Mar. 25-26, 2009 Commission Meeting Agenda
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Texas Parks and Wildlife Commission
Infrastructure Committee

March 25, 2009

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

BE IT REMEMBERED, that heretofore on the 25th day of March, 2009, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission 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:

P R O C E E D I N G S

COMMISSIONER HOLT: Let me see, the first order of business is the approval of the minutes from the previous Committee meeting, which have already been distributed. Do I have a motion for approval?

COMMISSIONER MARTIN: So move.

COMMISSIONER HOLT: Okay. Margaret Martin —

COMMISSIONER DUGGINS: Second.

COMMISSIONER HOLT: — with a second, Duggins. All in favor?

(A chorus of ayes.)

COMMISSIONER HOLT: Any opposed?

(No response.)

COMMISSIONER HOLT: No. Motion carries.

We have just one item, Committee Item 1, update on TPW — no, we have two, sorry — update on TPWD progress on the Land and Water Resources Conservation and Recreation Plan. Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman. Just one quick item. It is a rare moment in Austin these days when TxDOT is bragged on, and so I want to provide a little bit of that. We've got a great partnership with them. I think at the last Commission meeting, or the one before, Scott gave a very comprehensive overview of the impacts to the facilities from Hurricane Ike, and a big part of that was a tremendous amount of debris accumulation on our Wildlife Management Areas there on the upper coast and in our state parks. And through a coordinated partnership with TxDOT, they have assumed all of the responsibility for the debris clean up, which in the aggregate will save us, you know, something to the tune of $16- to $17 million that we don't have to pay for.

This is a phenomenal partnership when you think about a facility like the Candy Abshier Wildlife Management Area where you had, because of the storm surge, an accumulated debris pile that was 30 or 40 acres in size. So imagine Memorial Stadium times 30, and in some places 10 to 12 foot deep with coastal accumulated debris. And so they have just done a remarkable job in terms of tackling that project. We expect most of that to be done by early summer.

A lot of the Wildlife Management Areas at Lower Neches and Candy Abshier are already done; we expect the Murphree area clean up to be completed by the end of this month; be working on Galveston and Sea Rim, and so TxDOT has really, really stepped up here and it's a phenomenal partnership with our different divisions.

Infrastructure has played a major role in helping to do that; Scott's been very involved with that partnership at a high level; and then our folks on the ground, folks like Jim Sutherlin out at the Murphree. Very, very successful.

So I wanted to make sure all heard that. It's been an enormous benefit to this Agency as we confront these very, very significant costs of rebuilding and recovering after Hurricane Ike. So thank you, Mr. Chairman.

COMMISSIONER HOLT: Thank you. With that, we have

Committee Item Number 2, Capital Program Update. Mr. Rich McMonagle is up.

MR. McMONAGLE: Good afternoon, Mr. Chairman, Commissioners. My name is Rich McMonagle. I'm the Director of the Infrastructure Division. My brief today, or my presentation, will be informational, broken into two parts. First, I'm going to talk about the infrastructure Division, and then I'm going to give an update of our project portfolio.

I started at Parks and Wildlife four months ago. And when I first got here, I had a lot of questions about the infrastructure Division. And it turns out, as I started working, that a lot of people had the same questions I had, questions like, Why do we have an Infrastructure Division? Why is the Infrastructure Division so expensive? And why does the Infrastructure Division take so long?

So you as Commissioners may have heard these same questions, or have these questions yourselves; you may have heard them from the legislature. So I will attempt to at least address those three questions.

First of all, why do we need an Infrastructure Division? A related question is what the heck do all those people in Infrastructure do?

COMMISSIONER HOLT: How many people they have in Infrastructure?

MR. McMONAGLE: A hundred and forty-eight, sir.

COMMISSIONER HOLT: Okay.

MR. McMONAGLE: And why don't we just outsource all of these projects? Let me start by introducing you to our new mission statement, which was just developed. A mission statement should answer the five Ws: who, what, where, when and why. The most important is why. That is the purpose of the organization. We in Infrastructure are very conscious that we are a support organization. Our customers are the other divisions within the Department. We owe them first-class customer service. Our purpose is to enable them to accomplish their mission, and so doing, to contribute to the accomplishment of the mission for the Department.

To modify an Arab proverb, the customer of my customer is also my customer. And the customer of my customer is the people of the State of Texas. The people of the State of Texas give us natural, cultural and financial resources, and it's our job to be stewards of those resources, and understand that, the Department ultimately gives the people of Texas those meaningful outdoor experiences.

