By: Nichols, et al. S.B. No. 17
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the design, development, financing, construction, and
  operation of certain toll projects; granting the authority to issue
  bonds.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subsections (b) and (h), Section 223.208,
  Transportation Code, are amended to read as follows:
         (b)  A comprehensive development agreement entered into
  under this subchapter or Section 227.023(c) must include a
  provision [may include any provision that the department considers
  appropriate, including provisions:
               [(1)]  providing for the purchase by the department[,
  under terms and conditions agreed to by the parties,] of the
  interest of a private participant in the comprehensive development
  agreement and related property as required by Section 371.101 and
  may include any other provision the department considers
  appropriate, including a provision:
               (1)  [, including any interest in a highway or other
  facility designed, developed, financed, constructed, operated, or
  maintained under the comprehensive development agreement;
               [(2)     establishing the purchase price for the interest
  of a private participant in the comprehensive development agreement
  and related property, which price may be determined in accordance
  with the methodology established by the parties in the
  comprehensive development agreement;
               [(3)]  providing for the payment of obligations
  incurred pursuant to the comprehensive development agreement,
  including any obligation to pay the purchase price for the interest
  of a private participant in the comprehensive development
  agreement, from any lawfully available source, including securing
  such obligations by a pledge of revenues of the commission or the
  department derived from the applicable project, which pledge shall
  have such priority as the department may establish;
               (2) [(4)]  permitting the private participant to
  pledge its rights under the comprehensive development agreement;
               (3) [(5)]  concerning the private participant's right
  to operate and collect revenue from the project; and
               (4) [(6)]  restricting the right of the commission or
  the department to terminate the private participant's right to
  operate and collect revenue from the project unless and until any
  applicable termination payments have been made.
         (h)  A comprehensive development agreement with a private
  participant that includes the collection by the private participant
  of tolls for the use of a toll project may be for a term not longer
  than 50 years from the later of the date of final acceptance of the
  project or the start of revenue operations by the private
  participant, not to exceed a total term of 52 years.  [The
  comprehensive development agreement must contain an explicit
  mechanism for setting the price for the purchase by the department
  of the interest of the private participant in the comprehensive
  development agreement and related property, including any interest
  in a highway or other facility designed, developed, financed,
  constructed, operated, or maintained under the agreement.]
         SECTION 2.  Section 228.006, Transportation Code, is amended
  by amending Subsection (a) and adding Subsection (a-1) to read as
  follows:
         (a)  The commission shall authorize the use of surplus
  revenue of a toll project or system to pay the costs of a
  transportation project, highway project, or air quality project
  within a region [department district] in which any part of the toll
  project is located.
         (a-1)  The department shall allocate the distribution of the
  surplus toll revenue to department districts in the region that are
  located in the boundaries of the metropolitan planning organization
  in which the toll project or system producing the surplus revenue is
  located based on the percentage of toll revenue from users in each
  department district of the project or system. To assist the
  department in determining the allocation, each entity responsible
  for collecting tolls for a project or system shall calculate on an
  annual basis the percentage of toll revenue from users of the
  project or system in each department district based on the number of
  recorded electronic toll collections.
         SECTION 3.  Section 228.012, Transportation Code, is amended
  to read as follows:
         Sec. 228.012.  PROJECT SUBACCOUNTS. (a)  The department
  shall create a separate account in the state highway fund to hold
  payments received by the department under a comprehensive
  development agreement and[,] the surplus revenue of a toll project
  or system[, and payments received under Sections 228.0111(g)(2) and
  (i)(2)].  The department shall create subaccounts in the account
  for each project, system, or region.  Interest earned on money in a
  subaccount shall be deposited to the credit of that subaccount.
         (b)  The department shall hold money in a subaccount in trust
  for the benefit of the region in which a project or system is
  located and may assign the responsibility for allocating money in a
  subaccount to a metropolitan planning organization in which the
  region is located.  Money [Except as provided by Subsection (c),
  money] shall be allocated to projects authorized by Section
  228.0055 or Section 228.006, as applicable.
         (c)  [Money in a subaccount received from a county or the
  department under Section 228.0111 in connection with a project for
  which a county acting under Chapter 284 has the first option shall
  be allocated to transportation projects located in the county and
  the counties contiguous to that county.
         [(d)]  Not later than January 1 of each odd-numbered year,
  the department shall submit to the Legislative Budget Board, in the
  format prescribed by the Legislative Budget Board, a report on cash
  balances in the subaccounts created under this section and
  expenditures made with money in those subaccounts.
