Texas Parks and Wildlife Commission
Ad Hoc Infrastructure Committee

Jan. 28, 2004

Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744

BE IT REMEMBERED, that heretofore on the 28th day of January, 2004, there came on to be heard matters under the regulatory authority of the Parks and Wildlife Commission of Texas, in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

Robert L. Cook, Executive Director, and other personnel of the Texas Parks and Wildlife Department

P R O C E E D I N G S

MR. PARKER: The first order of business will be approval of previous minutes.

MR. HOLMES: So moved.

MR. MONTGOMERY: Second.

MR. PARKER: We have a motion from Commissioner Holmes and a second from Commissioner Montgomery. Do I hear a — are there any opposed?

(No response)

MR. PARKER: Hearing none, the motion carries.

Committee Item Number 1 will be the Chairman's Charges.

MR. COOK: Thank you, sir. Three primary charges are listed in your notes from this morning, again, for your consideration and review. They revolve around completing our existing bond issues, which is something I think we're well on track, and you'll hear more about it every one of these meetings — our briefings from Steve and his folks — to track and manage our Lone Star Legacy Development Projects such as Government Canyon, Texas River Center, World Birding Center.

And also finally to incorporate where reasonable, where it makes sense, into our Sustainable Design, Construction and Energy Conservation message in our repair and development projects. A kind of fun thing, actually, that we got involved with and we're getting very good reception to, and that our people are doing a great job on.

Those are our primary charges that we currently have listed, and again, if you have suggestions or comments on them, we'd be glad to have them. Thank you, sir.

MR. PARKER: Committee Item Number 2, Capital Construction Program Update. Mr. Steve Whiston.

MR. WHISTON: Thank you, Mr. Chairman, Chairman Fitzsimons. For the record, my name is Steve Whiston. I'm the Director of the Infrastructure Division. My briefing this afternoon will focus on the status of our bond programs, as indicated in our charge. And to highlight for you our capital repair needs for FY '06 and '07, as well as our capital goals for the future, I'm pleased to report that, as Mr. Cook indicated, that we are continuing to make great progress with the expenditure of our bond issues.

As I reported to you in our last meeting, we've completed the first two installments, or issues, of our revenue bond program that we received in FY '98 and FY '99. We anticipate fully extending the remaining revenue bonds by the end of this calendar year or soon after. To date we've completed 379 of the 419 funded projects funded by revenue bonds. We've expended a total of about $61 million of the $64.4 million bond proceeds that was generated by this bond program.

We received the first major installment, or $36.68 million of our Prop 8 General Obligation bond program a year ago this month. Of the 85 projects that were funded with those funds, 22 projects are now complete; 14 are in construction; 43 projects are currently being designed; one project is out for bids; and only five projects at this time remain scheduled.

We've expended so far about $3 million of G.O. bonds, and have encumbered about $7 million in design and construction contracts. And again, we're on schedule and making good progress toward the completion of this issue as well.

As you recall, the first issue of Prop 8 bonds — that $36.68 million — was intended to be the first of three installments of the total of $101.5 million bond authority that the legislature provided us. The second installment was intended to be issued in our current or existing biennium. And the third plan for FY '06-'07.

In this last session, as we discussed before, the legislature did not appropriate the debt service for our second issue, so no funds were made available to us this fiscal year, or for '05. Our next opportunity to receive bond proceeds will be fiscal year '06-'07, where we propose to request $46.5 million, and then a final installment of $18.4 million in request of bonds for the fiscal year or biennium FY '08-'09. And I'll break down that $46.5 million request for you in just a little bit in a slide to follow.

Regarding Connolly, making great progress, steadily spending down our partner development bonds, or Connolly bonds. As you recall, this is a $16.3 million bond authority that was approved in 1999 by the legislature to fund conservation and education projects. The proceeds from these bonds are being used to construct the World Birding Center, Government Canyon State Park, and a new Visitor Center — we hope soon a new Visitor Center at San Jacinto.

As well, a significant amount of these funds are now encumbered against, or intended to be used for, land acquisition, for parks projects to include access, habitat and the acquisition of park in-holdings. We've excluded a little over $8.5 million of this Connolly Bond program, and the remaining 7.8 million is currently scheduled, or obligated, to other projects.