The what that we do is provide sustainable planning service, design services, construction services, and support services. Notice I didn't say plan, design, construct, and support, because we do full services, and I'll talk about that in a little bit. If you look at the projects we do, we have 182 current projects. Of those, two-thirds have a total project budget of less than half a million dollars. And that doesn't include all those projects that are less than $25,000, which are considered minor repairs. Small projects are not very cost effective. Remote projects are not very cost effective, and repairs, because there's so many unknowns — they're tough to plan — they are not cost effective. So what we are driven by in Infrastructure is that the majority of our projects are small, remote repairs. And in order to do those, we need an in-house capability to make — to find the most cost effective way of taking care of those small, remote repairs.

There are five major phases to a project. We have the capability within the Infrastructure division, to do all of those phases internally. Sometimes those phases ca be done by the owning division, much as Donnie Frels talking about this morning that they do. Other times we do them in-house in the Infrastructure Division, and we also can outsource them. What we have the ability to do is to find the most cost effective way of conducting that project. Even when we outsource them we have the skilled professionals and craftsmen who can oversee and look out for Infrastructure and the Department's best interest.

Finally, our contract managers are our project managers when we have on the ground construction managers and inspectors who not only provide quality control, but make sure that the Department is getting what we paid for. Therefore, our in-house capabilities provide us not only that quality control to look after the Department's best interest, but also gives us the freedom of action to choose the most cost effective way of project delivery.

Probably the biggest question I hear, the most often question I hear is, why does the Infrastructure Division cost so much? And really the complaint from my fellow divisions is why do you charge the other divisions to do work? Oftentimes, people confuse construction costs with the total project budget. Construction costs, of course, are rather large, but there are other costs involved in the total project budget. So, for example, when you hire a design firm, they're going to charge you, depending on the size of the project, 10 to 15 percent of the construction costs to do that design.

The one that causes everybody heartburn, however, is that Infrastructure staff time. Historically we've found that our staff time counts for about 8.7 percent of the construction costs. So depending on the size of the project, 5 to 10 percent of the construction cost is added to the total project budget for Infrastructure staff time, and this is because 32 percent, or a third, of our Infrastructure salaries come from project money.

Now I would love to not have to charge the other divisions for our staff time, but I'm constrained by the fact that our salaries come from project money. So not only does that add to the total project budget, but it also adds to the perception that Infrastructure is too expensive. And the unintended consequence of that is that the divisions who really need our expertise in trying to cut costs don't use us when they really need us.

COMMISSIONER HOLT: Is that — can you explain that? Why does 33 percent of Infrastructure salaries come from project money? Okay.

MR. McMONAGLE: Because —

COMMISSIONER HOLT: Is that Commission — is that law? Walk me through that.

MR. McMONAGLE: — that is how our budget is written. So in the base budget is the 67 percent of our salaries, and then the other third is given to us in the project money, you know, usually through general obligation bonds.

MR. BORUFF: The reason for that, Mr. Chairman — Scott Boruff, Deputy Director of Operations — the reason for that is back in 2000 when I came on board, the Infrastructure Division had zero of its costs — zero percent of its cost funded through projects. We were looking at that time to the industry standards. We went out and did a statewide and nationwide analysis which indicated that most outfits used about 10 percent or 15 percent of project funds to fund the staff that did the projects. So we used an industry standard. We went back to the legislature at that time and convinced them that it was an appropriate use of funds to be able to use about 10 percent of the project funds to support the staff that was doing the projects.

In subsequent years, in particular in 2003 with the huge budget deficits that the state was experiencing at that time, the Legislative Budget Board came back to us and insisted that we increase the funding out of projects to 35 percent. So it was a directive from the legislature to increase funding to support our staff in an effort for them not to have to fund the staff out of general revenue.

MR. SMITH: The obvious challenge for that is, you know, when the cyclical nature of that appropriations process, it makes it very, very difficult on the Infrastructure Division then to be able to keep talented folks throughout those times, so.

MR. McMONAGLE: The third question is, why does Infrastructure take so long? We go back to our phases and compare that to the phasing for a private project. You can see that the private project funds first. And really what they do is they do the funding, the scoping, and the planning all at the same time. The first thing people ask is, well, what slows us down. Well, there are quite a number of things that slow us down. For example, during funding the legislature appropriates our money; then we come to the Commission to get permission to do those projects; then we go to the Texas Public Finance Authority to get their approval, and then we go to the Bond Review Board.

The Texas Public Finance Authority meets once a month, the Bond Review Board meets every other month. So, for example, when the legislature lets out in May, we will strive very hard to get our money. The earliest we think we can get it is December, but traditionally we usually get that money about February.