         (d) [(e)]  The commission or the department may not:
               (1)  revise the formula as provided in the department's
  unified transportation program or a successor document in a manner
  that results in a decrease of a department district's allocation
  because of the deposit of a payment into a project subaccount [or a
  commitment to undertake an additional transportation project under
  Section 228.0111]; or
               (2)  take any other action that would reduce funding
  allocated to a department district because of the deposit of a
  payment [received from the department or local toll project entity]
  into a project subaccount [or a commitment to undertake an
  additional transportation project under Section 228.0111].
         SECTION 4.  Subsection (b), Section 284.004, Transportation
  Code, is amended to read as follows:
         (b)  In addition to authority granted by other law, a county
  may use state highway right-of-way and may access state highway
  right-of-way in accordance with Sections 228.011 and 373.102
  [228.0111].
         SECTION 5.  Subsection (d), Section 284.061, Transportation
  Code, is amended to read as follows:
         (d)  Subject to the reimbursement requirements of Section
  373.102, a [A] county has full easements and rights-of-way through,
  across, under, and over any property owned by this state that are
  necessary or convenient to construct, acquire, or efficiently
  operate a project under this chapter.
         SECTION 6.  Subsection (c), Section 366.170, Transportation
  Code, is amended to read as follows:
         (c)  An authority has full easements and rights-of-way
  through, across, under, and over any property owned by the state or
  any local governmental entity that are necessary or convenient to
  construct, acquire, or efficiently operate a turnpike project or
  system under this chapter. This subsection does not affect the
  obligation of the authority under other state law, including
  Section 373.102, to compensate or reimburse the state for the use or
  acquisition of an easement or right-of-way on property owned by or
  on behalf of the state. An authority's use of property owned by or
  on behalf of the state is subject to any covenants, conditions,
  restrictions, or limitations affecting that property.
         SECTION 7.  Subsections (b) and (g), Section 366.407,
  Transportation Code, are amended to read as follows:
         (b)  A comprehensive development agreement entered into
  under this subchapter must [may] include [any provision the
  authority considers appropriate, including] a provision[:
               [(1)]  providing for the purchase by the authority[,
  under terms and conditions agreed to by the parties,] of the
  interest of a private participant in the comprehensive development
  agreement as required by Section 371.101 and may include any other
  provision the authority considers appropriate, including a
  provision:
               (1)  [and related property, including any interest in a
  turnpike project designed, developed, financed, constructed,
  operated, or maintained under the comprehensive development
  agreement;
               [(2)     establishing the purchase price, as determined in
  accordance with the methodology established by the parties in the
  comprehensive development agreement, for the interest of a private
  participant in the comprehensive development agreement and related
  property;
               [(3)]  providing for the payment of an obligation
  incurred under the comprehensive development agreement, including
  an obligation to pay the purchase price for the interest of a
  private participant in the comprehensive development agreement,
  from any available source, including securing the obligation by a
  pledge of revenues of the authority derived from the applicable
  project, which pledge shall have priority as established by the
  authority;
               (2) [(4)]  permitting the private participant to
  pledge its rights under the comprehensive development agreement;
               (3) [(5)]  concerning the private participant's right
  to operate and collect revenue from the turnpike project; and
               (4) [(6)]  restricting the right of the authority to
  terminate the private participant's right to operate and collect
  revenue from the turnpike project unless and until any applicable
  termination payments have been made.
         (g)  A [Except as provided by this subsection, a]
  comprehensive development agreement with a private participant
  that includes the collection by the private participant of tolls
  for the use of a toll project may be for a term not longer than 50
  years from the later of the date of final acceptance of the project
  or the start of revenue operations by the private participant, not
  to exceed a total term of 52 years.  [The contract must contain an
  explicit mechanism for setting the price for the purchase by the
  department of the interest of the private participant in the
  contract and related property, including any interest in a highway
  or other facility designed, developed, financed, constructed,
  operated, or maintained under the contract.]
         SECTION 8.  Subsection (c), Section 370.169, Transportation
  Code, is amended to read as follows:
         (c)  An authority has full easements and rights-of-way
  through, across, under, and over any property owned by the state or
  any local government that are necessary or convenient to construct,
  acquire, or efficiently operate a transportation project or system
  under this chapter. This subsection does not affect the obligation
  of the authority under other law, including Section 373.102, to
  compensate or reimburse this state for the use or acquisition of an
  easement or right-of-way on property owned by or on behalf of this
  state. An authority's use of property owned by or on behalf of this
  state is subject to any covenants, conditions, restrictions, or
  limitations affecting that property.