Each fiscal year — I've had an opportunity to share with you on a couple of occasions that we established for ourselves an expenditure goal for our capital program, for our division and for the agency. Our goal last year in FY '03 was to expend $20 million in the fiscal year. We fortunately were able to spend 21.9 million last year, and exceeded that goal.

So we decided to raise the bar this year, and we've set our expenditure goal for FY '04 at $22 million. So far, as of the end of December, our expenditure target for the agency was 6.7 million, and we've surpassed that by about 600,000. So we're hopefully expecting to continue to stay ahead of the curve with our expenditure goals.

Mr. Chairman, Commissioners, before we move into, and I talk a little bit about our future capital needs, I thought it would be appropriate this afternoon to share with the committee some interesting facts about our statewide infrastructure. I think it's interesting and appropriate for you to understand and know that, within our system, we operate and maintain 78 state parks, nine state natural areas, 33 state historic sites, 55 wildlife management areas, seven fish hatcheries, and 28 law enforcement offices.

These resources that I mentioned sit on approximately 1.4 million acres. Within those parks and wildlife management areas and hatcheries are 2,200 structures or buildings. We have 642 restrooms, comfort stations or bathhouses in our systems that are supported by 255 water and wastewater systems. We provide over 8,000 campsites and 4,269 picnic sites statewide. There's 133 boat ramps in our systems, and 75 fishing piers.

There's about 1,800 miles of roadways in our system, and 1,300 miles of trails for hiking, backpacking, bicycle and equestrian use. In our system we've got four golf courses, 12 swimming pools, a battleship, a railroad, an aerial tramway, three living history farms, a lighthouse and an historic brewery, just to name a few.

It's a big system. It's a gigantic infrastructure. We estimate that the replacement value of our assets statewide to be a little over $1 billion.

I wanted to lay that groundwork because I feel it's appropriate to understand that this gigantic infrastructure requires us to continue over time to provide regular maintenance and repairs to keep these facilities in shape. Our statewide capital repair needs are inventoried and collected in our Facility Management System, or FMS. We depend on this system to identify our repair needs, and with the help of the resource divisions, to help establish our repair priorities for each capital funding request.

Currently the total of all identified, unfunded capital repair needs recorded in FMS is estimated about $80.7 million. We estimate that about 25 million of that total, or of those projects, we consider critical, or at least more urgently needed. The major components of our capital repair program and that FMS needs database are facility repairs whose project costs we estimate to be right now currently about 51.6 million; water-wastewater renovations, we estimate the need to be right now about 16.3; historic preservation, or the restoration and repair of our state historic sites program, we have an estimated need of about 8.7 million in our database; and for ADA projects, or projects to retrofit facilities to bring them into compliance with the Americans for Disabilities Act, that cost is estimated right now at about $4.1 million.

In order to more strategically address our infrastructure capital needs of the department, and to set the stage for this next legislative session, I'd like to brief you a little bit about our capital goals for the future and for this next biennium.

We feel strongly that our number one goal, with your support in this next legislative session, is to get the legislative appropriation of debt service to allow the issue of the next installment of our General Obligation, or Prop 8, bond funds. We currently estimate the debt service cost to be about, for this $46.5 million issue or installment, in the worst case, to be about $3 million over the biennium.

There are, of course, many different scenarios that we're going to consider in planning how much and when we need to draw that money, or access those proceeds, in order to implement our projects throughout both '06 and '07. So we actually expect that debt service to be smaller, but in the worst case, we project it could be as much as 3 million.

As I mentioned earlier, that Prop 8 request, that $46.5 million, is intended to include first the allocation of $9 million per year for a total of 18 million over the biennium for statewide major repair. That's how we intend to spend that money. We plan next to initiate the renovation of the Battleship Texas. We're going to need 12.5 million for dry dock repairs to the ship's hull, to make deck repairs, and for repairs to the berth and shore line.

At Levi-Jordan Plantation we've invested, right now, $260,000 from our '03 Prop 8 funds for master planning, archeological investigation and the stabilization of the plantation house. We're going to need an additional 3.84 million in '06-'07 as our state contribution to that project. I think it's important to note that the project is going to need an additional 2.1 million from outside private funding sources in order to make that project complete.

An additional 750,000 is identified or proposed for the repair and renovation of the Admiral Nimitz Hotel at Admiral Nimitz. And finally, 11.4 million is needed in FY '06-'07 to complete the restoration of the San Jacinto Battleground to do site work and utilities and to construct some new facilities there.

