Newsworthy

Posted on September 26, 2023

What CRE Stakeholders Need to Know About Texas’ 2024 Unified Transportation Program (UTP)

After much deliberation and a period of public comment, Gov. Greg Abbott announced last month (August 2023) that the 2024 UTP has been approved. The record infrastructure investment will fund more than 7,000 TxDOT projects and will, over the next decade, create 70,500 new jobs pumping $18.8 billion into the state economy annually. Texas’s largest cities, Dallas-Ft. Worth, Houston, San Antonio, and Austin stand to gain the most from the $100 billion funding, says LPA ROW/ED Practice Leader Mario Caro, although rural communities across the state will benefit as well. What is UTP and why should CRE stakeholders pay attention?

What is the Unified Transportation Program?

With 314,000 miles of public roads, Texas has the longest highway network of any state in the country. The Unified Transportation Program is a 10-year planning document that directs the development of transportation work across Texas and authorizes the distribution of funds. In addition to highway projects, the plan addresses public transportation, aviation, maritime, rail, freight and international trade, and bicycle and pedestrian connectivity. The UTP also features projections about the flow of energy, goods, and people throughout the Lone Star State. As such, it contains key insights about Texas’ economic future.

The UTP process produces a list of projects TxDOT plans to develop or begin construction on within the next ten years. The Governor’s Office explains that “Projects are selected by TxDOT, and local transportation leaders based on effectiveness in addressing criteria such as safety, pavement condition, capacity, and rural connectivity, with opportunities for public input at both the state and local levels.” While the UTP does not guarantee that a project will be built or included in the budget, the document is a valuable tool for long-term planning linking planning of the Statewide Long-Range Transportation Plan, the Metropolitan Transportation Plans, and the Rural Transportation Plan with the Statewide Transportation Improvement Program.

The $100 Billion 2024 UTP represents a $15 billion increase from 2023 funding. “As the state of Texas continues to see exponential population and economic growth, this funding will help meet the needs of all Texans,” says Texas Transportation Commission Chairman J. Bruce Bugg, Jr.

Increased Infrastructure Funding Comes at a Critical Time

Texas has been experiencing exponential growth in population over the past two decades, hitting the 30-million mark in 2022. This growing population is traveling on aging roads and bridges. In its 2021 Infrastructure Report Card, the American Society of Civil Engineers gave Texas a “C” — mediocre, requires attention —on the overall condition of its infrastructure.

The ASCE assessment found that:

• Texas bridges are mostly safe with only 1.4 percent of inventory found structurally deficient, but the state will need to invest billions in bridges and culverts over the next decade to accommodate population growth.
• The state’s airfields are mostly in good condition, but many airports across the state are overcrowded and have outdated terminals and support facilities affecting the ability of airports to operate efficiently during peak travel times.
• 47 percent of roads and highways are in poor condition and cannot adequately handle the increased traffic. “Auto commuters in Austin, DFW, and Houston face significantly more congestion than the national average,” the ASCE reports.

Implications of 2024 UTP Approval for Landowners

The 2024 UTP is an ambitious plan and will guide the Texas DOT’s eminent domain and right-of-way activities for years to come. Caro believes TxDOT may have to condemn more property than ever to make proposed projects a reality, and that will bring more legal challenges to condemnation. Commercial property owners can expect to see property values rise as access to reliable transportation increases. “It’s one of the main drivers of value for commercial and residential properties,” says Caro. “Not only in the traditional sense of when you think of transportation infrastructure, but we’re seeing dramatic increases in property value around our ports, inland and seaports. Trade with our neighboring and foreign countries is booming, and there is a flurry of demand for US companies to be near these ports.”

Key Facts About the 2024 UTP

The 2024 UTP is focused on three strategic goals:

• Promote safety — “Safety is a top priority for TxDOT,” says TxDOT Executive Director Marc Williams, “and these funding levels reflect that.” Annual fatality rates, the ratio of annual fatalities per 100 million vehicle miles traveled, have risen steadily in the state since 2019 from a rate of 1.26 to 1.58 in 2021. The DOT target is to reduce this to .58 by 2033. Included in the 2024 UTP are highway improvement projects designed to increase safety at intersections, reduce lane departures, head-on crashes, run-off-road crashes, collisions with pedestrians and bicyclists, and mitigate roadway obstacles.
• Preserve assets — The DOT annually develops a bridge condition score and measures pavement quality. These numbers have been improving. The 2024 UTP is focused on continuing this trend.
• Optimize system performance —The 2024 UTP seeks to mitigate congestion, enhance connectivity and mobility, improve reliability, and facilitate the movement of freight and international trade.

