O.C. Tollway Agencies Pave Way to Lofty Pay and Generous Perks : Compensation: Top officials earn well over $100,000 and enjoy extras such as a low-interest loan and up to 2 1/2 months annual paid leave.

The agencies overseeing California’s first public toll roads have rewarded their executives with lofty salaries, cash bonuses and unusual perks--including a 2 1/2-month paid annual leave for one and a $190,000 home loan for another--over a six-year period in which Orange County slumped through a prolonged recession and declared bankruptcy.

The Orange County Transportation Corridor Agencies paid their top three managers $66,228 in cash awards and $28,576 in merit raises and provided other perks rarely available among public agencies despite missing most key construction start-up dates by years and watching the projects’ cost estimate double to $4 billion, records obtained by The Times show.

Executives weren’t the only ones who enjoyed the agencies’ largess. Last year, a dozen employees were permitted to “sell back” $115,893 worth of unused vacation time and sick pay over a 12-month period, a policy prohibited by the county of Orange and greatly restricted by other toll road agencies throughout the country. A similar sell-back is planned in the next few weeks.

And while governmental entities everywhere are being admonished to reduce their ranks, the transportation agencies have mushroomed from a 15-person operation six years ago to a bureaucracy of 47 full-time workers with a current annual budget of $4.5 million, or $95,219 per employee. Last fiscal year, the agencies spent an average of nearly $70,000 per worker on their 44 employees, documents show.

Similar toll road authorities in Houston, Orlando and Denver have budgeted or spent between $41,000 and $54,000 in compensation for each of their administrative employees this year.

The Transportation Corridor Agencies, formed through state legislation a decade ago to allow local governments to finance road and bridge projects, are overseeing the creation of three toll roads that will transform driving and housing patterns in southern and eastern Orange County.

Each of the two agencies is made up of about a dozen elected officials who represent the county and cities through which the toll roads pass. Those officials are not directly elected to the toll road boards but are appointed by their colleagues.

The roads are funded through revenue bonds, which are to be repaid by a mixture of toll collections, state funding and developer fees. Landowner fees are usually either added to the price of new homes near the tollways or paid through property taxes in special taxing districts that raise money for toll road construction.

Local tollway managers say they are working with a bare-bones staff on one of the nation’s most massive transportation projects that requires the best expertise money can buy. And they make no apologies for the salaries and perks they have expended since Chief Executive Officer William C. Woollett Jr. took over the agencies in late 1989.

“This organization is the way I run it,” said Woollett, whose compensation package tops $175,000 per year.

“I think we are very efficient and effective in what we’re doing. If you look at a city or county, our staff is at the top end of the triangle and that is one of the big reasons they are paid as well as they are. They supervise millions of dollars and hundreds and hundreds of [contract] employees.”

“You get what you pay for,” he added.

But the high rate of spending has prompted critics to call for a change in the way the Orange County toll road agencies do business.

“They show no signs they have a clue that they are accountable to anyone,” said Laguna Niguel Mayor Mark Goodman. “I think the Transportation Corridor Agencies have been a huge mistake and that mistake was compounded by not having had them consolidated” into the Orange County Transportation Authority, an agency that oversees all other county transportation projects.

Orange County Supervisor Marian Bergeson, one of the county’s representatives on both toll road agencies, said she is bothered by the salaries and benefits and maintained that such spending is a direct result of a governmental structure in which the members of the board overseeing the agencies’ business are not directly elected to those positions.

“It lends itself to less accountability than a body with directly elected officers who have the ultimate responsibility for any action,” she said. “We need to look at returning operations to a directly elected board through consolidation.”

State Sen. Quentin L. Kopp (I-San Francisco), who has unsuccessfully tried to get bills approved that would limit the salaries and compensation of top transportation executives, said he’s not surprised by what is happening at the Transportation Corridor Agencies.

“They just haven’t learned,” he said. “You can guarantee them that I will revisit my bill in January. This latest news will just add to the fodder that I’ve already collected.”

*

Atop the toll-road-building empire is Woollett, forced out of his job as Irvine city manager in 1989 and hired by the toll road agencies several months later at a starting salary of $118,000. After a slow-growth-oriented City Council majority sought to replace him with a slow-growth manager, Woollett signed on at the tollways with a mandate--to get the much-delayed projects moving and to smooth over relations with developers who are paying a hefty portion of the roads’ costs and were impatient with its progress.

At the time he was hired, Woollett had no experience in the construction or financing of toll roads.

“One of the things I do best is I pick good people and I listen to them,” Woollett said. “That’s why I have been able to handle the different kinds of jobs I’ve had because I’ve hired people who are smarter than I am, or more experienced or know how to do something better. So I see myself as a facilitator or a motivator.”