MR. COOK: Steve?

MR. WHISTON: Yes, sir?

MR. COOK: Is it correct — and again, particularly for our new commissioners here — that three of those items are specified in the legislation? Battleship, Levi-Jordan and San Jacinto?

MR. WHISTON: Correct. In fact, in the legislation, all five of those items are indicated.

MR. COOK: Nimitz also?

MR. WHISTON: Yes, sir, Nimitz as well. Yes, sir. All are prescribed. All our legacy projects, all to meet our Chairman's Charges.

MR. COOK: The only one that's got some flex in it would be the $18 million on the major repair.

MR. WHISTON: Yes, sir.

MR. HOLMES: Specified, but not necessarily funded.

MR. WHISTON: Yes, sir.

MR. COOK: Not funded at all, at this point.

MR. WHISTON: Yes.

MR. FITZSIMONS: Have them fund the mandate.

MR. WHISTON: I'd like to just real briefly give you some examples of some of the capital repairs that $18 million would be directed to, that we anticipate to fund with Prop 8 funds. First, the CCA Marine Development Center. We've got a $500,000 priority project there to replace pond liners. That site near Corpus Christi on the Laguna Madre, one that we're going to consider seriously for funding with this next $18 million installment.

As well, A.E. Wood Fish Hatchery — we have a $1.5 million need there to replace pond liners and to repair and install the drainage between those ponds and the storage reservoir at A.E. Wood.

We've got numerous projects across the state at wildlife management areas. Water and wastewater projects, roof repair projects, Elephant Mountain, J.D. Murphy, just to name a couple.

In parks, a significant water-wastewater project, unfunded at this point, to replace the water and wastewater treatment systems there at Lake Livingston. It's got a price tag of about $1 million that we anticipate will be directed out of those 18 million made available to us next year.

And lastly, a need in our Historic Sites program for about 500,000, or 460,000 to be more accurate, to make interior and exterior structural repairs to the mission, to do some roofing and some site work that's been much needed at Goliad.

Just to give you an idea of a few of the projects that are going to make up our list of funding requests for that 18 million.

Our second goal for '06-'07 we believe would be to secure the additional funding for minor repairs and preventive maintenance. We propose requesting a total of $9 million over the biennium to fund minor repair and maintenance programs for state parks, wildlife, inland and coastal fisheries, law enforcement, and communication division facilities. These minor repair funds, as I'm sure you realize, are crucial to us, and they enable us to address problems before they become major repairs. And it's important that we have an opportunity to continue that program.

Our third goal for '06-'07 would be to gain the legislative approval of an appropriate rider to allow the expenditure of the revenue generated from the sales of the new Freshwater Fishing Stamp. Phil and Gary briefed you about our new stamp program this morning, and it's going to be necessary that we get legislative appropriation through a rider that allows us to expend those funds that are going to be generated.

As Phil shared with you, this new stamp is going to be available in September '04, and the estimated annual revenue from the sale of that stamp is going to be, as Phil indicated, from 4 to 4.5 million. And those funds are going to be dedicated to hatchery repair, renovation and replacement.

MR. MONTGOMERY: Real quick question. We got the stamp but we can't spend the money?

MR. WHISTON: Not until we get legislative authority or appropriation to spend it. Yes, sir.

MR. MONTGOMERY: Was that an oversight?

MR. DUROCHER: We have authority to spend it this year, but it's in a rider. It's not in our appropriations, not under the appropriations bill.

MR. MONTGOMERY: Oh.

MR. DUROCHER: We would prefer it be in our capital appropriations to give us the authority to set up another rider.

MR. MONTGOMERY: Is the Wood facility salt or freshwater?

MR. WHISTON: It's freshwater.

MR. MONTGOMERY: So will it come out once we get the authority?

MR. WHISTON: It would not be included in this stamp revenue bond program, A.E. Wood.

MR. DUROCHER: When we put a list of projects together that we were going to seek to stamp the fund, the A.E. Wood was not in that because it had already been approved as a Prop 8. Because part of the Prop 8 — justification for the Prop 8 — was to renovate fish hatcheries. We didn't get everything that we needed. We made a list of projects that, if we got any Prop 8 money, we would spend it on these projects, and the A.E. Wood liners was part of the Prop 8.

Now, we didn't get the debt service, so we never got funded. We could use the stamp money for that, but it would come out of another project that was on our list.