         SECTION 9.  Subsection (b), Section 370.311, Transportation
  Code, is amended to read as follows:
         (b)  A comprehensive development agreement entered into
  under Section 370.305 must include a provision authorizing the
  authority to purchase, under terms agreed to by the parties, the
  interest of a private equity investor in a transportation project
  as required by Section 371.101.
         SECTION 10.  Section 371.002, Transportation Code, as added
  by Chapter 264 (S.B. 792), Acts of the 80th Legislature, Regular
  Session, 2007, is amended to read as follows:
         Sec. 371.002.  APPLICABILITY.  This chapter does not apply
  to:
               (1)  a project for which the commission selected an
  apparent best value proposer before May 1, 2007; or
               (2)  a publicly owned and operated toll project, as
  defined by Section 373.001.
         SECTION 11.  The heading to Section 371.052, Transportation
  Code, as added by Chapter 264 (S.B. 792), Acts of the 80th
  Legislature, Regular Session, 2007, is amended to read as follows:
         Sec. 371.052.  NOTIFICATION TO LEGISLATIVE BUDGET BOARD [AND
  STATE AUDITOR].
         SECTION 12.  Section 371.101, Transportation Code, as added
  by Chapter 264 (S.B. 792), Acts of the 80th Legislature, Regular
  Session, 2007, is amended to read as follows:
         Sec. 371.101.  TERMINATION BY PURCHASE [FOR CONVENIENCE].
  (a)  A comprehensive development agreement must contain a
  provision authorizing the toll project entity to purchase, under
  terms agreed to by the parties:
               (1)  the interest of a private participant in the toll
  project that is the subject of the agreement; and
               (2)  related property, including any interest in a
  highway or other facility designed, developed, financed,
  constructed, operated, or maintained under the agreement.
         (b)  The provision must include a schedule stating a specific
  price for the purchase of the toll project at certain intervals from
  the date the project opens, not less than one year and not to exceed
  five years, over the term of the agreement.
         (c)  The provision must authorize the toll project entity to
  purchase the private entity's interest at a stated interval in an
  amount not to exceed the lesser of:
               (1)  the price stated for that interval; or
               (2)  the greater of:
                     (A)  the then fair market value of the private
  entity's interest; or
                     (B)  an amount equal to the amount of outstanding
  debt at that time, as specified in the comprehensive development
  agreement.
         (d)  A toll project entity may not, under any circumstance,
  purchase the private entity's interest for an amount higher than
  the stated interval amount.
         (e)  A contract to purchase the private entity's interest at
  the then fair market value as described by Subsection (c)(2)(A)
  must contain a provision detailing the calculation used to
  determine that value.
         (f)  The toll project entity shall request a proposed
  termination-by-purchase schedule in each request for detailed
  proposals and shall consider and score each schedule in each
  evaluation of proposals.
         (g)  A private entity shall, not later than 12 months before
  the date that a new price interval takes effect, notify the toll
  project entity of the beginning of the price interval. The toll
  project entity must notify the private entity as to whether it will
  exercise the option to purchase under this section not later than
  six months after the date it receives notice under this subsection.
         (h)  A toll project entity must notify the private entity of
  the toll project entity's intention to purchase the private
  entity's interest under this section not less than six months
  before the date of the purchase  [A toll project entity having
  rulemaking authority by rule and a toll project entity without
  rulemaking authority by official action shall develop a formula for  
  making termination payments to terminate a comprehensive
  development agreement under which a private participant receives
  the right to operate and collect revenue from a toll project.   A
  formula must calculate an estimated amount of loss to the private
  participant as a result of the termination for convenience.
         [(b)     The formula shall be based on investments,
  expenditures, and the internal rate of return on equity under the
  agreed base case financial model as projected over the original
  term of the agreement, plus an agreed percentage markup on that
  amount.
         [(c)     A formula under Subsection (b) may not include any
  estimate of future revenue from the project, if not included in an
  agreed base case financial model under Subsection (b).  
  Compensation to the private participant upon termination for
  convenience may not exceed the amount determined using the formula
  under Subsection (b)].