Woollett is compensated well for such skills. He now draws an annual base salary of $141,248, placing him among the highest-paid executives in the county. Add deferred salary, retirement, life insurance and health insurance benefits, and Woollett’s total compensation totals $175,400 a year.

Woollett said he negotiated a compensation package similar to what he had in Irvine.

By contrast, the director of Caltrans, James Van Loben Sels, gets $116,897 in salary and benefits. Harold W. Worrall, the chief operating officer of Florida’s Orlando-Orange County Expressway Authority with more than two decades as a transportation executive in Illinois, Virginia, Utah and Florida, makes $152,221 in compensation each year. Wesley E. Freise, the Harris County Toll Road Authority executive director in Houston, another longtime transportation executive, gets $117,383 a year in compensation.

Woollett gets annual paid leave of 52 days a year, plus 12 paid holidays, which amounts to three months off a year. He said he accrued that much annual leave as Irvine’s city manager, given him in lieu of raises.

Woollett said he’s never been off more than a month during any given year and has never sought to sell his unused leave back to the agency.

However, he is exempt from a provision barring all other agency employees from stockpiling his annual leave beyond two years.

The chief executive also is provided a 1995 Chevrolet Caprice, which the agency purchased for $22,669. It replaces the 1990 Oldsmobile Regency 98 that Woollett drove until it was totaled in an auto collision earlier this year in Irvine. The driver of the other car is suing Woollett and the agencies, while Woollett has filed a counterclaim for damages. The agency bought him the 1990 model for $22,762.

Pleased with his six-year tenure, the boards of public officials who supervise the project have approved $36,664 in bonuses and merit raises for Woollett since 1990.

But a $7,062 bonus in August, as well as $6,370 each for finance director Walter D. Kreutzen and head engineer Gregory G. Henk, his two executive vice presidents, ruffled some feathers.

Some citizens groups were angry with the rewards since Kreutzen and Woollett were chiefly responsible for depositing $325 million of the agencies’ money in a county investment fund that subsequently collapsed. The agencies have since recovered $266 million of that amount and Woollett said he expected all the funds to eventually be returned.

“These perks and salaries are just not justifiable,” said Paula Werner, an Irvine city councilwoman and the only member of the toll road boards to vote against paying the bonuses in August. “And they are not necessary. Our staff is definitely working hard, but do we have to compensate them at this level? No.”

*

Kreutzen, whom Woollett knew from his days as the city of Irvine’s chief financial officer and city treasurer, started at a $95,000 salary in December of 1989. He now makes a yearly salary of $127,416 but his total annual compensation last year was $145,472. He has received bonuses and merit raises totaling $28,997 since 1990.

Kreutzen drives a 1995 Jeep Grand Cherokee Laredo worth $31,586. The agencies paid $25,386 for the vehicle after trading in the 1990 Ford Taurus the agencies bought him for $20,563.

Under a policy initiated by Woollett last year because of the agencies’ financial health, Kreutzen sold back his unused vacation and sick pay for $30,630. The policy went into place five days before the county declared bankruptcy.

Although other toll road agencies, such as those in Houston and Orlando, do not permit selling back vacation and sick time until employees retire or leave the agency, Woollett said the unused leave is owed employees and should be paid out annually rather than saddling the agencies with a financial obligation and waiting for workers to retire before they can get their money. State employees and members of the Orange County Transportation Authority are permitted to sell back vacation and sick time.

Kreutzen earns about 32 days of annual paid leave per year.

*

Head engineer Henk was hired in May, 1990, away from the E-470 Public Highway Authority in Denver, where he was chief engineer. Paid $96,000 at the start, Henk now earns $127,416 but his total compensation last year was $141,746.

He received an $8,341 merit increase in 1994 and bonuses in 1991 and 1995 totaling $20,802. Two of those bonuses, totaling $14,432, came five months apart. Last year, Henk sold sick time and vacation pay back to the agencies for $10,108. He earns nearly 37 days of annual leave each year.

He drives a 1995 Jeep Grand Cherokee Ltd., worth $35,743, which the agency bought for $24,943 after trading in his 1991 Jeep Cherokee Laredo, which the agency bought for $20,958.

Besides a lucrative salary and bonus history, Henk, the executive vice president for design and construction, gets another perk unusual for a public agency.

In order to entice Henk from recession-racked Colorado 5 1/2 years ago, the agencies agreed to float Henk a $190,000 home loan at a fixed 6% interest to buy a $320,000 home with four bedrooms and three bathrooms in Trabuco Canyon. The market rate for fixed-rate mortgages was between 10.5% and 11% at the time.

