Is Tollway Following Denver’s Road to Ruin? : Highways: Critics charge that proposed Orange County project will also be hampered by financial problems and low use. Proponents insist that all is well despite the delays.

A five-mile stretch of E-470 toll road lies eerily silent on the rolling Colorado plains just outside Denver. A car traveling along this road in midday is as rare as a UFO sighting--unusual, but not unheard of.

It was not supposed to be this way on a project that once was called a model for one of California’s first toll roads, the 17.5-mile, $1-billion San Joaquin Hills tollway scheduled for construction next year.

The Orange County and Denver projects began about five years ago when municipalities along the planned routes formed joint-powers authorities to build toll roads that would serve new housing subdivisions.

In Orange County, the San Joaquin Hills tollway would extend the Corona del Mar Freeway (California 73) from Newport Beach to Interstate 5 near San Juan Capistrano, through the new community of Aliso Viejo.

Proponents of Orange County’s project insist that all is well financially and that construction bonds will be sold during the first half of 1993.

But some observers fear that the Orange County project is following a path similar to Denver’s--especially the environmentalists who strongly oppose the tollway.

“It’s a road doomed to failure because nobody will use it,” Laguna Beach activist Beth Leeds said recently. “Taxpayers will be left with a white elephant.”

The Denver and Orange County projects were considered to be similar enough for Orange County’s San Joaquin Hills Transportation Corridor Agency to hire away Greg Henk, E-470’s chief engineer, and loan him money to buy a house.

But inaccurate traffic and financial forecasts, as well as a serious cash shortage, have forced Denver officials to drastically cut their project from 48 miles to 30 miles. Moreover, the rest of the project is being built over existing highways to eliminate toll-free competition, thus wasting $15 million in previous design work.

“There’s that western sense of independence that says: ‘By God, I’m not going to pay a toll,’ ” Steve Hogan, the Denver project’s executive director, said recently.

In addition, the Denver E-470 authority is knee-deep in litigation with the consulting firm that selected the automated toll collection and computer systems, which did not perform as well as expected.

Hogan said public road projects that represent toll-free competition helped reduce traffic on the new toll road from an expected 22,000 vehicles per day by this year’s end to only 4,100, with toll revenues of $750,000 running far below the $1.2-million cost of operating the toll plazas.

A key bank recently declined to renew the Denver project’s line of credit, and state officials declined to provide $150 million in other financing.

Today, Orange County’s tollway officials reject most comparisons with the Denver project. They argue that the Denver toll road is geared to development that has not occurred, while the Orange County project would relieve traffic on heavily congested Interstate 5.

But in five years, Orange County’s tollway construction cost estimates have more than doubled, construction has been postponed each year, and litigation remains a roadblock.

Orange County Supervisor Thomas F. Riley, whose district is bisected by the route, said recently that he is so disappointed by the lack of progress that “I’ll do anything to get the road built.”

The tollway agency has spent more than $77 million since its inception, without an inch of concrete poured--more than it cost to install 30 miles of car-pool lanes on the San Diego Freeway, or about what it takes to build three miles of eight-lane freeway.

Developers’ fees are supposed to pay 48.5% toward construction of the much-delayed San Joaquin Hills tollway, designed to carry 150,000 vehicles a day, with the rest of the money coming from bonds to be repaid from toll revenues, property taxes paid by homeowners along the route, and small state and federal grants.

But the recession has virtually halted new development and sharply reduced revenues from developers’ fees, which slid from $2.6 million in the second quarter of 1990 to $586,700 in the same quarter this year.

Financing problems and environmental litigation have thwarted planned groundbreaking ceremonies at least three times. Tollway construction was originally due to begin in the late 1980s, but the latest date to be abandoned was the end of this year.

Financial consultant Richard Swanson advised Stan Oftelie, the Orange County Transportation Authority’s executive director, not to loan any more money to the tollway agency without guarantees and a lien on toll revenue because such a loan would be high risk.

“We believe that the (tollway agency) will not be able to secure a rating on tax-exempt bonds given . . . (the) concern rating agencies and investors have about the pace of economic recovery in the county,” Swanson wrote to Oftelie in a draft memo dated Sept. 18.

Regardless, tollway officials say they are moving forward with their plans and are confident that the financing will fall into place.

“I’m optimistic,” tollway Executive Director William C. Woollett said last week. “Otherwise I wouldn’t have taken this job.”

“We will do it,” said Wally Kreutzen, the agency’s chief financial officer. “We have enough money now . . . to build a segment that will provide relief to some residents of Orange County.”

But Orange County Transportation Authority Chairman Gary L. Hausdorfer finds himself championing the road while seriously questioning the amount of money that has been spent. In a recent interview he was pessimistic about the tollway agency’s ability to obtain $1 billion in construction financing in the next few months.

“I don’t blame anyone because I was there myself,” Hausdorfer said. “But it’s natural for people to wonder where all the money has gone.”

According to reports given to tollway board members, this is how the agency has spent $77.7 million since 1987:

* $43.5 million went to engineering.

* $20.3 million was spent on rights of way.

* $6.9 million has been spent on lawyers, lobbyists and consultants, mostly in connection with legislation and environmental permits needed to proceed, and on lawsuits filed by and against the tollway agency. Two lawsuits are unresolved.

* $2.2 million went for staff salaries.

* $2.2 million was paid as interest to creditors.

* The remaining $2.6 million went for office rent, employees’ health care and other benefits, postage, insurance, travel and administrative expenses.

Meanwhile, the tollway agency is re-evaluating all revenue estimates based on the county’s latest population estimates and is taking into account the accelerated schedule of improvements such as car-pool lanes due on the Santa Ana Freeway and other projects that mean toll-free competition.

The real issue in Orange County, according to transportation officials who requested anonymity, is that the tollway agency has spent a great deal of money on design work and other matters before gaining title to all of the rights of way and environmental permits.

“To spend all that money without getting your ducks in order is ridiculous,” said one disgruntled former tollway agency board member.