         SECTION 13.  Section 371.102, Transportation Code, as added
  by Chapter 264 (S.B. 792), Acts of the 80th Legislature, Regular
  Session, 2007, is amended to read as follows:
         Sec. 371.102.  TERMINATION OF CERTAIN COMPREHENSIVE
  DEVELOPMENT AGREEMENTS.  (a)  If a toll project entity elects to
  terminate a comprehensive development agreement under which a
  private participant receives the right to operate and collect
  revenue from a project, the entity may:
               (1)  [if authorized to issue bonds for that purpose,]
  issue bonds or other obligations to:
                     (A)  make any applicable termination payments to
  the private participant; or
                     (B)  purchase the interest of the private
  participant in the comprehensive development agreement or related
  property; or
               (2)  provide for the payment of obligations of the
  private participant incurred pursuant to the comprehensive
  development agreement.
         (b)  A toll project entity has the same powers and duties
  relating to the financing of payments under Subsection (a)(1) as
  the toll project entity has under other applicable laws of this
  state, including Chapters 228, 284, 366, and 370 of this code and
  Chapter 1371, Government Code, relating to the financing of a toll
  project of that entity, including the ability to deposit the
  proceeds of bonds or other obligations and to pledge, encumber, and
  expend the proceeds and revenues of a toll project as provided by
  law.
         (c)  The powers held by the toll project entity include the
  power to authorize the issuance of bonds or other obligations and to
  pay all or part of the costs of a payment described in Subsection
  (a)(1), in the amount determined by the toll project entity under
  Section 371.101.  Costs associated with a payment under Subsection
  (a)(1) are considered a cost of the project.
         (d)  This section shall be liberally construed to effect its
  purposes.
         SECTION 14.  Subsections (b) and (c), Section 371.103,
  Transportation Code, as added by Chapter 264 (S.B. 792), Acts of the
  80th Legislature, Regular Session, 2007, are amended to read as
  follows:
         (b)  Except as provided by Subsection (c), a comprehensive
  development agreement may contain a provision authorizing the toll
  project entity to compensate the private participant in the
  agreement for the loss of toll revenues attributable to the
  construction by the entity of a limited access highway project
  located within an area that extends up to four miles from either
  side of the centerline of the project developed under the
  agreement, less the private participant's decreased operating and
  maintenance costs attributable to the highway project, if any. A
  provision under this subsection may be effective only for a period
  of 30 years or less from the effective date of the agreement.
         (c)  A comprehensive development agreement may not require
  the toll project entity to provide compensation for the
  construction of:
               (1)  a highway project contained in the state
  transportation plan or a transportation plan of a metropolitan
  planning organization in effect on the effective date of the
  agreement;
               (2)  work on or improvements to a highway project
  necessary for improved safety, or for maintenance or operational
  purposes;
               (3)  a high occupancy vehicle exclusive lane addition
  or other work on any highway project that is required by an
  environmental regulatory agency; [or]
               (4)  a transportation project that provides a mode of
  transportation that is not included in the project that is the
  subject of the comprehensive development agreement; or
               (5)  a highway designated an interstate highway.
         SECTION 15.  Subtitle G, Title 6, Transportation Code, is
  amended by adding Chapter 373 to read as follows:
  CHAPTER 373. TOLL PROJECTS LOCATED IN TERRITORY OF LOCAL TOLL
  PROJECT ENTITY
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 373.001.  DEFINITIONS. In this chapter:
               (1)  "Local toll project entity" means an entity, other
  than the department, that is authorized by law to acquire, design,
  construct, finance, operate, and maintain a toll project,
  including:
                     (A)  a regional tollway authority under Chapter
  366;
                     (B)  a regional mobility authority under Chapter
  370; or
                     (C)  a county acting under Chapter 284.
               (2)  "Privately operated or controlled toll project"
  means a toll project that is primarily commercial in nature and is
  designed and constructed by a private entity that holds a leasehold
  interest in or the right to operate and retain revenues from the
  toll project, regardless of whether the private entity operates the
  toll project or collects the revenue itself or engages a
  subcontractor or other entity to operate the toll project or
  collect the revenue. The term does not include a toll project for
  which the department or a toll project entity contracts with a
  private entity only for engineering, design, construction,
  finance, operation, maintenance, or other services.