Under the agreement, Henk was not required to make any payments until he had been employed five years, at which time he was to repay the entire amount plus interest, a sum total of $247,000.

By 1992, however, Henk had renegotiated the terms of the loan. Making $105,685 at the time, Henk paid $119,254 toward the loan, and signed a refinance note with the agencies, promising to pay the principal and interest balance of $99,200. Henk has declined to say how he came up with the $119,254, saying his finances are a personal matter.

The interest rate on the refinance note remained at 6% while the market rate for fixed-rate mortgages was between 7.9% and 8.5%.

But the terms of that note were renegotiated in Henk’s favor. Henk’s new arrangement required him to pay no principal and no interest on the $99,200 amount for five years, or until November, 1997.

Even then, Henk does not have to pay any principal--just interest payments--from November, 1997, to November, 2002. Between that date and the year 2007, he is required to make amortized payments of principal and interest until the note is paid in full, rather than a lump-sum payment ordered in the original agreement. The note is secured by a lien on the Trabuco Canyon property.

Woollett said the loan was essential in bringing Henk to California from Colorado. Henk’s salary increased from $75,075 to $96,000 when he joined the Orange County agencies.

“Frankly, in Greg’s particular case, we were sensitive to the fact that he had been living in the Denver area, which is a very depressed economy, and he had five or six children,” Woollett said. “It was important to him to have some temporary help in finding a house for his family. That’s how we got into the housing thing. We haven’t done it before and won’t do it again unless it becomes an important thing for somebody.”

Henk, who spent 14 years with the Colorado Department of Transportation and four years with the E-470 toll road authority, developed innovative construction and toll collection programs in Denver that are being applied here, Woollett said.

“It was important to get him,” Woollett said. “We searched all over the place. Because we are so different from other agencies, we can’t successfully hire someone from another toll road agency. They’re 10 years behind the technology. It became very obvious that Greg was the guy we wanted.”

*

Henk and Kreutzen were each given the titles of executive vice president in a public agency that likes to portray itself as a cost-effective private corporation, with Woollett as chief executive officer.

Both men deserve what they receive, Woollett said, because they are among the best at what they do.

Henk said the executive team had accomplished a great deal in the past six years, from developing a construction program to creating an intricate financial plan for the tollways.

Meeting those goals came from the “innovative and imaginative thinking of the people and the consultants working on this project. And you don’t get that by hiring county and state traditional . . . people.

“There is a component of new thinking that came into the project that came from experience outside of traditional government that is very hard to find,” he said.

Many of the key players in the administration, however, are from traditional government.

Henk was a longtime state transportation department official in Denver, while Woollett and Kreutzen worked for the city of Irvine. The agencies’ chief engineer split 25 years between Caltrans and the county of Orange. The head of its Foothill Transportation Corridor spent 27 years as a county employee. The chief of the San Joaquin Hills Transportation Corridor worked for the county for 16 years.

Among the team’s accomplishments, Henk said, is marketing the tollways so effectively that the agencies have been able to sell $2.7 billion in bonds.

“You can cut back and we can fail to sell bonds and we can be unsuccessful and it’s not going to help the county one bit,” Henk said. “What we need is a success in this county and we’ve got it.”

But whether the tollways are a success is yet to be determined. Woollett’s team estimated in 1990 that the San Joaquin Hills Transportation Corridor would begin construction in 1991 and open this year. The project started more than two years late, mainly due to changes in design and legal challenges to its environmental process. The entire roadway will not be open to traffic until 1997.

The San Joaquin’s $560 million cost estimate--also developed by Woollett’s team--has nearly tripled to $1.45 billion. Tollway officials say 1990 estimates did not take into consideration the full cost of financing the project.

The Eastern Transportation Corridor was supposed to start construction in 1991, open this year and cost $840 million. Construction did not begin until this past July and the cost has nearly doubled to $1.6 billion, due to delays in environmental certification and revised financing costs. The entire road is not scheduled to be open until 1999.

And the Foothill Transportation Corridor is a mixed bag.

While construction of the northern section started on schedule in 1990 and one 7.5-mile stretch is already open to traffic, the southern leg between Oso Parkway and Interstate 5 is four years behind schedule and is not expected to break ground until the year 2000 and open four years later.

Overall, the Foothill Transportation Corridor’s cost is up to $1 billion from the $672 million predicted after Woollett and his team took over. Delays had to do with a lack of money to begin the road’s environmental review, and the construction estimates rose because of revised financing projections, officials said.