Also, cultural and environmental assessments can add up to two years to the length of a project. Now, of course, private projects have to go through these same sorts of assessments and clearances; however, the nature of where we are tends to prolong those for us. And finally, contracting — being a state agency, contracting adds quite a number of requirements. All of these requirements are in and of themselves — you know, have good intentions, but the cumulative effects just add to the length and prolong the length of one of our projects. So, for example, the State Contract Advisory Team, anything over a million dollars, we have to submit to them.

HUB review, only four days, but if we can't meet the HUB review, it will extend the project considerably until we can get that approved. And all of that contracting can happen two or three times during a project if we're contracting a design firm, then we're contracting for a construction company.

As well as those statutory things that slow us down, there's also a perception issue, and that is that the full process of our projects is on display. From the time that we go to the legislature for funding through the five years that that appropriation, the life of that appropriation, our process is on display, whereas in a private project, nobody really pays much attention to it until construction begins.

So as I talked about us going for our clearances, we do that as part of our project, on a private project, all those things are usually taken care of long before ground is broken, or anybody even knows there's much of a project going on. So in summary, not only are projects slowed by our statutory requirements, but there's also just, from the point of reference, we just look slower compared to a private project.

So what have I learned in my three and a half months here at Infrastructure? First, we're driven by the fact that we do small remote projects. The second thing is we have in-house capabilities that provide us quality control over all of our projects, and also provide us the flexibility to choose the most cost effective project delivery means. Thirdly, is that as my boss talked about, the legislature has created a situation where we in Infrastructure add to the cost of the total project to our customer divisions because we have to pay for our salaries out of project money. And lastly, that we're a lot slower and we appear a lot slower because of the statutory requirements inherent in being a state organization.

So moving on to the project portfolio. The most important thing to everybody is money, so I'll talk about money first. And these columns represent the percent of encumbered and expended monies by funding source. In the first column, the '06-'07 general obligation bonds; we received $18 million; we've encumbered or expended $15 million of that for 84 percent. The second column is the

'08-'09 general obligation bonds, and I'll talk about that in the next slide. The third column is exclusively East Texas fish hatchery donations. Eighty percent of that is represented by the Game Warden Training Center.

As all of you are aware, the '08-'09 projects, we are trying a new project delivery model, and that is to package the projects into three geographic packages. Due to requirements of the legislature, we didn't receive the funds until the fall of FY '09, the fall of calendar year '08. Since that time, in December we contracted the design firms, three design firms, one for each region. In February we contracted two construction firms to be the contract — excuse me — the construction managers at risk with one of those firms doing two of the three regions.

One of the reasons that we're trying this model was the fact that we believed it would allow us to encumber funds faster. And as you can see, we plan on within a little over a year after receiving funds, we will have encumbered 95 percent of that appropriation. Now remember that — the package represents 75 percent, three-quarters of what was appropriated. Also, our plan right now, and we're on schedule, is that three years after receiving that money, we'll be construction complete.

Thus far we are proving that the goals of the new model are going to be successful. That is, that we can encumber money faster, which is what the legislature looks at, and that's how they grade us about how fast we can spend the money. We're gaining efficiencies because — not only internally, but externally, because the small remote repairs are now attractive to larger contractors. And therefore, we're getting efficiencies by having large contractors do a package of jobs rather than individual jobs.

In July of 2008 we submitted the project plan for the dry berthing of the Battleship Texas. As I'm sure has been discussed, though I haven't heard it here today, last week we received authority from the LBB to draw on the funds for this dry berthing project. Next month, at the beginning of April, we will go to the Texas Public Finance Authority, then in May we will go to the Bond Review Board. So we should have those funds by the middle of May.

Three months later we will contract a design firm, and then we will give that design firm three months in which to select the option that they will recommend for the project. As you may know, there were four options that came from the initial study. We have not picked any of those options. We have left it open and we will leave it to the design firm to make their recommendations. After they make their recommendation, we'll have a series not only of cultural and environmental assessments, which will take a considerable amount of time, but also a series of public sessions where the public can input.

We're planning that this can take probably 12 to 24 months, but if there is either large public outcry, or if we run into any problems with the environmental or cultural assessments, this could be extended a considerable amount of time. So in the best case of all this, we will start construction and after 18 months of construction we could be done as early as the end of FY '13. But, again, I warn that this could extend considerably depending on public input as well as the assessments that still need to be done.

COMMISSIONER HOLT: Is that why that — explain to me why the design box is so long.

