Countywide : Tollway Gets Backing Inside the Beltway

The U.S. Senate gave Orange County’s financially strapped Transportation Corridor Agencies a big present this week--the promise of a federal loan if the planned San Joaquin Hills tollway fails financially.

But the House of Representatives was not as generous, so differences will have to be resolved in a House-Senate conference committee not expected to meet until after Labor Day.

Designed to spur investor confidence in tollway construction bonds to be offered soon, the loan guarantee was included in the Department of Transportation’s annual appropriations bill for 1993, which the Senate approved on a vote of 74-22 Wednesday night.

Without the guarantee, the construction bonds would be considered a riskier investment and thus command a much higher interest rate at great cost to the tollway agency.

The $12-million loan guarantee could expand to $120 million over a five-year period to cover inflation and unforeseen circumstances, officials said.

County tollway officials acknowledged several months ago that they were lobbying for the federal guarantee because Wall Street underwriters, who are expected to purchase tollway construction bonds, have been worried that the agency has no track record.

A loan guarantee means that federal tax money would be loaned to the tollway agency if it defaults on payments to bond purchasers.

U.S. Sen. John Seymour (R-Calif.), a former state legislator from Orange County, urged the Senate to grant the loan guarantee. “Because the bonds are not backed by the full faith and credit of a governmental agency, which has been the customary practice for infrastructure bonds, the investment community is looking for more security to ensure a revenue stream in the first few years of operation,” Seymour told senators.

Tollway opponents have objected to the loan guarantee, saying that it’s at least a symbolic violation of county officials’ pledge years ago to fund the road with developer fees and bonds against toll revenue. Recently, partly due to reduced home building, the agency’s income has dropped. And tolls can’t be collected until the road opens.

But tax money has been involved in the road’s financing since Congress and the Reagan Administration made it a federal “demonstration” project five years ago, the state earmarked small sums for interchanges, and Mello-Roos districts in South County levied property assessments for the 15-mile, $793-million highway.

The road will extend California 73 from the end of the Corona del Mar Freeway at MacArthur Boulevard in Newport Beach to Interstate 5 near San Juan Capistrano. Construction is expected to start by the end of the year if the court battle over the project is resolved. Anticipating a federal court challenge by environmentalists, the tollway agency went to court first to seek a judge’s approval of the project’s environmental impact statement. A hearing has not been scheduled.