The Foothill-Eastern Toll Road, a.k.a. Route 241, is reportedly nearing the biggest default in the $3.7 trillion municipal market since Detroit's record bankruptcy.
Revenues and ridership chronically fail to meet projections–most certainly the ones politicians who said Orange County should be run like a business used to shove Lexus lanes down our throats years ago. Of course, like Wall Street looters, those same folks maintain their positions of power.
And like the Bruce Dickinson and the cowbell, these same Orange County political lifers and Transportation Corridor Agencies (TCA) staffers in Irvine say the prescription to cure this financial affliction is more toll road.
Comparing the financial state of the Foothill-Eastern Toll Road and the Motor City madness comes not from the dirty hippies and unwashed surfers who have banded together to save Trestles but that anti-capitalism tool known as Bloomberg Businessweek.
The report cites a consultant to California Treasurer Bill Lockyer's Debt and Investment Advisory Commission saying earlier this summer that the TCA risks default on $2.4 billion in debt. To put that in perspective, the 1994 Orange County bankruptcy, the largest U.S. municipal bankruptcy at the time, totaled $1.7 billion.
“The projections that were originally put into place when they issued debt didn't come to fruition,” Howard Cure, director of muni research for Evercore Wealth Management LLC in New York, tells Bloomberg reporter Stephen Merelman.
That echo year hear? It's what the Weekly has been reporting for years–to choruses of denials from toll-road boosters.
“Built into this kind of project is the expectation that they can improve the amount of traffic and the collection of tolls,” Cure reportedly continued. “When you fall behind early on, it just makes the problem that much worse.”
And it has driven down the value of the bonds that were issued to build the blasted thing and driven up requests by the TCA to refinance its debt and ask for extensions on repayment obligations, Merelman observes.
Lisa Telles, the delightful TCA spokeswoman, reportedly tells the Bloomberger that the collapse of Southern California's housing market is to blame for revenue and ridership projections failing to be met, not the overly great expectations.
As I try to wrap my head around new toll road lanes historically creating new homes and traffic rather than taking care of the existing bottlenecks, Telles is claimed to go on that when the housing bubble burst inland homes lost value, Orange Countians lost jobs and the toll roads remained lightly traveled.
“If people are nervous about losing their jobs, they are more careful about their expenses and are willing to sit in traffic rather than pay a toll,” she reportedly said by telephone.
Marilyn Brewer, the former Republican state assemblywoman out of Newport Beach who asked Lockyer to review the TCA finances, also talked housing in her reported insights to Merelman.
“The TCAs are like a homebuyer whose house is underwater and they want to extend the loan in order to save it,” she reportedly said. “It's the result of bad decisions they've made in the past. This is like the third time they've gone to the well. In three to five years, they're going to be asking for another extension.”
Clang that cowbell, boys.