Democrats on the Harris County Commissioners Court have successfully pushed through a controversial plan that shifts toll road system funds into county coffers and circumvents original restrictions on how tollway revenues may be used.
Approved by voters in 1983, the Harris County Toll Road Authority (HCTRA) has managed construction, operation, and maintenance of a network of toll roads facilitating traffic through and around the heavily congested Greater Houston area and beyond for more than 30 years.
HCTRA has managed to accumulate $1.6 billion in cash on hand, with about $2.7 billion in bonds. Under the current structure, bond conditions and state law limit the use of these funds to transportation infrastructure and related facilities.
At last Tuesday’s commissioners court meeting, newly appointed Budget Director David Berry recommended a plan to circumvent restrictions and “provide more efficient funding” for other projects in Harris County.
Under the new plan, Harris County will create a Local Governance Corporation (LGC), to which they will then sell the existing toll road system. Existing HCTRA bonds will be paid off and reissued under lower rates, but also without the previous restrictions on surplus funds.
Commissioner Rodney Ellis (D-Pct. 1) asserted that surplus funds could then be used for flood control projects. Voters approved a $2.5 billion bond for flood mitigation in 2018, but last year the court voted to subject such projects to a “Social Vulnerability Index” that only weighs flood risk reduction as 25 percent of the formula for prioritizing new projects, and flood mitigation needs for the region are projected to exceed funds made available through property taxes, bonds, and federal programs.
The terms of the LGC arrangement, however, do not attach a specific purpose for the funds that will be shifted from the toll road system to the county, and the funds can be used for anything the court votes to approve.
Once established, the new Harris County Toll Road Corporation (HCTRC), will make a first year payment to the county of $300 million in franchise fees. Estimated franchise fees each year thereafter will be $90 million, but are subject to change by commissioners’ court.
Commissioner Jack Cagle (R-Pct. 4) noted that the transaction, which would involve between $2.7 and $2.8 billion, would be the largest in county history, and expressed concerns to Berry about rushing to create such a program without soliciting public input.
“When we did the bond [for flood control projects] for $2.5 billion…we did 22 public meetings to engage the public on this very large financial transaction that would impact the public,” said Cagle.
When Cagle asked if Berry was aware of any plans or desire to engage the public before moving forward, Berry replied that there were none. Berry suggested the urgency is related to historically low interest rates, but the Federal Reserve this week indicated rates will remain low for several years.
Cagle submitted letters in opposition to the LGC plan from both the Greater Tomball and Cy-Fair Chambers of Commerce, and the North Houston Association.
County Judge Lina Hidalgo called the proposal a “creative” and “smart” plan, to “maximize every resource,” and said she wanted to move forward immediately instead of waiting for public input so they could refinance the bonds at lower interest rates.
Other options analyzed by Berry included refinancing the bonds at the lower rates, but without selling the toll system to a newly created LGC.
Commissioner Adrian Garcia (D-Pct. 2) also applauded what he said was “innovative” thinking, and joined Ellis in praising Hidalgo for her transparency.
“There is nothing transparent about this…this is a money grab,” Commissioner Steve Radack (D-Pct. 3) responded.
Former Spring Valley Village Mayor Tom Ramsey, who is the Republican nominee to replace retiring Commissioner Radack, told The Texan that for the past 30 years the county had been disciplined in keeping toll revenues dedicated to transportation infrastructure, but that the HCTRC will shift funds to non-related projects of the majority’s choosing.
“There will be fewer dollars spent on infrastructure spent in Harris County as a result of this move,” said Ramsey.
Democrat candidate for Precinct 3 Commissioner Michael Moore did not respond to request for comment by the time of publication and has not publicly commented on the LGC arrangement, but has campaigned on a promise to push for alternative transit as well as infrastructure improvements.
State Senator Paul Bettencourt (R-Houston) told The Texan that HCTRA surplus funds should be used to reduce tolls for taxpayers “who drive back and forth to work on these roads every day.”
Harris County Toll Revenues Redirected to County Coffers