In This Issue

	LaHood Defines Livable Communities, Questions Remain
	Gov. Perry Wins Texas GOP Primary over Hutchison
	Build America Pays Off for Banks
	Austin Mayor Kills Nov. Rail Vote
	Cities not on Track for Calif. High Speed Rail
	Study Shows Taxpayers Subsidizing Ethanol at $4.18 per Gallon

LaHood Defines Livable Communities, Questions Remain

A Senate subcommittee is questioning using highway tax dollars to promote a vaguely defined proposal for livable communities as part of the president's budget request. The Senate Subcommittee on Transportation, Housing and Urban Development, conducted a March 4 hearing on the topic to analyze the president's $527 million request to create a new multi-agency "office of livable communities." The funding for the new office comes as part of a $77.6 billion budget proposal for the U.S. Department of Transportation.

Ranking subcommittee Republican Sen. Christopher "Kit" Bond, R-MO, questioned U.S. Transportation Secretary Ray LaHood during the hearing. "What's livability?" Bond asked during an exchange with LaHood. Bond also questioned the use of highway dollars for the communities, and about the DOT paying for sidewalks. Bond argued that the new bureaucracy would focus on cities, leaving rural taxpayers with nothing. "Livability, in some areas, has a different meaning," said Bond. "And I just question, if we're looking at all these dollars to go in and build urban livability, there needs to be broader criteria as well."

LaHood described livable communities as follows: "Communities where people have access to many different forms of transportation and affordable housing and the ability to really have access to all of the things that are important to them, whether it's a grocery store, drug store access … These are communities and neighborhoods where people want to live where they have access to all of the things they want."

Gov. Perry Wins Texas GOP Primary over Hutchison

Texas – Gov. Rick Perry beat U.S. Sen. Kay Bailey Hutchison in the Republican gubernatorial primary, with 51 percent of the votes. Hutchison, who has repeatedly voiced her opposition to tolling, collected 30 percent of the votes. GOP activist Debra Medina ended up in third with 19 percent.

At the November election, Perry will face the former Houston Mayor Bill White, who claimed 76 percent of the Democratic votes in the primary election. Sen. Hutchison's U.S. Senate term ends in 2012, but she has said she plans to resign her seat in the Senate after the primary election, regardless of who won.

Perry is already the state's longest serving governor, with two full terms already served, as well as a partial term in 2000 after George W. Bush resigned to run for president. In November, Perry will seek to serve a total of 14 years as the head of Texas.

Build America Pays Off for Banks

Federal bailout programs have resulted in big returns for banks, particularly through the sale of so-called Build America Bonds, according to the Wall Street Journal, which states that banks have collected nearly $1 billion in fees from underwriting these bonds. The most recent claims add fuel to the ongoing debate, which has lately been focused on Goldman Sachs and other bank's involvement in the sale of the bonds, which the federal government paid for and subsidized to provide economic stimulus money.

A story by Bloomberg last fall stated that banks were charging higher fees to underwrite the stimulus bonds than they charged on other municipal bonds. California received the single largest bond issue, and paid $50.9 million in fees. As one of the largest Build America underwriters, Goldman has not publicized the fees charged in its advertisements about the company's role in advising municipalities.

"American taxpayers are subsidizing larger underwriting fees for Wall Street investment banks, including Goldman Sachs," said Sen. Charles E. Grassley (R-Iowa). This week, Sen. Grassley released a letter he was sent from Goldman Chief Executive Lloyd Blankfein, explaining the fees. Blankfein wrote that Goldman has thus far collected $54 million in fees for Build America Bonds, and acknowledged that the rate was indeed higher than that charged for regular bonds (.6%-.9% of the loan compared to .5% to .6% for a normal municipal bond). He said the higher rate was because Build America Bonds were "new products" while other municipal bonds "have existed for decades and are well known to investors."

Blankfein said the fees are now decreasing, but says the company is justified in their charges, adding that Goldman is "proud of our history advising and financing state and local governments."

Austin Mayor Kills Nov. Rail Vote

Mayor Lee Leffingwell announced on his website this week that he will not give Austin voters the chance to approve bond funds to pay for urban rail in November. The city council was to vote on the topic next month, but the mayor's announcement effectively halts that process. "We have discussed this at length with the entire council," said aide Mark Nathan.

In the March 10 letter on his mayoral website entitled 'Doing Urban Rail Right…', Lee wrote that "it is not feasible for the City to bring a fully developed urban rail proposal to Austin voters this November." The announcement comes even as the mayor committed as a mayoral candidate last year to pursue an urban rail election as soon as this November.

Leffingwell said he came to this conclusion because the city will not be prepared before November to propose an exact rail route across Lady Bird Lake, leaving an unacceptable variable in the construction cost estimate for the first phase of the system. He added that the city also would not be ready to propose collaborating with a specific entity to operate the system by November, and the city would not be prepared with a plan to minimize the impact of rail construction on Austin commuters and local business owners before the proposed election. The mayor continued that he remains committed to urban rail, and he plans to propose a transportation bond referendum in November for $100 million.

Cities not on Track for Calif. High Speed Rail

BUENA PARK, Calif. – A combined housing and commuter rail station development planned for years by Mayor Art Brown is nearing completion, with townhouses being finished around the $14 million Metrolink station, just as California's high speed rail planners are designing plans to build right through his pet project.

"The only option they presented to us was either losing the condo units or losing our train station," Brown said of an engineering presentation to city leaders last year. Some find it ironic that a hard-earned effort to convince Californians to approved mass transit in their community could be plowed down by another transportation project. But such conflicts are one of the unexpected costs and potential delays for the elaborate plan to give commuters a 220 mph way to travel 430 miles between Los Angeles in just 2 ½ hours.

"The idea that they would spend millions for a new station and remove it is a colossal waste of time and money," said Mark Goldsmith, a resident of the "transit village" next to the Buena Park station.

High speed rail planners are still looking at several proposals, including the Buena Park plan, for the high speed rail line. The first phase of the $43 billion project will span about 520 miles between San Francisco and Anaheim by 2020, with segments added connecting to Sacramento and San Diego by 2026. Rail officials say they have been communicating with city planning departments since 2005, but local officials say the communication was minimal until stimulus funds were approved. "Because of the momentum we need to basically go back, start from square one to reach out to cities and explain to them where we're at," said the high speed rail authority's Executive Director Jeff Barker. "The tone of our process right now is not to tell any city what might happen. It's to gather their input."

Study Shows Taxpayers Subsidizing Ethanol at $4.18 per Gallon

Corn ethanol tax credits are costing taxpayers $4.18 per gallon and boosting grain prices, according to a new study by University of Missouri Food and Agricultural Policy Research Institute. If extended, the tax credit would cost about $5.85 billion next year, and will lead to 1.4 billion gallons above the 12.6 billion gallons required by law under the Renewable Fuel Standard (RFS).

Nathanael Green, Director of Renewable Energy Policy in New York City, said this means that "next year the oil companies will be required to buy 12.6 billion gallons of conventional corn ethanol, but because tax payers are giving them $5.585 billion they'll consume 1.4 billion more than required. That works out to $4.18 per gallon." Green added, "Having the tax credit on top of the RFS is like paying drivers to obey the speed limit. Taxpayers have been subsidizing the corn ethanol industry far too long at the expense of developing cleaner, more renewable biofuels."

"The biggest point we're making is that the health of the farm economy depends on the health of the larger economy," said Pat Westoff, co-director of the MU institute. The report, which researchers released for the past 25 years, predicts that the U.S. farm economy, which lost $30 billion in 2009, will recover by $10 billion this year.