By Jim Forsyth, Reuters
January 7, 2009 - 12:00 a.m. EST

SAN ANTONIO (Reuters) - Texas road officials on Tuesday scrapped a $180 billion plan to build a giant system of toll roads and commuter rails criss-crossing the state in favor of a smaller slate of infrastructure projects.

The state Department of Transportation abandoned the Trans Texas Corridor, the centerpiece of Gov. Rick Perry's long-range transportation plan, after objections from communities and farm groups along the planned route, which would have involved seizing large swaths of private property.

In 2002, Perry unveiled an ambitious plan to build 4,000 miles of transport corridors a quarter mile wide, which would include room for high-voltage power lines, commuter and freight rail lines, and five road lanes in each direction.

In an "updated vision" for the plan, Texas officials want to build several smaller, narrower segments stretching from San Antonio to the Oklahoma border and from the Rio Grande Valley to Texarkana.

"Texans have spoken, and we've been listening," said Amadeo Saenz, executive director of the Department of Transportation. The new plan "goes a long way toward addressing the concerns we've heard."

A spokeswoman for Perry said the new plan was welcomed.

"The Trans Texas Corridor was merely a concept," the spokeswoman, Allison Castle, said. "Transitioning to an updated vision for infrastructure in the state is a positive move."

President-elect Barack Obama has made rebuilding the nation's infrastructure a crucial part of his economic stimulus plan, and many governors, from California to New York, are already vying for dollars.

Investment banks have raised hundreds of millions of dollars to invest in infrastructure projects, and developers, long accustomed to doing deals overseas, are eager to launch projects in the United States.

The Texas Farm Bureau, as well as landowners along the proposed corridor, had heavily opposed the original plan because large swaths of private property would have been seized by the state through eminent domain proceedings.

"This would have been the largest taking of private property in the state's history," Farm Bureau spokesman Gene Hall said, noting that Over 500,000 acres of land could have been transferred to state control from private hands.

Citizens groups like Corridor Watch have opposed the project for years, warning that Perry's push to raise funds by selling operating rights to private companies in exchange for highway building funds would raise costs for consumers.

"This was the Tony Soprano version of highway construction," David Stall of Corridor Watch said, referring to the HBO television series about a fictitious New Jersey mobster. "They give away the farm in exchange for a road project."

Such groups also warned that Perry's plan would have put Texas roads in the hands of foreign owners.

Spain's Cintra Concesiones de Infraestructuras de Transporte S.A. had been tapped to finance a portion of the megaroad project in exchange for leasing and operating rights for 50 years.

A Cintra spokesman was not immediately available to comment.

Legislators feared that private developers would benefit at the expense of taxpayers and they had already barred Perry from signing more deals in some areas.

That two-year moratorium on new deals expires in the second half of this year and citizens groups are calling on lawmakers to extend it.

(Additional reporting by Chris Baltimore in Houston and Joan Gralla in New York; Editing by Leslie Adler)