Toll Road “Bailout” Request Blasted

Groups that have banded together to fight the 241 toll road extension through San Onofre State Park today accused the private agencies that operate Orange County's financially troubled network of toll roads of seeking a $1.1 billion federal bailout.

The Transportation Corridor Systems (TCS) — a joint powers agency created in 2003 by the San Joaquin Hills Transportation Corridor Agency, which operates State Route 73, and the Foothill/Eastern Transportation Corridor Agency, which runs State Routes 241, 261 and 133, and something of a paper cousin to the Transportation Corridors Agency (TCA) — has submitted an application for a $1.1 billion loan from the U.S. Department of Transportation under the Transportation Infrastructure Finance and Innovation Act (TIFIA).

“The Bush Administration should not approve this loan to a toll road agency that has boasted that it does not depend on public funds,” stated Elizabeth Goldstein, president of the California State Parks Foundation, in a statement that was released just before she and other members of the Save San Onofre Coalition held a conference call with reporters. “Serious questions surround this request for a bailout. The brakes need to be applied to this billion dollar boondoggle immediately.”


“Now, as TCA’s existing toll roads have failed to perform as promised and sharply declining revenues raise the possibility of a default, the toll road agencies are turning to taxpayers to pay off existing private bondholders and have the public assume a substantial portion of the risk of the toll roads’ failure,” added Goldstein.

During the call, Bill White, an attorney with Shute, Mihaly N Weinberger, said TIFIA funds were designed to help acquire financing of new transportation projects that will receive revenues via fees, tolls and rents. “This is not about building new roads,” White said of the TCS application, “it's for existing debt from roads built in the 1990s.”

Back then, as the Weekly's R. Scott Moxley exhaustively reported, the TCA said the roads were desperately needed, there were no state or federal funds to build them, that they would be used heavily, and that they would easily pay for themselves. The agency even went so far as to assure Orange County residents that if its ridership and revenue projections were wrong, taxpayers would not be exposed to any risk.

“This was repeated ad nauseum as the main justification for building the roads,” White noted. “This is a promise TCA has made time and time again to the taxpayers, but on both counts now we're seeing a major retreat. It's becoming increasingly clear the toll roads are not performing as promised.”

He said people can discover on TCA's own website that ridership and revenue projections not only have been off the mark nearly from the start, but that the agency is now projecting lower numbers in coming years. The worst is the San Joaquin, which he said “is not meeting its revenue projection, and given the state of the economy, it's difficult to say if it will ever get better.” Numbers are also off for the better performing Foothill Eastern. “As times get worse, the TCA is consistently doing what it said it would never do: put the taxpayers on the hook for its debt,” White said.

White and Michael Fitts, a staff attorney with the Endangered Habitats League, said that the TCS loan should not even be allowed to be considered because it conflicts with federal statutes.

But TCS got a timely assist from Caltrans, which urged the Federal Highway Administration to waive the statutes in this case, according to Susan Jordan, director, California Coastal Protection Network. The feds agreed to consider the application, although the TIFIA committee that considers loans has not made a decision. “This is a breathtaking seizure of power for this highway administration to deviate from federal statutory requirement,” White said. “That is the fundamental problem we have with the application.”

Ripping a page from the playbook used by those who say federal taxpayers should not pay for the bad decisions of financial institutions, lending companies and homebuyers amid the current mortgage crisis, White said, “This is still not a justifiable use of taxpayer money. The only people who benefit are the original bond holders.”

“The bottom line is this is an unprecedented request,” said Jordan, who urged voters, state legislators and the media to ask how this application came about, how did the toll road agencies “get themselves in this hole” and “why Caltrans has become the TCA's mouthpiece.” She added that people across America should also ask why they are being asked to help reorganize the debt of an underperforming toll road in California, one whose loan request would wipe out about half the TIFIA budget.

“It is absolutely business as usual for the TCA and TCS, which have led us to a project that would be devastating to the natural environment of Orange County and San Diego County,” said Goldstein. “It is very ironic that federal taxpayers could end up bailing out a toll road authority based on destruction of the remaining natural environment.”

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