MR. MONTGOMERY: But we can't use the money for any other purpose?

MR. DUROCHER: No, it can't be for any other purpose.

MR. COOK: I think that's an excellent question and an excellent point in that, when we went to the legislature and requested the Prop 8 funding. When that proposition went out to the people of Texas to vote on, part of the support for Prop 8 was that we would utilize those funds in our fishery center, our hatcheries, our facilities that had to do with fishing — saltwater and freshwater.

But there was a limited number of them in there. The proposition was limited to 100 million, and so the Fishing Stamp specifically focuses that funding toward freshwater. So I think it would be wise to, as we get some additional Prop 8, to continue to utilize some of that funding toward the fisheries, as we committed to when we asked for the funding.

MR. WHISTON: Our last goal for '06-'07 as we anticipate the session, is legislative appropriation for supplemental operating budget funds to support our capital program. In the last two sessions, the legislature has reduced our operating budget and redirected those operating costs to bonds or to project dollars to our capital program. We project, as a result of that, that in FY '06-'07, that $1.4 million per year of capital bond funds are going to be required to pay for our operating costs — our costs for operating our divisions, operating expenses.

This is $2.8 million over the biennium that we believe could be used for capital repair critical projects. Bricks and mortar, as opposed to paying salaries. So we would like to approach the legislature, hopefully to enable us to seek approval to reinstate some of those operating expenses.

MR. PARKER: Does everybody understand what he's talking about? They gave us ten bucks to do all this money, but then they are forcing Mr. Cook and the department to take $2.80 out of the ten bucks they gave us to run the department. You understand what I'm saying?

MR. COOK: And that has been directed from the legislative finance people as to utilize more of that bond money for our infrastructure staff specifically, and to —

MR. PARKER: A sleight of hand.

MR. COOK: So we have done so. And we're appreciative of their consideration.

MR. WHISTON: Finally, I'd like to conclude this afternoon with sharing with you some of our long-term goals for the future. First, we desperately need, in our opinion, a sustainable funding source for scheduled repairs, maintenance and minor repairs, rather than to be required, or to remain dependent on the irregular issue of bond funds. Repairs are things we got to do in order to maintain our system. We certainly agree that capital improvement or development, or expanding or increasing facilities is an appropriate need that could be funded out of bonds, but we believe that to do business properly, a sustainable or renewal source for scheduled repairs is necessary.

In addition to our long-term need for facility repair, we are also seeing a growing backlog of road repairs, road and parking lot repairs in the system. If you recall, in 1995 the legislature authorized TXDoT to provide $5 million a year through our MOU with that agency to construct, repair and maintain roads for Parks and Wildlife. At the time, we were certainly really grateful, and we were optimistic and felt like at the time that that additional $5 million would help us keep pace with the need.

But over time, that's proven not to be the case. We currently schedule repair projects for roads and parking, and obligate funds four years in advance. Our concern currently is that we have an unfunded need right now, not scheduled with TXDoT, approaching about $59 million for repair and maintenance. All of those projects certainly are not critical, as the ones scheduled, but it still points to the fact that $5 million a year is not in keeping with our need. So it's something we would also like to consider in our relationship with that agency.

Second, as noted in the slide, is future capital funding for facility development, construction of new facilities, the opportunity to expand and improve existing facilities statewide. Our current estimated need for capital improvement and development is about $40 million. This includes identified projects to replace hatcheries and coastal fisheries, to construct boat storage facilities, to construct group facilities, dining halls, convert shade shelters to cabins in state parks, to build new ADA restrooms where they're needed in the system, or to expand or to renovate any of our inadequate, outdated or outgrown facilities in our system.

Finally, for some time now, we've been wrestling with the very real need to construct a new game warden academy. Our present facility here in Austin on 51st Street is 36 years old, built in 1968. Law enforcement has occupied that building since 1976. The building is in disrepair. We've really outgrown that building. That facility no longer has adequate space for classrooms, for offices, or for any of the training facilities needed to operate a game warden academy. So that's a real important need for us in our long-term future.

Looking a little farther down the road, we believe it's important as an agency that we begin to look for opportunities, as Scott and Gene briefed you on this morning. Opportunities and funding sources for the acquisition of new public lands and the development of new facilities to meet the goals laid out in our Land and Water Conservation Plan, as Scott briefed you earlier. Those goals and that plan clearly have long-term capital implications and capital costs that, as a department, we're considering.