               (3)  "Publicly owned and operated toll project" means a
  toll project owned and operated by the department or a local toll
  project entity in which a private entity does not have a leasehold
  interest or right to operate or retain revenue from the toll
  project.  The term does not include a privately operated or
  controlled toll project, but may include a toll project for which a
  private entity provides:
                     (A)  engineering, design, construction, finance,
  operation, maintenance, or other services; or
                     (B)  financial assistance for the toll project
  that does not entitle the private entity to any ownership interest
  in or the right to operate or retain revenue from the toll project.
               (4)  "Toll project" means a toll project described by
  Section 201.001(b), regardless of whether the toll project is:
                     (A)  a part of the state highway system; or
                     (B)  subject to the jurisdiction of the
  department.
         Sec. 373.002.  APPLICABILITY.  (a)  This chapter does not
  apply to a toll project described in Section 228.011.
         (b)  Except for Sections 373.003, 373.004, and 373.005, this
  chapter does not apply to:
               (1)  the State Highway 161 project from State Highway
  183 to IH 20 in Dallas County;
               (2)  the U.S. 281 project in Bexar County from Loop 1604
  to the Comal County line;
               (3)  the Loop 49 project from IH 20 to State Highway 110
  in Smith County;
               (4)  the DFW Connector project in Tarrant and Dallas
  Counties (State Highway 114 from State Highway 114L Business to
  east of International Parkway and State Highway 121 from north of FM
  2499 to south of State Highway 360);
               (5)  the North Tarrant Express project in Tarrant and
  Dallas Counties (IH 820 and State Highway 121/State Highway 183
  from IH 35W to State Highway 161, IH 820 east from State Highway
  121/State Highway 183 to Randol Mill Road, and IH 35W from IH 30 to
  State Highway 170);
               (6)  the U.S. 290 project from east of U.S. 183 to east
  of FM 973 in Travis County;
               (7)  the State Highway 99 (Grand Parkway) project;
               (8)  the IH 635 managed lanes project in Dallas County
  (IH 635 from east of Luna Road to Greenville Avenue and IH 35E from
  south of the Loop 12/IH 35E split to south of Valwood Parkway);
               (9)  Phase 4 extension of the Dallas North Tollway in
  Collin and Denton Counties from U.S. 380 to the Grayson County line
  to be developed by North Texas Tollway Authority; or
               (10)  the Southwest Parkway (State Highway 121) in
  Tarrant County from Dirks Road/Altamesa Boulevard to IH 30.
         Sec. 373.003.  PROJECT OWNED IN PERPETUITY. Unless a toll
  project is sold or otherwise transferred to another toll project
  entity in accordance with applicable law, including Sections
  228.151, 284.011, 366.036, 366.172, and 370.171, a toll project
  procured by the department or a local toll project entity
  determined by the process under Subchapter B is owned by that entity
  in perpetuity.
         Sec. 373.004.  GOVERNMENTAL AND NOT COMMERCIAL
  TRANSACTIONS.  A transaction involving a local toll project entity
  under Section 228.011 or this chapter is not primarily commercial
  in nature but is an inherently governmental transaction whose
  purpose is to determine governmental jurisdiction, ownership,
  control, or other responsibilities with respect to a project.
         Sec. 373.005.  VALUATION DETERMINATION.  Any determination
  of value, including best value, under this chapter or other
  applicable federal or state law for a comprehensive development
  agreement or other public-private partnership arrangement
  involving a toll project for which a local toll project entity has
  exercised its option under this chapter and has complied with all
  other conditions in this chapter for the development of the project
  by the local toll project entity must take into consideration
  factors the entity determines appropriate, including factors
  related to:
               (1)  oversight of the toll project;
               (2)  maintenance and operations costs of the toll
  project;
               (3)  the structure and rates of tolls;
               (4)  economic development impacts of the toll project;
  and
               (5)  social and environmental benefits and impacts of
  the toll project.
         Sec. 373.006.  LEGAL CHALLENGES CONCLUDED. For the purposes
  of this chapter, all legal challenges to development of a toll
  project are considered concluded when a judgment or order of a court
  with jurisdiction over the challenge becomes final and
  unappealable.
  [Sections 373.007-373.050 reserved for expansion]
  SUBCHAPTER B. PROCESS TO DETERMINE ENTITY TO DEVELOP, FINANCE,
  CONSTRUCT, AND OPERATE TOLL PROJECT
         Sec. 373.051.  INITIATION OF PROCESS. (a)  At any time
  after a metropolitan planning organization approves the inclusion
  of a toll project to be located in the territory of a local toll
  project entity in the metropolitan transportation plan, the local
  toll project entity may notify the department in writing of the
  local toll project entity's intent to initiate the process
  described in this subchapter.
