Judge OKs Transfer of Toll Road Fees to Aid Sale of Bonds : Transportation: Money will be pledged to secure $1.1 billion. With funds in hand, the Foothill/Eastern agency hopes to make issuance more attractive.

Worried that the $1.1 billion in bonds it plans to issue next week might be received less than enthusiastically by Wall Street, the Foothill/Eastern Transportation Corridor Agency on Friday got U.S. Bankruptcy Judge John E. Ryan to ratify a county agreement to turn over all fees it collects on behalf of the TCA.

The fees will be pledged to help secure the bonds that will finance the Eastern Transportation Corridor and a southern extension of the Foothill Transportation Corridor, both toll roads.

Attorneys for both the county and the TCA said they hope the county’s court-sanctioned pledge to hand over all of the fees, despite its bankruptcy, will make the bonds more attractive to rating agencies and potential bond buyers.

“This is a beneficial development for the county,” TCA attorney Allan Ickowitz told Ryan in court. “This is the first substantial bond issuing by Orange County. We’re glad to be able to come here with this agreement.

“This shows that the county will honor its obligations, and that it is not going to use the bankruptcy case to avoid its obligations,” he said.

Although the cities of Anaheim, Huntington Beach and Laguna Beach have successfully sold small bond issues since the county’s Dec. 6 bankruptcy filing, the toll road bond sale Wednesday will be the first major test of investors’ appetite for Orange County bonds.

“Let’s keep our fingers crossed,” Ryan said.

The offering’s large size and questions about the county’s credit quality have so far generated a lot of investor inquiries, according to Moody’s Investors Service, one of Wall Street’s major rating services.

Because about $240,000 in fees collected in the months before the bankruptcy were invested in the county’s ill-fated investment pool, the TCA will receive only 76% of that money, in keeping with this month’s settlement agreement between the county and pool investors.

But it will receive all of the $300,000 the county has collected from developers since then and all future fees, said county bankruptcy attorney Lee Bogdanoff.

The county originally entered into the agreement regarding the collection and transfer of developer fees in October, 1988. As part of the agreement, the county and 11 cities have been collecting fees from developers building on property along the Foothill and Eastern Transportation Corridors. Such building-permit fees must be transferred to the TCA on a quarterly basis, according to the agreement.

Friday’s ruling reaffirmed that agreement, Bogdanoff said.

The TCA anticipates that about $465 million in fees will be collected over the next several decades, Ickowitz said..

The bonds are also being secured in part by tolls that will be collected from users of the new toll roads, he said.