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
It's hard to imagine road conditions getting worse, but that's what is going to happen, according to transportation experts. The average local driver —who is now forced to waste 82 hours per year stuck in traffic —is expected to suffer an 81 percent longer commute to and from work during the next 20 years.
If the toll roads have not and will not offer relief for the general public, they have been a welcomed convenience for a minority of citizens who can afford to pay about $1,200 annually for use of the private lanes. State Senator Tom Hayden (D-Santa Monica) derisively pegged the toll roads "Lexus Lanes." Other winners in the toll-road experiment have been Wall Street investment-house giants and their lawyers, who have taken an estimated $40 million for bond sales involving the publicly managed Transportation Corridor Agencies (TCA). In four massive deals during the past seven years, the TCA has sold more than $3 billion in private bonds to help fund the roads.
Some observers believe that the tollways were never meant to relieve traffic but were instead built by state and local politicians to aid Orange County's powerful real-estate developers. The argument has merit, if only because such politically connected developers as the Irvine Co. worked so feverishly behind-the-scenes for the roads. It is also true that the tollways (and thus the $150 million-plus in taxpayer funds that helped build and maintain them) translated into pure unearned profit for the area's largest landowners. At last count, the San Joaquin Hills toll corridor alone has spurred more than 102 residential projects (totaling more than 20,000 new homes) and 52 commercial developments. Several dozen more large-scale housing and commercial projects were made possible by the opening of the Foothill/Eastern tollway.
Although those new developments boost the economy, they also exacerbate the original problem: oppressive traffic congestion. A 1997 study of California highways by the trade journal Transportation Research found that every increase in road capacity was matched by an increase in traffic within five years. In Orange County—where business interests have long won public-policy debates—the statistic is more alarming. Although the Reason Foundation's Poole claims a community can "build its way out of congestion," Caltrans reported that new highway lanes here reach capacity in a matter of months.
The developers are not bothered, however. Regardless of costs, they wanted new highways that lead to their now-ultravaluable properties. The chairman of Parker Properties, developers of a 1.7 million-square-foot project along the toll corridor, was blunt in his assessment of the road's value. "Without the tollway, [that project] would have never happened," he told the Los Angeles Times.
The sales and marketing director of the Irvine Co.'s swank Newport Beach mall was equally straightforward. She said, "The [toll roads] have been fabulous for Fashion Island."
If the tollways have been fabulous for a powerful few, they are nothing more than a future real-life nightmare for local citizens. In a few short years, the county's privatized toll-road system has amassed an appalling record:
•The TCA has yet to meet even one of its financial or ridership objectives since it opened in 1996. For example, the agency's 1999 revenue estimates were off by a whopping 420 percent. Instead of receiving $81.5 million, it took in roughly $20 million, an amount drastically insufficient to repay private bondholders.
•Although the toll roads are routinely cited as an example of the merits of privatization over government involvement, it is taxpayers who have helped fund the projects to the tune of more than $150 million, an amount that increases every year. (Caltrans officials strenuously claimed that not one tax dollar has gone into TCA coffers until they were presented with documents to the contrary.) Additionally, TCA officials have routinely claimed that the roads' bondholder would be responsible if the roads go bankrupt, but a backroom deal slipped into federal law holds taxpayers liable to the bondholders for up to $240 million in potential toll-road losses.
•The toll roads' popularity was so overestimated that the agency's "worst-case scenario" projections—based on a near collapse of the local economy—estimated 20 million more users than actually showed up during an economic boom. Even though toll-road officials predicted the road would sell itself, they had to spend more than $3 million on marketing.
•Horrendously low user levels caused the San Joaquin Hills tollway to refinance its debt in 1997. The move gave the agency short-term payment relief but added $400 million to the road's debt load. The Foothill/Eastern tollway debt of $1.75 billion was also refinanced last year, pushing the repayment on the toll roads back an additional seven years, to 2041.
•The success or failure of the 91 tollway is masked behind a corporate wall. CPTC, the company that runs the publicly licensed road, routinely refuses to answer financial and ridership-level questions, claiming—even though they have a government charter—that such details are "proprietary information." In 1998, a company official told the LA Times that they had lost $21.5 million during their fiscal year. Two weeks later, the same official flip-flopped and told the Riverside Press Enterprise that his company was in the black. Who knows?
•Last year, CPTC—which Poole predicted would make cash "hand over fist" from the road—attempted to arrange a secret deal to sell their public license to run the toll road to another private concern. The bizarrely secretive deal was nixed by embarrassed state bureaucrats and local politicians who had not been consulted.