MR. McMONAGLE: Well, thank you. First of all, the design part is long because this is representing the phases. The design phase is going to be long because of that public input and the assessments that are required. So we're hiring a design firm, they're going to select that initial option, and then they'll basically stop while we go through the assessments and we get the public input. So that will —

COMMISSIONER HOLT: I don't think I understand. We can talk about that later. This I understand is public input relative to the ongoing design. Okay.

MR. McMONAGLE: The project plan also included five capital repair projects, but I stress they're separate and distinct from the dry berthing. So there are some that try to include these as part of the dry berthing. These are separate and distinct. We have not asked the legislature for funding of any of these projects at this point.

MR. SMITH: Rich, if I could just add something to this, and it's important that everybody know this. When we received the authorization letter last week from the Legislative Budget Board, you know, they authorized us to move forward with the sale of the bonds for $25 million, and then the authorization to use the $4 million in donations that the Battleship Texas Foundation has pledged to this project.

There was an interesting qualifier to the letter that stated that it was the, and I'm paraphrasing, the intention of the leadership that the Agency not come back to future legislatures for funding for capital repairs. Obviously that would be impossible with an able antique battleship to make that pledge. And so this is an important thing to understand because the Agency over the last year, probably longer, has certainly made it known that we are going to have repairs that will come up in the future and we're going to need to ask for legislative help to handle those. And so I just wanted you to be aware of that condition. We're obviously moving forward in the process and continuing to let everybody know that there will be repairs needs in the future.

MR. McMONAGLE: I will go back to — just to answer part of Chairman Holt's question. The design phase we envision as being about 11 months. So although that line is low, I just add that there. We're giving them — we're going to give them 11 months. It's the assessments and the public input that adds all that time.

COMMISSIONER HOLT: Gotcha.

MR. McMONAGLE: The Executive Director talked a little bit about Hurricane Ike. I will quickly blow through — well, no pun there — Hurricane Ike. Forty facilities had damages; five sites had major damages defined as more than a million dollars. Those included three Wildlife Management Areas: J.D. Murphree, Candy Abshier, and Lower Neches, as well there were two state parks included in that five, Sea Rim and Galveston Island, that were totally destroyed; the math is that's somewhere over $99 million in damages. As Mr. Smith talked about, that expended includes not only operational funds we used for clean up and overtime, but also the savings that were encountered when TxDOT contracted for the debris removal.

That leaves us short $80.8 million. The way that money falls out is like this, we've gone to the legislature a couple of different ways, how to cut up that $80.8 million, and at this point I'm not going to talk about how that's going to fall out unless —

MR. SMITH: Well, I think the only thing that's important for the Commission to know is that the legislature is planning on handling this through a special emergency appropriations bill. And it's being driven in the House, HB 6, you may hear Vice Speaker Pro Tem Eiland from the Galveston area, and right now in that bill, and it passed out of Committee, the Appropriations Committee — there's $60.8 million in there for Texas Parks and Wildlife. And basically that would allow us to do all of the repairs that we have identified and we're still trying to figure out exactly what we want to do with Sea Rim State Park. We'll report more back to you later on on that front. But we've gotten a lot of support from the House on this, and hopefully that number will hold through the session.

MR. McMONAGLE: With that, that concludes my presentation. Any questions?

COMMISSIONER HOLT: Any questions?

(No response.)

COMMISSIONER HOLT: Taking on a big job. But at the same time hopefully you can have more jobs, we'll be able to keep funds flowing and momentum going and maybe we'll even get that battleship out of the water —

MR. McMONAGLE: Yes, sir.

COMMISSIONER HOLT: — before you have to just build a model of it and put it in a bottle. Excuse my sarcasm there. This thing has drug on a long time, and I'm glad finally we got some authorization at least to get the darn thing dry berthed, because I think, as my predecessor said, you know what Bismarck and Tojo and Hitler couldn't do — you know, we don't get this thing fixed; we may do it — we may sink that sucker, so we need to get it out of the water. Okay. And then maybe those other things will come — they will come, but it may take some time. But the key is getting it out of the saltwater.

MR. McMONAGLE: Yes, sir.

COMMISSIONER HOLT: Rich, I appreciate your help, and thanks.

MR. McMONAGLE: Thank you.

COMMISSIONER HOLT: Any other discussions?

(No response.)

COMMISSIONER HOLT: Mr. Chairman, Mr. Chairman, this Committee's complete. Thank you. I'm complete; we're adjourned.

(Whereupon, at 4:20 p.m., the meeting was concluded.)

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: March 25, 2009

I do hereby certify that the foregoing pages, numbers 1 through 21 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.

04/09/09

(Transcriber) (Date)
On the Record Reporting, Inc.
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