Drivers desert toll roads roads. Orange County toll road agency seeks $1.1 billion bailout
By Susannah Rosenblatt,
Los Angeles Times
As the federal government undertakes the largest financial bailout in history, Orange County's toll road agency is asking for its own hefty government handout.
The agency is seeking a $1.1-billion loan of taxpayer money to shore up the finances of its network of turnpikes. The reason? As gas prices gyrate and the economy flounders, drivers -- and the revenue they bring -- have been deserting the toll roads.
The Transportation Corridor Agencies is seeking to merge its two distinct arms -- separate agencies that oversee different roads but share a single staff. The government loan, the largest of its kind, would help refinance the agencies' $4.6 billion in existing debt.
Critics condemn the effort, saying that the agency is reneging on a promise to never use public money for its highways. They also contend that the loan would divert scarce federal funds away from new transportation projects nationwide.
If the loan and merger go through, the renamed Transportation Corridor System would be more efficient and have stronger finances to better improve the 51-mile network of roads, said agency spokeswoman Lisa Telles.
The request for $1.1 billion from the federal government was not a reversal of earlier pledges to avoid taxpayer financing, she said, because the loan would be repaid with future toll road revenue.
"Certainly in the past we have not utilized tax dollars for the majority of the project," Telles said, adding that the loan would lower the agency's interest rate on the refinanced debt by at least a couple of percentage points. The restructuring would also include the issuance of new toll revenue bonds.
According to the agency's website, current bonds "can only be repaid by future tolls and development fees, taxpayers are not responsible for repaying the debt if future toll revenues fall short."
But foes of a proposed toll road extension through south Orange County labeled the move a "total reversal" of the agency's assurance that toll revenues and development fees would cover the cost of the roads. And they voiced concern that dwindling use of the roads could leave taxpayers footing the bill.
"It's becoming increasingly clear the toll roads are not performing as promised," said Bill White, an attorney who works with the Save San Onofre Coalition, an array of conservation groups fighting the proposed 16-mile extension of the 241 toll road through a state park in north San Diego County. "Things have gone from very bad to much worse."
Use of the 73 toll road last fiscal year was roughly half of what was predicted, and those numbers have dropped further this year. Several years ago the road's bond ratings were downgraded to junk status. The 241, 261 and 133 toll roads have generally fared better, but recent usage has also been slipping.
"Even if there was an economic recovery and even if the toll roads were doing just fine, this would be an unjustifiable use of taxpayer money," White said.
Responding to questions about the system's financial viability, Telles said the agency has "always been able to make our debt service payments, we've always been able to pay our expenses," and is not in danger of defaulting on current bonds. Though she acknowledged the current economic woes have reduced traffic nationwide, she anticipates a long-term recovery in toll road use.
The agency is applying for the money through the Transportation Infrastructure Finance and Innovation Act administered by the U.S. Department of Transportation. The act, which is largely designed to help fund transportation projects of national and regional importance, distributes an average of more than $2 billion in credit help each year.
The largest loan to date was $917 million for the Central Texas Turnpike.
Other loans have included $140 million to build a San Diego toll road and $600 million to update aging equipment of the Washington, D.C., mass transit system.
Because infrastructure companies are likely to be hit particularly hard by the credit crunch, appealing to the federal government for funds makes sense, said Lisa Schweitzer, an assistant professor in the School of Policy, Planning and Development at USC.
The risk, Schweitzer said, is whether those toll road revenues will eventually pan out: "It's actually not that easy to make money on roads."
© 2008 Los Angeles Times: www.latimes.com
To search TTC News Archives click
To view the Trans-Texas Corridor Blog click