An Audit Report on the Department of Transportation and the Trans-Texas Corridor

February 2007

Report Number 07-015

Overall Conclusion

In 2005, the Department of Transportation (Department) signed a $3.5 million Comprehensive Development Agreement contract with a private sector entity (Cintra Zachry, LP) to partner in planning Trans-Texas Corridor 35 (TTC-35).

TTC-35 will comprise 14 percent of the Trans-Texas Corridor's planned 4,000 miles (see Appendix 6 for maps). According to the Department, Cintra Zachry, LP's role is to assist in:

- Identifying priority projects.

- Assessing those projects' preliminary feasibility.

- Establishing a process to develop potential corridor projects over an extended time period by creating a Master Development Plan.

Administration of Contracts. The Department has been successful in certain key aspects of administering its Comprehensive Development Agreement contract with Cintra Zachry, LP and negotiating the first road project for TTC-35. However, weaknesses in the Department's accounting for project costs create risks that the public will not know how much the State pays for TTC-35 or whether those costs are appropriate.

TTC-35 Estimates. The Master Development Plan contains conceptual plans for the design, construction, financing, operation, and maintenance of TTC-35. The Master Development Plan anticipates that TTC-35 could be developed through a series of 50-year contracts over a staggered timeframe and could cost more than $105.6 billion. According to the Master Development Plan, the design, right of way, construction, operations, maintenance, and financing costs will be provided through a developer, but in some cases these items could be partially paid by the State. There will be a separate contract for each segment, or group of segments, of TTC-35; each contract will be between the segment's developer and the Department. As of January 2007, none of these segment development contracts had been executed, although the Department is currently negotiating such a contract for State Highway 130 (segments 5 and 6) with Cintra Zachry, LP.

Reliability of Financial Information. There is a lack of reliable information regarding projected toll road construction costs, operating expenses, revenue, and developer income. Auditors made an effort to sum the elements of costs, operating expenses, revenue, and developer income contained within the TTC-35 Master Development Plan. Upon its review of the sums, the Department stated that this financial information was not correct because it is not possible to accurately estimate profits due to many unforeseen variables. This report contains financial information auditors summed from the Master Development Plan for every 10 years of the 50-year life of the projects (see Table 8 in Appendix 2).

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