That concludes my presentation. I'd be happy to answer any questions.

MR. PARKER: Any questions?

MR. BROWN: Sustainable funding source — how do you propose it?

MR. PARKER: Say that louder.

MR. BROWN: On developing a sustainable funding source, how do you propose that we do that, or what do we need to do?

MR. WHISTON: There might be others that could answer that question better. Opportunities are basically limit. We have the opportunity to get additional GR funds appropriated to our agency to fund that. We could look to fee increases to help offset some of those costs.

MR. COOK: The obvious question — I think it has to be new money. I do not think, in all honesty, that we can fund those projects in any significant proportion of the dollars needed, particularly in state parks. I don't believe we can raise the fees to the point that we can expect that kind of funding opportunity.

There have been a number of programs around the nation in other states to fund such levels of funding. You know, everything from a tax on the water tap, to a real estate tax, to car registration transfer of tax. You know, increase in sales tax, a couple of states have done that. But the bottom line, and the reality is, that in all of those cases it has come from new money — additional taxes, additional fees, on the people of that state.

For instance, we had a good briefing in Executive Session today about the Land and Water Plan, and some of the land opportunities out there. There are some other alternatives, and obviously, again, it's a matter of priorities. There are some of these needs that are clearly of higher priority. We wanted to share with you today, not a dream — it's not a —

MR. PARKER: It's reality.

MR. COOK: It is a need for the additional repair and maintenance in particular, and the routine repair and maintenance of what we have, is high on the list.

MR. MONTGOMERY: How much revenue comes from the sporting goods tax above the cap that was put on us? Because that's the logical —

MR. COOK: There have been all kinds of numbers tossed around, Commissioner, but the last pretty solid number that I remember — and Walt, correct me if I'm wrong — was somewhere in the range of 60 to $80 million.

MR. MONTGOMERY: Above the cap?

MR. COOK: Above — yes. I mean, it's in the —

UNIDENTIFIED: Eighty total.

MR. COOK: Eighty total? Okay.

MR. HOLMES: And we're capped at 32, so —

MR. COOK: And keep in mind that, at this point in time it really is not necessarily related to —

MR. MONTGOMERY: It's old money.

MR. COOK: It's just general money.

MR. FITZSIMONS: It's old money, but it's in General Revenue, so you are goring somebody's ox when you get it.

MR. MONTGOMERY: At the same time, I think — you're talking about new taxes in this environment, with respect to the leadership we have, is not going to be —

It's not going to happen. And we may all be out of jobs. But the philosophical high ground, we talk about user fees, which that one resembles a little more. We've got legitimate need.

MR. FITZSIMONS: There's a legitimate connection between the payer and the benefit, and I agree with you. And I learned when I got interested in the Sporting Goods Tax was that we keep looking at the number and the cap. And it was pointed out to me by the retailer that Academy — they were on our advisory committee — well, it depends on what you include as a sporting good. He said, We can make that number really big if you roll in the hiking boot. But some shoes are out and some shoes are in. It's the typical story of how you make up the list.

MR. HOLMES: But the cap is a dollar cap, right?

MR. FITZSIMONS: Correct.

MR. HOLMES: And the sales of sporting goods are going up pretty significantly.

MR. FITZSIMONS: Yes. And then people who are buying those sporting goods are going to use them in state parks that are in disrepair. That's always our argument.

MR. MONTGOMERY: The leadership that put that cap on this department isn't there, and might be a chance to think fresh about that.

MR. HOLMES: At least you could index it to increase sales.

MR. MONTGOMERY: Take a percentage of it.

MR. FITZSIMONS: Make the list bigger.

MR. HOLMES: That wouldn't hurt either, but that comes out of somebody else, too.

MR. PARKER: There's no doubt about it, we've got a serious problem.

MR. FITZSIMONS: I can imagine, with the few structures I have to worry about, 2,200 falling apart —

MR. PARKER: Any other questions?

MR. COOK: I believe that's it, sir.

MR. PARKER: I think that this committee has completed its business. We'll move on to the next committee.

(Whereupon, at 4:50 p.m., the meeting was adjourned.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission

Ad Hoc Infrastructure Committee

LOCATION: Austin, Texas

DATE: January 28, 2004

I do hereby certify that the foregoing pages, numbers 1 through 24, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Parks and Wildlife Commission.

2/16/04
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731


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