NEWS 8 INVESTIGATES
In response to a News 8 investigation, the Texas Department of Transportation will take action to prevent some contractors from collecting millions of dollars in bonus profits.
TxDOT rules currently allow some contractors to keep windfall profits that come from falling construction prices.
In the face of shrinking transportation dollars, TxDOT got creative with something called "pass-through" financing — maybe too creative.
In February, News 8 revealed that as construction prices fall, some contractors are earning huge, windfall profits at taxpayer expense.
It's a policy TxDOT supported.
"If it comes in under budget, that pool of money should be returned so everybody that's paying into that pool has a chance to receive those projects," said Parker County Judge Mark Riley.
In response to what News 8 found, Lt. Governor David Dewhurst has asked for a "thorough review" to preclude such payments.
On Friday, the Texas Transportation Commission, which oversees TxDOT, will vote on a new rule that limits windfall profits.
Michael Morris oversees transportation policy for the North Texas region. "I think what the commission is doing is correct, and they need to take a hard look at it," he said.
What is pass-through funding?
Instead of TxDOT paying for a new road, a local community borrows the money, assumes the financial risk, and builds the road.
TxDOT pays the community back over time, but because of falling construction prices, some projects are millions of dollars under budget.
For example, State Highway 289 in Grayson County is $15 million under budget. In this case, the county will split the windfall with the developer who built the road, a company called Pate Transportation Partners.
Pate gets the money because that was the contract negotiated with them.
That may change.
Thursday's proposed rule change would prohibit windfall profits on 11 pending projects in Texas. That, in turn, may pave the way for TxDOT to fund additional projects.
E-mail: dschechter@wfaa.com
