BACKGROUND

During this legislative session five bills (SB1267, HB2772, SB1929, HB1892, and SB792) have contained language seeking to place a two-year (30 month) moratorium on the construction of public-private toll road projects. The intended result is the creation of a law that would prevent TxDOT from entering into construction contracts for the Trans Texas Corridor TTC-35 or TTC-69 for two years.

Two bills containing the moratorium language, HB1892 and SB792 made it out of committee and were overwhelmingly passed by both houses. The first has been vetoed and the latter is in currently in conference committee.

MORATORIUM LANGUAGE OF SB792

Below is the relevant text of Senate Bill 792 creating the moratorium.

THE ISSUE WITH SB792

It is clear and well understood that the legislative intent of SB792 is to create a moratorium that applies to TTC-35 (except Loop 9). However, upon close examination of existing statues, the bill language, and TxDOT contract documents it can be determined that SB792, as passed in the Senate, would not create a moratorium that applies to TTC-35.

This conclusion is supported by an analysis of SB792 amendments (shown below) reportedly prepared by the Governor's office and circulated in opposition to amendment 13. The objection to amendment 13 is based on a finding that, "No segment of TTC-35 can be built during the moratorium, except Loop 9, which is exempted from the moratorium." Of course that is exactly what the intent was in introducing a moratorium bill. 

SB792 absent amendment 13 will not make construction of TTC-35 facilities through agreements entered into after May 1, 2007, subject to the moratorium. This is because those agreements will be executed under the TTC-35 CDA which was entered into on March 11, 2005, well before the bill's threshold date of May 1, 2007.

The March 11, 2005, agreement sets out in paragraph "I" of the recitals, "The parties intend for this Agreement to provide . . . along with some or all of the development, design, construction, financing, operation and maintenance, of a combination of Facilities which together constitute the Project."

The development, design, construction, financing, operation and maintenance of facilities under this CDA are accomplished through Facility Agreements.

Section 1.2.4 sets out that, "the Facility Agreement(s) shall exclusively govern the rights and obligations of the parties as they relate to the Facility in question."

Section 3.1 sets out the terms of the agreement including those of the, "execution and delivery of Facility Agreements . . "

Section 8.2.5 set out the elements of the Facility Agreement.

Section 8.2.5(f)-(h) includes the right to set, collect and retain tolls or fare which in a CDA would trigger a moratorium under SB792.

Given the language of this agreement, facilities of TTC-35 will be developed, designed, constructed, financed, operated and maintained through Facility Agreements executed under the 2005 TTC-35 CDA rather than through a series of new CDAs. Accordingly those Facility Agreements are not subject to the moratorium provisions of SB792.

The first application of a Facility Agreement under the 2005 TTC-35 CDA was SH-130 segments 5 & 6.

The agreement's recitals show the flow of authority beginning with HB3588 and HB2702; Chapters 223 and 227 of the Texas Transportation Code; the March 11, 2005 CDA between TxDOT and Cintra-Zachry; and ending in this Facility Concession Agreement executed on March 22, 2007.

The Facility Concession Agreement for SH130 segments 5 & 6 does not constitute a new CDA entered into after 2005, but rather an agreement entered under the original 2005 CDA.

The language of the TTC-35 CDA is broad enough to provide for the development, design, construction, financing, operation and maintenance of all Facilities that together constitute the project called TTC-35.

AMENDMENT 13

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