AGC in Motion

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Frank and John

Frank Holzmann (left), interim director of the Strategic Contract Management Division at TxDOT, and John Rempe (Balfour Beatty Infrastructure), chairman of AGC’s Alternative Delivery Committee, led the discussion during the quarterly meeting of the AGC/TxDOT committee.

The design-build issue likely will get a thorough review in the next session of the Texas Legislature as TxDOT is scheduled for Sunset consideration. While discussing the design-build process, TxDOT Chief Engineer Bill Hale said, “There is a method behind our madness” and described the selection process “as objective as possible.”

Committee members acknowledged a need to educate folks as many equate toll roads with “design-build.” Not all design-build projects are toll roads.

Alternative Delivery

The AGC/TxDOT Alternative Delivery Committee met at the Chapter Office to discuss the design-build selection process; quality testing requirements; alternative technical concept and review procedures; technical provisions of the design/build contracts; and the future use of design/ build and comprehensive development agreements.

Highway Funding

Highway Funding Task Force Chairman Johnny Weisman (Hunter Industries) leads discussion during the meeting. Industry leaders are concerned about nearly 40 “performance measures” not included in the HB 20 bill language and also about a need for aggressive allocation of Prop 1 and Prop 7 funds.

Concern exists that legislators may use too much of the funding to pay down previous construction debt. Industry leaders fought hard to increase funding for construction projects and don’t want to see that effort diluted.

“This is a political issue, not an engineering or a financial issue,” Doug Pitcock (Williams Brothers Construction) told the task force “Stockpiling money will kill us.”

Johnny emphasized the importance of communications with Senate Transportation Chairman Robert Nichols, R-Jacksonville, House Transportation Chairman Joe Pickett, D-El Paso, and Texas Transportation Commission Chairman Tryon Lewis to help get “more aggressive” in the allocation of the construction funding.

The Task Force also will ask TxDOT for Prop 1 and Prop 7 funding projections.

Larry Gonzales

Rep. Larry Gonzales promised a more efficient Sunset Commission review of TxDOT while speaking to the AGC of Texas membership luncheon in May.

AGC of Texas members will be paying close attention for legislative changes affecting TxDOT operations.

The Republican legislator from Round Rock was recently named chairman of the Sunset Commission whose job obligates a periodic review to ensure state agencies remain efficient in carrying out their respective missions.

But sometimes the Sunset process itself becomes inefficient and the reviews of major agencies, such as the Texas Department of Transportation, take a detour – especially when state legislators jump in. Agencies are supposed to undergo the “sunset” review every 12 years, but TxDOT has failed to survive “sunset” legislation in recent years.

“This is one of those bills that turns into a Christmas tree because every member has their own idea of transportation,” Chairman Gonzales told AGC members. “Rather than file their own bill, they throw it on the TxDOT sunset bill because it’s a must-pass bill – and, with the weight of all that garbage on there, that bill winds up not passing.”

The last TxDOT sunset bill died under the weight of 222 amendments. Rep. Gonzales, who spent a couple of decades in the Texas Capitol as a legislative staffer before his 2010 election, promises “you will see a very different process this time.”

Specifically, he wants to include his colleagues in the process at the front end to avoid gumming up the bill later in the legislative session, which opens in January.

“There’s going to be more participation, cooperation and collaboration of the entire body,” he assured AGC members. “The reason you see 222 amendments is because members don’t feel they have had their shot; they don’t have their say. We’re going to change that.”

Chairman Gonzales figures it’s fair to put TxDOT under the microscope for a few weeks every 12 years “for a top-tobottom look at everything they do.”

But it’s not fair to put TxDOT leaders through that grilling process three times in eight years, he said: “I need TxDOT to build roads, bridges and infrastructure. I need TxDOT doing their job. When the politics of the Sunset process requires that agencies to go off their mission, then the process hasn’t worked. I need the agencies to do their job.”

The sunset process may find ways for TxDOT to improve and streamline their operation but there’s no question the agency will continue, he said.

But the new chairman emphasized he wants the Sunset Commission to focus on TxDOT’s structure and procedures instead of on policy. He expects the TxDOT review to start later this year.

Joe Pickett Chairman

House Transportation Chairman Joe Pickett appreciated the AGC of Texas fundraiser reception, but the presentation of a custom drumhead will provide longer-lasting memories and really fired up the El Paso-based legislator.

“That’s bad-ass!” he exclaimed after Public Affairs Chairman Doug Walterscheid (J. Lee Milligan) unveiled the specialized artwork revealing an emotional Pickett (a drummer who plays in the House of Rock and Roll band) in performance.

The artwork describes Pickett, D-El Paso, as a “Texas Road Warrior.”

“It’s going to be the center of the office,” he said later. “I’m going to be proud to display it. It’s just too bad it doesn’t have and AGC logo on it, but I’ll tell everyone where it came from.”

Unlike typical politicians, Pickett rarely looks at a photo of himself.

“I don’t like photos of myself, but this one worked out OK,” he said. “I was totally surprised because it’s so personalized.”

The drum head also includes the type of drum sticks that Pickett uses: “The whole thing is awesome.”

And it was the idea of AGC of Texas President Jeff Smith (Smith and Company) who had seen previous work by drummer and artist John Douglas, of Montgomery, Texas.

