Countywide : Tollway Agency Told Cash Crunch Coming

The agency planning to build a $585-million, 15-mile tollway through San Joaquin Hills will run out of money by the end of the year, months before any concrete is poured, according to new financial forecasts.

But officials of the San Joaquin Hills Transportation Corridor Agency, who hope to begin construction by early next year, say they anticipated the cash-flow problem and are confident of being able to obtain necessary financing.

“In November of 1990 the agency’s expenses will exceed cash available,” Deputy Director Wally D. Kreutzen wrote in a cash-flow analysis sent to corridor agency board members this week. “Without either significant increases in revenues or decreases in expenditures, the agency will be required to seek operating capital for the completion of the environmental and design process.”

Kreutzen said through agency spokeswoman Donna Stubbs that his analysis merely confirms what was known all along--that final design work and construction will be costly, and that the developer fees now being paid to the agency are insufficient to cover the bills.

Kreutzen forecast a $3.1-million deficit by year’s end. The deficit would eventually reach an estimated $559.9 million by the end of the project in mid-1994.

The corridor agency has long planned to sell revenue bonds to pay for construction costs projected to be about $585 million, but agency officials have been reluctant to go to the bond market merely for so-called preconstruction financing.

“This forecast is actually more favorable than previous ones, because at one point (agency board members) were even talking about going to the bond market by this date and decided to wait,” said Stubbs.

Officials said they hope their cash will last long enough to use bond financing only for actual construction, thus reducing interest costs over the project’s duration.

The $1 or $2 tolls to be paid by motorists when the highway opens in 1994 won’t be affected by the cash-flow problem, according to Loretta Sanchez of Fieldman Rolapp & Associates, an Irvine-based financial consulting firm that advises the corridor agency board.

That’s because any preconstruction borrowing can be secured with anticipated developer fee revenue instead of expected toll income.

One option under consideration, said Sanchez, is asking developers to advance the fees they would have to pay in future years as commercial and residential construction continues in the tollway corridor.

Altogether, about $265 million in such fees are expected to be collected, and the agency probably needs $60 million or less to carry over until construction bonds are sold, Sanchez said.

“I don’t really think of this as alarming,” said Newport Beach Councilman John Cox, chairman of the corridor agency board. “With any luck, we will go out to get construction financing (sell bonds) right at about the same time we run out of money.”

The tollway is one of three planned for the eastern and southern sections of Orange County at a combined cost of $2 billion or more. All are expected to be open to traffic in the mid- to late 1990s. Developer fees are expected to pay about 48.5% of actual construction costs, with toll revenue and state and federal grants paying the rest.