A Plan to Foster Economic Competitiveness

In a February 2023 press release announcing the plan, Governor Abbot identified a key objective of the UTP, “This 10-year plan will further boost our economy and keep Texas the economic juggernaut of the nation. Together, we are working to ensure that Texas remains the premier destination for people and businesses.” Projects will add capacity, upgrade roads to handle freight, increase road access and safety for the energy industry, connect ports to facilitate trade and upgrade major statewide corridors to achieve Interstate highway classification. Future Interstate highways in Texas include I-14, I-27/Ports-to-Plains, and I-69.

Where is the money coming from?

The $15 billion increase in 2024 from the 2023 funding includes an additional $3.1 billion for rural areas and $2.4 billion for urban areas; more than $2 billion has been added for preventive maintenance and rehabilitation. This funding comes from a mix of state, federal, and in some cases, local sources.

Proposition 1 and Proposition 7 dedicate some of the state’s oil and gas production taxes and sales taxes — revenues that have grown with the population — to the State Highway Fund. These combined revenue sources make up 50 percent of expected funds. Provisions of the federal Infrastructure Investment and Jobs Act and federal motor fuels tax collections are projected to provide 43 percent. Traditional highway funds and other funds make up the balance.

2024 UTP Highlights

Energy sector infrastructure

The 2024 UTP boosts energy sector road funding to $1 billion, a move applauded by Permian Strategic Partnership (PSP) Chairman Secretary Don Evans. “Permian Basin energy companies and other energy companies across the state paid 10.8 billion dollars in state severance taxes in FY 2022 alone helping fund infrastructure across Texas,” says Evans. “We are pleased to see additional funds returning to the Basin, helping build and repair infrastructure that will help fuel our local, state, national, and global economy for years to come.” Nearly $285 million will be directed to the North Permian Promise Project, which addresses transportation needs throughout the Permian Basin.

Ports

According to the TxDOT, Texas ports moved more than 607 million tons of cargo in 2020, more than any other state. The port industry supports 128,00 direct jobs and port-dependent economic activity drives another 1.7 million generating a total personal income of $110 billion. The 2024 UTP includes $14 billion for projects that improve economic opportunity, military movement, border and port connectivity, and emergency routes.

Statewide rural and urban connectivity

Nearly $18 billion is dedicated to improving rural and urban connectivity including the SL335 upgrade project, which the Texas Transportation Commission has prioritized recognizing that new freeway connections between I-40, I-27, US 87, and US 287 will allow freight shipments to bypass Downtown and will provide alternate routes for commuters and travelers in Amarillo.

When developing the UTP, district planners sought regional projects that would also address local needs. Upgrading US 59 in the Lufkin District will address local traffic issues and advance a project, the development of I-69, simultaneously. US 59, US 96, and US 69 are major evacuation corridors, which means projects to continue connectivity in the region fall under Category 4-Connectivity Corridors funding.

International Bridge Trade Corridor

The 2024 UTP approves $237 million for Phase I construction of the International Bridge Trade Corridor, a planned 13-mile, four-lane highway that will connect the international bridges between Pharr and Donna in Hidalgo County. When completed, the corridor will give commercial trucks from Mexico direct access to the interstate from several international ports of entry. Billions of dollars of produce and goods are imported through Texas Ports and the steady stream of 18-wheelers creates traffic jams and security risks in border communities. The Corridor will mitigate these problems and facilitate increased international trade.

Following the 2024 Money

The 2024 UTP Report highlights some of the major projects that are planned or under development. A full listing of projects may be found online at TxDot Project Tracker. The following is a regional breakdown of large projects in major metro regions.

Dallas

Some of the largest and most costly projects are in the Dallas District. They include:

• The I-30 Canyon project through Downtown would reconstruct collector-distributor roads and widen the main lanes of I-30 between I-35E and I-45. This $590 million project will alleviate the bottleneck that makes this one of the most congested highways in Texas.
• Two other I-30 projects, the Interchange at Bass Pro Drive and the East Corridor from I-45 to Ferguson Road, have a combined cost of more than $1.1 billion.
• Other major projects are slated for Interstates 35, 20, 820 and 635.

