Road to Ruin

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

The TCA staff has at least a year or two of breathing room. TCA Chief Operating Officer Wally Kreutzen told the Register, "I have money in the bank today to pay through March of 1999." That prompted the Register to headline a related story on the collapse, "Road bonds in no danger before 1999." What Kreutzen didn't tell the Reg was that much of the money in the bank was borrowed. Thanks to Republicans in Washington, D.C., the agency has a $120 million "ridership risk" line of credit. But to tap that cash now would add to the TCA's mounting debt, which ultimately means even more cars will have to pay to use the road if it's going to be financially viable.

A high-ranking county official familiar with the TCA called the non-disclosure agreement "ominous" and the toll road's ridership numbers "miserable." The source added, "On the heels of the county's bankruptcy and the costly lessons we were supposed to have learned about the need for open, informed decisions, I'd have to conclude unfortunately that the lessons didn't sink in with everyone."

Tom Rogers, a South County rancher and longtime Republican critic of the toll road, said he complained to the agency last week when he learned of the non-disclosure agreement. "Based on their reaction, I think I caught the staff with their hands in the cookie jar, and they don't like it," he said. "But we want full disclosure of all the facts about the project. It's just crazy that the TCA thinks it's okay to hide the truth from the public."

The San Joaquin Hills toll road has been steeped in bitter controversy almost from the day plans for the road were first announced in the mid-1970s. The $5 billion, 17-mile government project--which was completed last November--drew the praise of business leaders quick to point to growing traffic congestion. Citizens complained that the road would fuel South County development and that the toll road's finances were shaky. Much of the debate boiled down to whether the road was necessary to reduce traffic (as real-estate developers claimed at the time) or was a public-works project to increase the marketability of future private-housing developments (as community groups maintained).

In Orange County, the ultrawealthy developers who control local politics rarely lose in the end--and for good reason. Just as the county Board of Supervisors blatantly stacked the so-called "citizens" advisory committee on whether to convert El Toro Marine Corps Air Station into an international airport with ardently pro-airport panelists, the "citizens" committee that was formed to help decide the need for a toll road was monolithically pro-development. That panel consisted of six Republican politicians, a Building Industry Association lobbyist, and three real-estate developer executives from the Mission Viejo Co., the Santa Margarita Co. and the Irvine Co.

Dominating the decision-making process apparently wasn't enough. In the mid-1980s, the Irvine Co. was so eager to see the road built for its planned business ventures--particularly then then up-and-coming Newport Coast development--that it secretly wrote pro-toll road letters to the editor, had "average citizens" sign their names and then planted them in a local newspaper. Since it and other developers like the Mission Viejo Co. would benefit financially more than anyone else if the road were built, the Irvine Co. also briefly considered directly subsidizing a portion of the initial construction costs itself. That idea died an early death.

A number of grassroots citizen groups opposed the efforts. Over the years, skirmishes between the two forces--carried out in the courthouse and at the construction site--have become legendary. To publicize their opposition to the road, environmental activists chained themselves to bulldozers at the construction site in 1993 and were arrested for trespassing--a tactic repeated several times with great fanfare before large media crowds. There were also candlelight vigils and rallies off Laguna Canyon Road. Although the anti-toll-road groups succeeded in delaying the construction through court injunctions, the courts ultimately ruled against them, and the road was completed. Orange County public officials, including those at the TCA, promised the toll road would be a international model for future transportation projects.

Given the events of the past few years, it's clear they couldn't have been more wrong. Far from a financially conservative operation focused on the bottom line, the TCA has been plagued with questionable management. Last year, the agency paid $4.8 million for its Irvine headquarters--even though the property was valued at $3 million. For toll collection, installation and maintenance, the TCA is paying more than a whopping $600 million during the next 20 years to Lockheed Information Management Services of NY, a subsidiary of the defense-industry giant. And as Times Orange County reporter Mark Platte uncovered two years ago, the agency has lavished lofty salaries, huge bonuses and unusually generous perks on its senior staff. The three top TCA officials (CEO William Woollett Jr. and his two vice presidents, Kreutzen and Gregory G. Henk) were paid salaries of $148,749, $134,416 and $127,416 respectively in 1996, and they have been given combined cash awards of $66,228 and merit raises of $28,576--not to mention free cars worth more than $31,000. In one case, Kreutzen "sold back" his sick and vacation leave to the agency for $30,630, more than what most Orange County residents earn in one year. The revelations created an overnight public-relations nightmare for the agency.

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