         (b)  At any time after a metropolitan planning organization
  approves the inclusion of a toll project to be located in the
  territory of a local toll project entity in the metropolitan
  transportation plan and all necessary environmental approvals for
  the toll project have been secured, the department may notify the
  local toll project entity in writing of the department's intent to
  initiate the process described in this subchapter.
         Sec. 373.052.  PUBLIC PROJECT BY LOCAL TOLL PROJECT ENTITY.  
  (a)  A local toll project entity has the first option to develop,
  finance, construct, and operate a toll project as a publicly owned
  and operated toll project.  A local toll project entity has not more
  than 180 days after the date on which notification under Section
  373.051(a) is provided or notification under Section 373.051(b) is
  received to decide whether to exercise the option.  The option
  period under this subsection may be extended an additional 90 days
  by agreement of the department and the local toll project entity.
         (b)  If a local toll project entity exercises the option
  under Subsection (a), the local toll project entity after
  exercising the option must:
               (1)  within 180 days after the later of the date of
  exercising its option or the date on which all environmental
  approvals necessary for the development of the toll project are
  secured and all legal challenges to development are concluded,
  advertise for the initial procurement of required services,
  including, at a minimum, design services, for the project; and
               (2)  within two years after the date on which all
  environmental approvals necessary for the development are secured
  and all legal challenges to development are concluded, enter into a
  contract for the construction of the toll project.
         Sec. 373.053.  PUBLIC PROJECT BY DEPARTMENT.  (a)  If a
  local toll project entity fails or declines to exercise the option
  to develop, finance, construct, and operate a toll project under
  Section 373.052(a), or fails or declines to advertise for
  procurement or enter into a construction contract as required by
  Section 373.052(b), the department has the option to develop,
  finance, construct, and operate the toll project as a publicly
  owned and operated project. The department has not more than 60
  days after the date the local toll project entity fails or declines
  to exercise its option under Section 373.052(a) or fails or
  declines to advertise for procurement or enter into a construction
  contract as required by Section 373.052(b) to decide whether to
  exercise its option.
         (b)  If the department exercises its option under Subsection
  (a), the department after exercising the option must:
               (1)  within 180 days after the later of the date of
  exercising its option or the date on which all environmental
  approvals necessary for the development of the toll project are
  secured and all legal challenges to development are concluded,
  advertise for the initial procurement of required services,
  including, at a minimum, design services, for the project; and
               (2)  within two years after the date on which all
  environmental approvals necessary for the development are secured
  and all legal challenges to development are concluded, enter into a
  contract for the construction of the toll project.
         Sec. 373.054.  PRIVATE PROJECT BY LOCAL TOLL PROJECT ENTITY.  
  (a)  If the department fails or declines to exercise the option to
  develop, finance, construct, and operate a toll project under
  Section 373.053(a), or fails or declines to advertise for
  procurement or enter into a construction contract as required by
  Section 373.053(b), the local toll project entity has the option to
  develop, finance, construct, and operate the toll project as a
  privately operated or controlled toll project. The local toll
  project entity has not more than 60 days after the date the
  department fails or declines to exercise its option under Section
  373.053(a) or fails or declines to advertise for procurement or
  enter into a construction contract as required by Section
  373.053(b) to decide whether to exercise its option.
         (b)  If the local toll project entity exercises its option
  under Subsection (a), the local toll project entity after
  exercising the option must:
               (1)  within 180 days after the later of the date of
  exercising its option or the date on which all environmental
  approvals necessary for the development of the toll project are
  secured and all legal challenges to development are concluded,
  advertise for the initial procurement of required services,
  including, at a minimum, design services, for the project; and
               (2)  within two years after the date on which all
  environmental approvals necessary for the development are secured
  and all legal challenges to development are concluded, enter into a
  contract for the construction of the toll project.
         Sec. 373.055.  PRIVATE PROJECT BY DEPARTMENT.  (a)  If a
  local toll project entity fails or declines to exercise the option
  to develop, finance, construct, and operate a toll project under
  Section 373.054(a), or fails or declines to advertise for
  procurement or enter into a construction contract as required by
  Section 373.054(b), the department has the option to develop,
  finance, construct, and operate the toll project as a privately
  operated or controlled toll project. The department has not more
  than 60 days after the date the local toll project entity fails or
  declines to exercise its option under Section 373.054(a) or fails
  or declines to advertise for procurement or enter into a
  construction contract as required by Section 373.054(b) to decide
  whether to exercise its option.