Fort Worth

Metro and urban area corridor projects, statewide connectivity projects, and preventive maintenance and rehab projects in the Fort Worth District have been allocated more than $1 billion each to address urban congestion, mobility, and connectivity between urban and rural counties. These funds are part of the Texas Clear Lanes funding. Much of the funding for the Fort

Worth region is dedicated to improving state and interstate highways that support the freight network in North Texas to reduce travel times and improve safety.

Austin

Caro believes the most important transportation project on tap is in the Austin District. The I-35 Capital Express project is one of the largest in Austin with a $16.5 million price tag. “Broken up into 3 stand-alone projects, it proposes to improve 28 miles of I-35 from SH 45 North and SH 45 Southeast. The project aims to relieve traffic at 4 of the 100 most congested roadway segments in Texas,” Caro notes. In addition to adding lane capacity, the project includes reconstructing ramps, bridges, frontage roads and cross-street bridges, and enhanced pedestrian and bike paths.

Corpus Christi

The Corpus Christi District allocations will help develop interstate highway corridors with US 281, US 77, and US 59 designated as future interstates.

• New overpasses, frontage roads, and relief routes are planned for US 77 and US 281 to prepare for the eventual I-69E and I-69C.
• $60 million in Supplemental Transportation Projects funds are allocated to upgrade infrastructure at the Port Aransas Ferry to meet the demands of a surge in energy industry ship traffic and coastal tourism.

El Paso

• The demands of oil and gas drilling in the El Paso district threaten the integrity of rural roads that were not designed to handle the heavy trucks used in exploration and extraction. The 2024 UTP projects address this with funds to upgrade energy sector corridors.
• Multiple projects aimed to ease traffic congestion in El Paso include widening segments of I-10, US 54, and US 62 and enhancing frontage roads.
• $208.5 million has been allocated to the 178 (Artcraft Road) interchange project at I-10. SH 178 is a major artery supporting international and interstate commercial activity. The area has experienced rapid residential and commercial growth creating congestion and safety issues. The planned improvements include constructing four direct connectors at the interchange of I-10 and Hwy 178 to streamline traffic flow, decrease delays at intersections, enhance connectivity to NM 136 and the Santa Teresa Border Crossing, and facilitate the movement of oversized loads through the interchange.

Houston

• Construction has begun on the project to widen I-45 south of downtown. Multiple improvements are planned for I-45 North, from downtown to Beltway 8, with new express lanes and accommodations for bike and pedestrian traffic. A total of $3.2 billion has been allocated to enhancing this priority corridor.
• Hurricane Harvey drove home the importance of disaster planning in the Houston District. Capacity improvements for SH 146 have been ongoing. The highway is an important hurricane evacuation route and freight corridor.
• SH 99 (Grand Parkway) is a loop around the Greater Houston Region passing through multiple counties. Plans to complete the loop with segments through Fort Bend, Brazoria, and Galveston will cost an estimated $4.2 billion.

San Antonio

• One of the most active oil fields in the U.S., the Eagle Ford Shale, lies under the rural southern counties of the San Antonio District. Planners will utilize funding from the Energy Sector and Preventive Maintenance and Rehabilitation categories to upgrade roads to address the increase in heavy truck traffic and fund safety and maintenance projects in the area.
• $876 million has been authorized for three I-35 Northeast Expansion (NEX) projects.
• $11.9 million has been authorized for the Cibolo Creek bridge replacement project. The new bridge is designed to allow use in heavy rainfall events and will accommodate pedestrians and bicyclists.

This historic level of infrastructure spending will impact CRE values across the state. LPA is committed to ensuring that Texas has enough commercial appraiser capacity to support the 2024 UTP. Our commercial real estate experts are active in the valuation of real estate for right-of-way and eminent domain (ROW/ED) purposes. Their proficiencies span the full range of ROW/ED project types, including:

• Highway and street expansions
• Aviation easements
• Water/sanitary/sewer lines
• Oil and gas pipelines
• Electric transmission lines
• Drainage easements
• Recreational hike and bike trails
• Government buildings
• Ground lease liability
• Surplus right-of-way disposition
• Future utility facilities
• Public parks acquisition

Contact us today to learn more about LPA’s extensive ROW/ED experience and commitment to delivering accurate and comprehensive appraisal collateral on time, every time