“Construction and financial schedules are just goals, but until you have a guaranteed contract, you can never know the real costs or how long it will take to build,” said Lisa Telles, the agencies’ spokeswoman.

In a recent interview, Woollett seemed astonished anyone would question his record and that of his staff, describing the tollways as a praiseworthy project in a county hit hard by bankruptcy and a sluggish economy.

“I hired on at 60 years of age, when most people are retired, because I thought the projects were important, and they were important enough for me to bust my butt along with the rest of the staff to make that happen. And I still feel that way about it.”

* BIGGER BUCKS: Tollway employees paid better here than in other areas. A20

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Tollway’s Toll

Compared to other independent transportation agencies building similar-sized toll road projects in urban areas throughout the country, Orange County’s cost per administrative employee is much higher:

*--*

Cost per Employees employee Orange County 47 $95,219 Oklahoma City 17 60,945 Denver 17 53,676 Orlando 30 50,000 Houston 39 41,846

*--*

Source: Various toll road authorities

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Home Loan Perk

Details of the $190,000 home loan for Gregory G. Henk, tollway agencies executive vice president for design and construction:

MAY, 1990

* Transportation Corridor Agencies’ board of directors authorize Executive Director William C. Woollett Jr. to sign trust deed for Henk and his wife

* Loan is for $190,000 to purchase $320,000 home in Trabuco Canyon

* Agencies charge a fixed 6% interest

* Market rate for fixed-rate mortgages is 10.5% to 11%

* Henk not required to make payments until May 1, 1995, when he would have to pay entire amount plus interest, which totals $247,000

****

NOVEMBER, 1992

* Henk renegotiates loan terms

* Making $105,685, he pays $119,254 toward the loan, and signs refinance note with agencies, promising to pay a principal and interest balance of $99,200. The terms still include a fixed 6% interest

* Market rate for fixed-rate mortgages is 7.9% to 8.5%

* Henk not required to pay principal or interest until November, 1997

****

THE FUTURE

* From November, 1997, to November, 2002, Henk is not required to pay any principal--just interest

* From 2002 until 2007, he must make amortized payments of principal and interest until note is paid in full, rather than lump sum ordered in original agreement

* Note secured by lien on Trabuco Canyon property

Sources: Transportation Corridor Agencies, Orange County recorder’s office

Researched by MARK PLATTE / Los Angeles Times

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Executive Salaries

Compensation for the Transportation Corridor Agencies’ three most richly compensated executives does not end with cash. Here’s a look at their packages:

William Woollett Jr., Chief executive officer

1994-95 compensation; $175,400

1995-96 salary: $148,749

(included annual deferred income): $7,500

Starting salary (1989): $118,000

Merit raises (1990-95): $11,894

Bonuses (1990-95): $24,770

Automobile: 1995 Chevrolet Caprice

value: $22,669

Other compensation:

days annual sick leave/vacation: 52

per year toward retirement: $15,000

Able to “sell back” sick leave/vacation in fiscal 1994/95: $0

****

Walter D. Kreutzen, Executive vice president, finance and administration

1994-95 compensation: $145,472

1995-96 salary: $134,416

(included annual deferred income): $7,000

Starting salary (1989): $95,000

Merit raises (1990-95): $8,341

Bonuses (1990-95): $20,656

Automobile: 1995 Jeep Grand Cherokee Laredo

value: $31,586*

Other compensation:

days annual sick leave/vacation: 32

per year toward retirement: --

Able to “sell back” sick leave/vacation in fiscal 1994/95: $30,630

****

Gregory G. Henk, Executive vice president, design and construction

1994-95 compensation: $141,746

1995-96 salary: $127,416

(included annual deferred income): $0

Starting salary (1989): $96,000

Merit raises (1990-95): $8,341

Bonuses (1990-95): $20,802

Automobile: 1995 Jeep Grand Cherokee Ltd.

value: $35,743**

Other compensation:

days annual sick leave/vacation: 37

per year toward retirement: --

Able to “sell back” sick leave/vacation in fiscal 1994/95: $10,108

****

* Includes $6,200 trade-in value for his 1990 Ford Taurus, which cost $20,563)

** Includes $10,800 trade-in value for the agency-provided 1991 Jeep Cherokee Laredo, which cost $20,958)

Note: Henk was given agency-paid low-interest $190,000 home loan inducement to join agencies, and still owes $99,200

Source: Transportation Corridor Agencies

Researched by MARK PLATTE / Los Angeles Times

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Cost of Compensation

The Transportation Corridor Agencies’ 25 highest-paid employees pulled in salaries ranging from about $45,000 to almost $150,000, with total compensation packages ranging much higher. Here’s a comparison for fiscal year 1994/95:

