Wallys World

Toll-road boss Kreutzen is proving skillful in the art of bureaucracy

Photo by Jack GouldCounty CEO Janice Mittermeier isan unapologetic control freak, guarding the $3.8 billion-per-year government as if it were her household budget. I once requested a single controversial record from her staff and was handed more than a dozen boxes stuffed with unrelated documents. The document in question was, of course, missing. Even the elected supervisors—technically Mittermeier's bosses—have had the pleasure of requesting access to basic government information only to be told no. She would be the one, she said, who decided what supervisors need to know.

But Mittermeier is no longer in a league of her own. Here comes Walter Kreutzen, CEO of the county's embattled Transportation Corridor Agencies (TCA).

TCA runs the county's toll-road system, and Kreutzen, once the agency's chief financial officer, replaced William Woollett in the top job two years ago. Though less experienced than Mittermeier, Kreutzen is proving skillful in the art of bureaucracy.

In 1997, the man staffers call "Wally" tried quietly to force the TCA's board of directors to sign "confidentiality certificates." The certificates would have legally prohibited the public's watchdogs from ever divulging ugly truths about toll-road operations—particularly its finances—without staff approval. After the Weekly broke the story, Wally tried to argue that the unprecedented certificates were routine. Several alarmed board members said Wally didn't seem to understand that they —not he—were supposed to be running the agency.

It was not the first time Wally had been confused. In 1995, as if they had already built a successful toll road, he and his mentor Woollett gave themselves exorbitant raises, bonuses and perks like free luxury cars and no-cost housing loans from TCA coffers. One major problem: the San Joaquin Hills toll road, their first of three roads, was at least two years behind schedule and wouldn't even be finished for another year. After it opened in November 1996, the agency was forced to admit, at least behind-the-scenes, that it had terribly mismanaged its finances, would have to drastically revise all its revenue projections and—to save itself from potential bankruptcy—refinance more than $1.7 billion.

That didn't stop Wally from proposing another round of lucrative pay raises for TCA brass last year, going so far as to spend $24,000 on a "study" to justify the move. This time, the board wisely said no.

Wisely because last month it became obvious to everyone that the San Joaquin Hills Transportation Corridor will never come close to achieving its original revenue projections. It can't even meet its more recent, heavily doctored projections. In February—after years of blatantly misleading public relations—a stubborn TCA finally admitted as much publicly. Not that it did so voluntarily: major Wall Street investment firms forced the agency's hand by downgrading TCA bond ratings and describing the toll road's financial health as "negative." To calm anxiety, the agency —until recently touted as an international model of private road construction—immediately dipped into $40 million in savings and promised to pinch pennies on administration. They also discussed raising tolls, an idea that has already proved to reduce traffic on the roads.

In a follow-up February meeting, concerned board members, including Collene Campbell and Todd Spitzer, the chairman, said it was time for the agency to stop winging it with numbers. The two admitted that they did not have answers to some of the most basic questions concerning toll-road operations.

"I have big concerns," Spitzer said. "We need to have a confidence level that we just don't have now."

High-priced consulting firm Wilbur Smith Associates—a master at painting rosy scenarios—had trouble explaining to Spitzer why it ignored obviously critical factors in calculating what turned out to be hilariously inaccurate road usage projections for the taxpayer-subsidized San Joaquin Hills toll road. After a round of heated questioning by Spitzer, a Wilbur Smith consultant could only say, "We really believed we were introducing an appropriate level of conservatism [into revenue projections]. Obviously, we were wrong. . . . We've learned a lot."

It was also revealed that the agency doesn't even know the first thing about ridership habits. Remarkably, a staffer reported that the agency "is flying more blind than we'd like to."

Frustrated, Spitzer noted that it was "the first time we've had this type of comprehensive session"; the TCA is 14 years old. He ordered that the staff arrange a future weekend workshop to clear up disturbing unanswered questions. A visibly annoyed Campbell said she was "devastated and publicly embarrassed" by the TCA's "mess" of an operation and that she expected forthright honesty and competence from the staff and consultants in the future.

Don't count on it, Collene. The Weekly requested access to official tapes of the two February meetings—likely the most critical and revealing in the TCA's shady history. "You're not going to believe this, but the staff says the tape machine wasn't working," one board member told us. "I know it doesn't look good, but that's what they say." Another board member said he was "shocked" to learn that no tapes had been made. "I can't explain it," he said.

On March 9, the agency's board met again. Apparently hoping to dodge another humiliating session, Wally made sure this meeting was almost devoid of substance. At one carefully staged point, three McDonald's restaurant representatives—who have a joint marketing agreement with the TCA—spoke glowingly about how proud they were to be working with the "fine" agency. The kind words seemed to delight board members, who smiled, made jokes and laughed during the brief 30-minute meeting. A McDonald's rep remarked, "Everyone here is so upbeat!"

 
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