The agencies that run Orange County’s 241 and 73 toll roads are on track to collect $28 billion for roadways that cost $2.8 billion to construct, the Orange County grand jury says in a critical report that questions whether the routes will ever become free to motorists as once promised.
The Transportation Corridor Agencies have accumulated “a high level of debt that will encumber the roads and its users for decades to come,” according to the report in which the county watchdog panel suggested that the elimination of debt become the agencies’ top priority.
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Development fees for the toll roads were passed along to initial home buyers and effectively are paid off over the years on mortgages for the nearby roadways completed two decades ago, the report notes, adding that the public deserves to know whether those roads ever will be free and whether the agency will fade away once the debt is paid.
Formed in the 1980s, two related organizations built and continue to operate the 73, 241, 261 and 133 toll roads, managed by one staff (An unrelated agency oversees the 91 Express Lanes).
The grand jury report, released this week, acknowledges that the agencies have “built excellent roads with minimal tax dollars” and continues to “run a state-of-the-art toll-collection operation.”
The grand jury report also notes that the TCA has reduced future interest payments by taking advantage of low-interest rates. But the report argues there is no reason to delay full payment of the agency’s debt until 2053 – when it is currently scheduled to be retired – rather than pay it off sooner.
Once the debt is fully paid off, the original plan was for the toll road agencies to cease operations and the roads be turned over to Caltrans to operate as freeways, with no tolls collected. The grand jury report contends that “probably none of those things will happen.”
“In grand jury interviews, knowledgeable officials, both elected and appointed, have expressed their opinion that the toll roads will never become freeways,” the report says.
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The grand jury estimates that $700 million in annual tolls will be coming in by the time the construction debt is scheduled to be retired in 2053, and the report opined that it would be a “radical step” for the public sector to shut down the agency and cease toll-road collection at that point.
In a response to the grand jury report, TCA leadership noted that its debt-management policies have helped weather a recession, a pandemic, a debt crisis and political battles.
A strategic plan expected to be adopted later this year could include using reserve money to retire some outstanding bonds, toll road agency officials added.
The toll roads agency questioned the “$28 billion for $2.8 billion in road (construction)” figure cited by the grand jury, noting it is partly based on assumptions as to how the agency will operate over the next 30 years, which TCA officials described as “decisions that clearly haven’t been made.”
“Our region’s transportation system is core to the quality of life we enjoy, making this one of the best places in the world to live,” the TCA wrote in response to the grand jury report. “The tangible economic value transportation infrastructure provides should always be a consideration when reviewing the total cost of the investment.”
Several TCA board members did not respond to requests for comment.
The toll roads were key to the development of south Orange County cities, the grand jury report acknowledges.
But, now that the roads are built, the grand jury questioned whether associated development fees – paid by developers but passed on to the buyers and renters of nearby homes and commercial properties – are still justified.
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“Individual homeowners are paying thousands of dollars to an agency that is banking its money for a rainy day,” the grand jury wrote.
A “large pool of unrestricted cash” raised by the TCA has been used to “polish the agency’s image, perpetuate its life, bolster the positions of board members and engender goodwill across a wide range of business and political leaders,” according to the report.
“An elected board member who holds charitable functions told the grand jury that the TCA was always good for a donation,” the grand jury wrote. “In its most innocuous form, toll money goes through the TCA to the favorite charities of city council members who sit on the board. At the other extreme, millions have gone to advocacy groups that are free to politically support certain TCA board members and undermine others.”
According to the report, over the past 10 years, the TCA spent $10.6 million in donations and membership fees to nearly 200 organizations, as well as more than $8 million in all for lobbying and advocacy.
The report comes as at least one member city has taken steps to withdraw from the joint powers authority that forms the TCA board. San Clemente’s leaders – have long battled the TCA with others over a proposed extension of the 241 toll road to the I-5 Freeway.
The TCA stopped planning work on the latest proposed 241 extension after a traffic study determined it wouldn’t be worth the cost. But the grand jury noted that the TCA has fought bills crafted by state Sen. Pat Bates that would block future consideration of the roadway, raising concerns that the agency could resurrect it at some point.
The grand jury is specifically recommending the TCA pay off their debts by 2040, a move the panel estimates would result in approximately $1 billion in debt-service savings.
The grand jury is also recommending that TCA eliminate developer fees once the debt is paid off, and exclusively use funds raised by the fees in the meantime to pay off debt.
Source: https://t-tees.com
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