         (b)  If the department exercises its option under Subsection
  (a), the department after exercising the option must:
               (1)  within 180 days after the later of the date of
  exercising its option or the date on which all environmental
  approvals necessary for the development of the toll project are
  secured and all legal challenges to development are concluded,
  advertise for the initial procurement of required services,
  including, at a minimum, design services, for the project; and
               (2)  within two years after the date on which all
  environmental approvals necessary for the development are secured
  and all legal challenges to development are concluded, enter into a
  contract for the construction of the toll project.
         Sec. 373.056.  RE-INITIATION OF PROCESS. If the process
  described by Sections 373.051, 373.052, 373.053, 373.054, and
  373.055 concludes without the local toll project entity or the
  department entering into a contract for the construction of the
  toll project, either entity may re-initiate the process under this
  subchapter by submitting notice to the other entity in the manner
  provided by Section 373.051.
         Sec. 373.057.  ALTERATION OF PROCESS.  (a)  The department
  or the applicable local toll project entity may waive any step or
  steps of the process under this subchapter.
         (b)  The department and the applicable local toll project
  entity may, by written agreement, extend any time limit under this
  subchapter.
         Sec. 373.058.  SHARING OF PROJECT-RELATED INFORMATION.
  (a)  If a local toll project entity or the department fails or
  declines to exercise an option or fails or declines to advertise for
  procurement or enter into a construction contract under Section
  373.052, 373.053, 373.054, or 373.055, the local toll project
  entity or the department, as applicable, must make available its
  traffic estimates, revenue estimates, plans, specifications,
  surveys, appraisals, and other work product developed for the toll
  project to the other entity.
         (b)  On entering into a contract for the construction of the
  toll project, the department or the local toll project entity, as
  applicable, shall reimburse the other entity for shared project
  work product that it uses.
         Sec. 373.059.  QUARTERLY PROGRESS REPORTS. After the
  department or a local toll project entity exercises an option under
  this subchapter, the department or local toll project entity, as
  applicable, shall issue a quarterly report on the progress of the
  development of the toll project. The report shall be made available
  to the public.
         Sec. 373.060.  ENVIRONMENTAL REVIEW. (a)   The department
  or the local toll project entity may begin any environmental review
  process that may be required for a proposed toll project before
  initiating the process under this subchapter.
         (b)  If a local toll project entity initiates the process for
  development of a toll project under Section 373.051(a) and has not
  begun the environmental review of the project, the local toll
  project entity shall begin the environmental review within 180 days
  of exercising the option.
  [Sections 373.061-373.100 reserved for expansion]
  SUBCHAPTER C. USE OF RIGHT-OF-WAY BY LOCAL TOLL PROJECT ENTITY
         Sec. 373.101.  USE OF STATE HIGHWAY RIGHT-OF-WAY.  
  (a)  Consistent with federal law, the commission and the department
  shall assist a local toll project entity in the development,
  financing, construction, and operation of a toll project for which
  the local toll project entity has exercised its option to develop,
  finance, construct, and operate the project under Subchapter B by
  allowing the local toll project entity to use state highway
  right-of-way and to access the state highway system as necessary to
  construct and operate the toll project.
         (b)  Notwithstanding any other law, the local toll project
  entity and the commission may agree to remove the toll project from
  the state highway system and transfer ownership to the local toll
  project entity.
         Sec. 373.102.  REIMBURSEMENT FOR USE OF STATE HIGHWAY
  RIGHT-OF-WAY.  (a)  The commission or the department may not
  require a local toll project entity to pay for the use of state
  highway right-of-way or access, except:
               (1)  to reimburse the department for actual costs
  incurred by the department that are owed to a third party, including
  the federal government, as a result of that use by the local toll
  project entity; and
               (2)  as required under Subsection (b).
         (b)  A local toll project entity shall reimburse the
  department for the department's actual costs to acquire the
  right-of-way in the manner provided in the payment schedule agreed
  to by the department and the local toll project entity.  If the
  department cannot determine that amount, the amount must be
  determined based on the average historical right-of-way
  acquisition values for comparable right-of-way located in
  proximity to the project on the date of original acquisition of the
  right-of-way.