“I thought Chairman Pickett would like something like that. Who in the world other than Pickett would like that?” President Smith said, laughing. “It’s something that he will keep forever. Even if he quits being a rep, he will still have this at 90.”

Douglas has produced designs for musical instruments for such musicians as ZZ Top, Aerosmith and Red Hot Chili Peppers.

Zack Burkett

Zack Burkett III (Zack Burkett Co.) received applause Monday (May 2) after returning from months of recuperation following knee surgery and infection complications.

“I’m glad to be back among the living,” Zack told his AGC of Texas colleagues. The former Chapter president has been sidelined since January. “It’s a hard-go, a long process,” Zack said of his recovery.

Bobby Ranthum

Bobby Ranthum addresses attendees of Central Texas Future Leadership Council happy hour held in Georgetown, TX. Bobby is the Area Engineer in Georgetown and discussed TxDOT’s plan to push out projects amidst the influx of funds from recently passed Proposition 7.

Victor Vandergriff

Texas Transportation Commission Victor Vandergriff attended the June Board of Directors Meeting to discuss commission initiatives, including the department’s ethics policy and how it would apply to AGC and contractors.

Aaron Cabaza

Aaron Cabaza (Aaron Concrete Contractors) visits with Rep. Gonzales after his speech during the Monthly Membership Luncheon.

Seth Schulgen

President-Elect Seth Schulgen (Williams Brothers Construction) spoke to the AGC of Texas board June 6 about a special Asprey shot-gun that retired 4-Star General Tommy Franks donated for the AGC scholarship program. King Hamad of Bahrain gave the shot gun to the general, which is valued at $140,000.

Seth sought board approval to maximize the proceeds from the shot-gun by consulting with a broker and possibly selling it outside AGC’s annual scholarship auction. The general put no conditions on his gift. He simply wants the AGC scholarship program to get the maximum benefit from the shot-gun.

AGC leaders also will consult with Joe McBride of Mc- Bride’s Guns in Austin for his opinion on how to best market the special gift. A gun broker would get a commission from any sale.

Derek Angel (Angel Brothers) and several other members prefer that AGC members get an opportunity to buy the gun, once the minimum net value is determined The AGC Scholarship Gala is scheduled for Oct. 5 at the Four Seasons Hotel in Austin.

Glenn Hegar

Texas Comptroller Glenn Hegar told AGC of Texas members June 7 he would check with his staff regarding the Prop 7 funding for highway construction. The proposition will generate $2.5 billion a year in additional highway funding, once the state collects $28 billion in general sales tax revenue.

Responding to a question about the payment schedule (TxDOT apparently says the agency cannot let Prop 7 projects until the $28 billion threshold is reached), the comptroller said he thinks he can transfer “part of that money every single month because once we hit the number, I don’t need to wait until the end of the year to transfer the money.”

The Prop 7 funding kicks in for the 2018 fiscal year, which opens Sept. 1, 2017. The $2.5 billion per year for highway construction will come from general sales tax revenue. Additional money will come from motor vehicle sales (starting in fiscal year 2020).

The comptroller told AGC members he would have a definitive answer about the Prop 7 payment schedule when he meets with them at the AGC Management Conference in Santa Barbara next week.

The comptroller provided AGC members a fairly confident economic report despite a 7 percent decline in May sales tax revenue from May of last year. May 2015 sales tax revenue was the second highest ever for Texas. General sales tax revenue makes up 54 percent of the state’s total revenue; that number hits 62 percent when vehicle sales tax is added: “Sales tax revenue drives the state budget – period,” Hegar said.

The state’s revenue for the 2016 fiscal year through May is 1 percent off from what the comptroller estimated last fall: “We’re pretty much on the money.”

But he predicted the state’s next budget cycle “will be a lot tougher” because a $4 billion tax cut means less revenue, he said, adding that Texas “still doesn’t have enough money for roads (to accommodate population growth and traffic congestion.)

Texas, however, remains in much better financial shape than nearly every other state. Among the four mega states (California, Texas, New York and Florida), Texas clearly stands out and will be in much better shape to handle the next recession, he said. The next recession, he added, is a matter of “when” – not “if.”

Part of the state’s financial stability can be seen with the $9.6 billion currently sitting in the Rainy Day Fund (Economic Stabilization Fund, which lawmakers created in 1987 to help weather economic downturns.)

The comptroller laughed when asked to predict future oil prices.

He noted that the “widest swing down” in oil prices from one year to the next has been 53.5 percent during the past 22 years. The widest swing up from one year to the next over that 22 period has been 83 percent, he said. The smallest one-year decline has been 14.5 percent.

His office estimates oil prices at around $56 a barrel next year. At the time of the meeting, prices hovered around $49 a barrel.

Roger Albert DBE Report

Roger Albert (Reece Albert) provides a DBE report at the June 7th meeting of the AGC of Texas Board of Directors. Roger told the board he’s impressed with Michael Bryant, the new director for TxDOT’s Office of Civil Rights.

“He’s a smart guy. Nice guy …. He’s helping us move forward on these issues,” Roger said.

He discussed several issues, such as the 14 different log-in locations “to do business with TxDOT. Hopefully, sometime – even before I retire – they will have a single log-in location.”

He also expressed concern about confusion with low bids whose commitments or good faith efforts are later determined not to be compliant with DBE requirements: “What happens to the bid” What happens to that project?”

“We have a select group to figure out where we are,” he said.

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