By Charles Lam
By R. Scott Moxley
By Taylor Hamby
By Matt Coker
By R. Scott Moxley
By Charles Lam
By LP Hastings
By Taylor Hamby
The toll road is bleeding money and the Weekly wants you to know what the TCA, local dailies won't tell you: it's a looming financial disaster
Joseph Roth was late. To make matters worse, he was late for an appointment in South County. To make matters much, much worse, Roth was in his car and heading south toward the El Toro Y--the place where the 5 and 405 freeways collide, where (locals will tell you) traffic is invariably miserable.
"I drove through the Y without even touching my brakes once," Roth said. "It was weird; it was kind of like The Twilight Zone."
Roth's story was the lead in an April 28 Times Orange County article declaring an end to "life in the slow lanes." Crediting an array of road improvements--including the multibillion-dollar San Joaquin Hills Transportation Corridor--Times reporter Frank Messina took on the role of public-relations manager for the county. "Rush hour hasn't disappeared," he wrote, but (citing a California Highway Patrol officer) "there is definite, definite improvement."
The true cost of that improvement only began to emerge two days later when The Orange County Register reported that revenues to the Transportation Corridor Agencies (TCA)--the county agency charged with building and managing the toll road--are off by half. The toll road, in other words, is losing money. Big money. But not to worry, sources told Register reporter Ricky Young. Young cited toll-road officials and bond analysts suggesting the bad news was no cause for alarm.
Racing to catch up, the Times ran a similar don't-worry-be-happy story three days later. But it was too late. And, worse, the story was now rolling over both papers.
In conversations with the Weekly, four directors of the TCA now reveal the county agency is so far behind in revenue--losing nearly $100,000 every day--that it has entered emergency refinancing negotiations with the toll road's chief investors. Worse than that, the agency's staff members have demanded that its board of directors--made up of elected officials appointed by various O.C. cities--sign a non-disclosure form and talk to no one about the emergency finance effort--not the press or public, not even the cities the directors are supposed to represent.
TCA spokesperson Lisa Telles said she has "been told to call [the emergency refinance effort] 'refunding,'" and said the move is "part of good business practices." Telles said the poor ridership numbers have "nothing to do with the refunding," but she couldn't explain why members of the board say there is an unequivocal link between poor revenues and the agency's refinancing talks. She claimed she is "personally" unaware of any non-disclosure demands made by staff to the board.
The effort to shut up normally powerful local politicians--there are 12 of them on the board of directors--has a déjà-vu quality; it's only been a little more than two years since officials tried to keep a lid on the tumbling fortunes of the county's investment pool. But the cover-up has also created a climate of fear and mistrust on the board. When I asked one director if the agency was trying to mask impending financial ruin at the TCA, I was met with silence, and then: "Does anyone know that you are calling me?"
"Because they have threatened us--forcefully--to keep our mouths shut. They don't want the public to know the truth, that the toll road is a financial disaster. They are desperate for people to believe everything is rosy," the board member said. "And they have promised to get any member of the board who talks."
"Who is behind this?" I asked.
"Basically, it's members of the TCA's senior staff. They act as if the agency belongs to them personally and is not accountable to the public," said the board member. "A few weeks ago, [members of the board] were approached privately. [The staff was] hoping that no one on the outside would find out about this. But there is a document. Under the guise that it was simply routine, the staff told us to sign a three-page non-disclosure form guaranteeing that none of us would tell what is happening at the toll road. [Last week], the staff called a private, closed-door meeting and lied--claiming the session was to discuss litigation. But it was really to find out who leaked that there is a non-disclosure form circulating. It's just unbelievably arrogant that the bureaucrats think they can get away with this, but it shows the crooked mentality running the TCA."
All four directors said the staff asserted that the non-disclosure form was necessary to the refinance effort--and business as usual.
Sources told the Weekly that the financial picture is so gloomy that the agency is planning to refinance its debt of $5 billion in principal and interest. Refinancing would be a significant move that brings with it even more debt accumulation at near-junk-bond rates, and it prolongs the life of the TCA, which was supposed to convert the road to a freeway after it had been paid off in 40 years. Chucking aside the most basic elements of supply-and-demand economics, there has also been talk of raising the tolls--a move sure to drive away users. According to board members who spoke with the Weekly, no one has seriously considered lowering the toll rates. One of the TCA's privately commissioned studies from last summer suggested that removing the toll entirely is likely the only way to meet traffic projections.