         (c)  In lieu of reimbursement, the local toll project entity
  may agree to pay to the department a portion of the revenues of the
  project, in the amount and for the period of time agreed to by the
  local toll project entity and the department.
         (d)  Money received by the department under this section
  shall be deposited in the state highway fund and, except for
  reimbursement for costs owed to a third party, used to fund
  additional projects in the department district in which the toll
  project is located.
         (e)  The commission or department may waive the requirement
  of reimbursement under this section.
         Sec. 373.103.  AGREEMENT FOR USE OF RIGHT-OF-WAY.  A local
  toll project entity shall enter into an agreement with the
  department for any project for which the entity has exercised its
  option to develop, finance, construct, and operate the project
  under Subchapter B and for which the entity intends to use state
  highway right-of-way.  The agreement must contain provisions
  necessary to ensure that the local toll project entity's
  construction, maintenance, and operation of the project complies
  with the requirements of applicable state and federal law.
         Sec. 373.104.  LIABILITY FOR DAMAGES.  (a)  Notwithstanding
  any other law, the commission and the department are not liable for
  any damages that result from a local toll project entity's use of
  state highway right-of-way or access to the state highway system
  under this subchapter, regardless of the legal theory, statute, or
  cause of action under which liability is asserted.
         (b)  An agreement entered into by a local toll project entity
  and the department in connection with a toll project that is
  financed, constructed, or operated by the local toll project entity
  and that is on or directly connected to a highway in the state
  highway system does not create a joint enterprise for liability
  purposes.
         Sec. 373.105.  COMPLIANCE WITH FEDERAL LAW.  Notwithstanding
  an action taken by a local toll project entity under this
  subchapter, the commission or department may take any action that
  in its reasonable judgment is necessary to comply with any federal
  requirement to enable this state to receive federal-aid highway
  funds.
         SECTION 16.  Section 228.012, Transportation Code, as
  amended by this Act, applies only to payments received by the Texas
  Department of Transportation under that section on or after
  September 1, 2009. Payments received by the department under
  Section 228.012, Transportation Code, before that date are governed
  by the law in effect immediately before the effective date of this
  Act, and that law is continued in effect for that purpose.
         SECTION 17.  The change in law made by this Act to Section
  371.102, Transportation Code, shall apply to the projects described
  in Subdivisions (1), (4), (5), and (8), Subsection (b), Section
  373.002, Transportation Code, as amended by this Act.  Such
  projects are governed by the remaining provisions of Chapter 371,
  Transportation Code, as it existed immediately before the effective
  date of this Act.
         SECTION 18.  The change in law made by this Act to Section
  223.208, Transportation Code, does not apply to any project
  described in Subdivisions (1), (4), (5), and (8), Subsection (b),
  Section 373.002, Transportation Code, as amended by this Act.  Such
  a project is governed by Section 223.208, Transportation Code, as
  it existed immediately before the effective date of this Act, and
  that law is continued in effect for that purpose.
         SECTION 19.  (a)  The repeal of Section 228.0111,
  Transportation Code, by this Act does not apply to any project
  described in Subsection (b), Section 373.002, Transportation Code,
  as added by this Act.  Such a project is governed by Section
  228.0111, Transportation Code, as it existed immediately before the
  effective date of this Act, and that law is continued in effect for
  that purpose.
         (b)  For the purposes of the application of Subdivision (1),
  Subsection (g), Section 228.0111, Transportation Code, or
  Subdivision (1), Subsection (i), Section 228.0111, Transportation
  Code, under Subsection (a) of this section to the State Highway 99
  (Grand Parkway) project, the local toll project entity or the
  department, as applicable, must enter into a contract for the
  construction of at least one segment of the project in the two-year
  period described by Subdivision (1), Subsection (g), Section
  228.0111, or Subdivision (1), Subsection (i), Section 228.0111.
  For each of the remaining segments, if the department and a local
  toll project entity have entered into an agreement for the advance
  funding of the initial segment, a local toll project entity or the
  department, as applicable, is not required to enter into a
  construction contract for any remaining segment before the second
  anniversary of the date a construction contract for a segment
  contiguous to that remaining segment has been entered into.
         SECTION 20.  The following sections are repealed:
               (1)  Section 228.0111, Transportation Code; and
               (2)  Subsection (c), Section 371.052, Transportation
  Code, as added by Chapter 264 (S.B. 792), Acts of the 80th
  Legislature, Regular Session, 2007.
         SECTION 21.  This Act takes effect September 1, 2009.