and the "borrower" defaults on the loan. What happens if there isn't the anticipated traffic on a toll road? If the U.S. Government faciliates these tax exempt bonds for the private partner (such as Macquarie or Cintra), does the US Government (i.e. U.S. Taxpayer) stand behind the loan as is the case when a bank forecloses on an FHA home loan or a VA home loan or a Federal Guaranteed Student Loan?

I've asked this question to numerous engineers and officials at TxDOT and RTC meetings and to date have yet to have anyone show me in writing where the US Government isn't standing behind these loans. If a private partner is going to make the profit I think the private equity firm should take the risk. However, I am suspicious.  There is a rush across the pond to court American lawmakers and acquire toll road deals. Is one of the edges of the sword that somewhere there are clauses buried in those mountains of fineprint and legalize which transfer the risk to the taxpayers?

Examining Australian sources, another edge to the sword emerges.  Most of these equity firms are borrowing from retirement funds. The retirement accounts of working men and women and retirees from all over this nation are invested in bonds and stocks.  John L. Goldberg, in "The Fatal Flaw in the Financing of Private Road Infrastructure in Australia" wrote a paper last year which analyzes the cash flow of four private public road infrastructure projects in Australia and probability of solvency/insolvency.

Goldman wrote:

The repayment of debt is clearly on the minds of the toll road owners and operators as revealed by the recent release of a draft prospectus for the so-called Sydney Roads Group (Macquarie Infrastructure Group, 2006). This group consists of three existing toll roads, the M4, M5 and Eastern Distributor. The financial arrangements are similar to those of the M2. In February 2009, the debt of the M4, currently at about $57.6 m must be paid. The method of doing this is said to involve the use of reserves and a securitization arrangement (Alles, 1999) involving the M4 and M5. This means that future cash flow receivables and/or the asset value of the M5 is to be used as collateral for a new financial structure for refinancing. It should be noted that the M5 has a debt of $515m which has to be repaid or refinanced by June 2010. But in the final prospectus, serious doubts have now been raised about the ability to repay the debt or refinance it on

favourable terms (MIG, 2006).

He concludes that the private investors are using various public private road projects as collateral for other projects, creating a " financial house of cards".  Macquaire and Cintra are partners in many projects around the world and have bid on numerous projects in Texas and the DFW area. They are presented to citizens as private partners who will take the responsiblity for risk from the government and taxpayer in exchange for tolls. Citizens' protest that the cost for tolls is higher than those projected if citizens finance road construction with gas tax and public bond financing the old fashioned traditional way goes are unheeded by lawmakers and transportation policy gurus and state and US DOT bureaucrats.

Goldman analyzed their business methodology in Australia and reported:

The data in the financial models attempt to portray the best possible outcome for the consortiums promoting the projects using for example, unrealistic traffic projections, and creative accounting. Despite this attempt the probability of financial failure has been shown to be 100% in every case, in the sense that cash flow will be insufficient to amortize debt. Not only do the models specify unattainable rates of return to investors but the true financial position of the projects is being masked by financial engineering leading to increased debt out of which equity dividends are being paid. Such an approach is unlikely to be sustainable, but may nevertheless lead institutional investors and others to erroneously believe in the long term outcome portrayed by the promoters.

Why does this matter?  It matters because citizens deserve to be able to trust the reliability of financial institutions. It matters because retirement accounts are being invested in bonds to finance private equity firms share of investment in public private partnerships for toll roads (and toll bridges and other infrastructure). If the cards begin to fall, and the toll road private investor public partnership CDA financial house crumbles, then as each card will take down an adjacent investor and that one will take down the next. If the model used to predict traffic, fees, maintenance costs for a 50 year toll road project are faulty and the private equity partner does not get the anticipated return on investment, everyone who loaned money on the project will lose. It is very likely that much of those loans will be held by retirement funds! Ouch! When you lose your retirement account, it is difficult for many people to recoup before they are out of the job market. I know. My 401K account dried up a few years ago when utility. telops stocks switched from reliable investments to swindles!

With retirement account investment in private public infrastructure equity partnership (toll roads) we may see scandals which reek of the hot sultry days of Enron investigations and energy sector manipulation which cost trusting investors and employees their life savings and retirement incomes. As the energy grid spread from state to state, we are watching a network of toll corridors spread throughout the North American continent, attracting international partners who are not totally without controversy in their home countries.

Possible remedies

Protection for retirees who invest in PPP/CDAs presents a classic catch-22. Private partnership who claim to remove the risk from taxpayers on infrastructure projects in return for receiving tolls (retrn on investment) should not have their loans guaranteed by the US Government.  That is unfair to taxpayers!

Goldberg pointed out:

Recent statements about the use of securitization as a means of debt amortization are unconvincing. In the event of corporate collapse, and in the absence of government guarantees, the trust/company structure of these projects will be used to claim limited liability for the entire structure. But such a claim may be rejected by a court, leaving investors liable.

That brings me back to my original quest. Are there guarantees written into these volumes of contracts, bills, agreements, which transfers the risk from the private partner to the U.S. taxpayer?  If you know where the guarantee is that the US Government will not back the tax exempt bonds they faciliate for private partners in public infrastructure projects, please share that with me. I need to see it in writing and be able to verify the source.  There are too many inconsistencies in what transportation engineers and TxDOT and regional transporation policy boys have told me about toll roads, CDAs and the benefit to the public for me to really rely on what they tell me without being able to evaluate it and verify it. This is an instance when if it isn't on paper, published in government documents within the public domain then it is probably more urban legend than reality.

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