*--*

Vacation/ Total Current sick time compensation salary sellback William Woollett Jr. $175,400* $148,749 $0 (Chief executive officer) Walter D. Kreutzen 145,472* 134,416 30,630 (Executive vice president, finance and administration) Gregory G. Henk 141,746* 127,416 10,108 (Executive vice president, design and construction) Jerry Bennett 126,108* 116,030 16,407 (Chief engineer) Michael Endres 119,261** 105,381 17,087 (Manager, Eastern Transportation Corridor) Gene Foster 112,742** 104,333 16,302 (Manager, San Joaquin Hills Transportation Corridor) Brent Muchow 112,493** 97,000*** 0 (Deputy chief engineer) Colleen Clark 108,449 101,89 3,987 (Director of finance) Terrence Geohegan 103,012** 98,219 0 (Director of toll operations) Wendell Hartman 102,979** 100,729** 0 (Manager, Foothill Transportation Corridor) Steven Letterly 99,965 95,175 0 (Director, environmental services) Gary Steinke 98,586 92,296 0 (Director, contracts) Kathleen Besnard 84,103 75,076 7,058 (Manager, administrative services) Victoria Reynolds 81,029 74,333 0 (Manager, toll operations) Eileen Harrigan 79,634 75,076 0 (Manager, bond finance) Manuel Marroquin 72,440 66,394 0 (Contract administrator) Laura Eisenberg 65,157 59,099 271 (Senior environmental analyst) Terry Swindle (7 mos.) 60,447 90,902 0 (Manager, right-of-way land purchases) Laura Barker (5 mos.) 59,666 75,076 1,429 (Controller) Lisa Telles 55,552 59,201 7,785 (Was a senior management analyst, now public affairs assistant) Jacqueline Jones 53,378 49,674 2,274 (Senior accountant) Terrea Tamanaha 51,237 46,634 0 (Assistant to CEO) Annita Henzie 49,763 44,860 2,555 (Executive secretary) Mary Lou Woods 48,946 67,000 0 (Senior management analyst, was part-time, now full-time) Macie Cleary-Milan (9 mos.) 47,551 60,125 0 (Senior environmental analyst)

*--*

* Does not include agency-provided vehicle

** Includes $4,200 auto allowance

*** Recently resigned; position filled by Russell Zapalac, with current annual salary of $97,000

Note: Chart does not include Paul Glaab, director of public affairs, whose total compensation is $100,551, of which $88,291 is annual salary.

Source: Transportation Corridor Agencies

Researched by MARK PLATTE / Los Angeles Times

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San Joaquin Hills Transportation Corridor Agency

Chairman Patricia C. Bates, Laguna Niguel City Council

Vice Chairman Peter F. Buffa, Costa Mesa City Council

Marian Bergeson, Orange County supervisor, 5th District

Collene Campbell, San Juan Capistrano City Council

Scott Diehl, San Clemente City Council

Joel T. Lautenschleger, Laguna Hills mayor

Joseph D. Lowe, Mission Viejo City Council

Dennis D. O’Neil, Newport Beach City Council

William L. Ossenmacher, Dana Point City Council

Robert L. Richardson, Santa Ana City Council

Don Saltarelli, Orange County supervisor, 3rd District

Michael Ward, mayor of Irvine

****

Foothill/Eastern Transportation Corridor Agency

Chairman Scott Diehl, San Clemente City Council

Vice Chairman Michael Ward, mayor of Irvine

Marian Bergeson, Orange County supervisor, 5th District

Collene Campbell, San Juan Capistrano City Council

Joanne Coontz, mayor of Orange

Harold R. Kaufman, Dana Point City Council

Jim Potts, mayor of Tustin

Robert L. Richardson, Santa Ana City Council

Mark Schwing, Yorba Linda City Council

William G. Steiner, Orange County supervisor, 4th District

Don Saltarelli, Orange County supervisor, 3rd District

Helen Wilson, Lake Forest City Council

Susan Withrow, Mission Viejo City Council

Bob Zemel, Anaheim City Council

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Project Problems

With the exception of the Foothill Transportation Corridor, Orange County’s tollway projects have slipped behind their original construction start dates. Meanwhile, construction costs have nearly doubled estimates of June, 1990.

Eastern Transportation Corridor

Original start: Late 1991

Actual start: July, 1995

Opening dates: Late 1999

****

Foothill Transportation Corridor North (From Eastern Corridor to Oso Parkway)

Original start: Late 1990

Actual start: Nov. 1990

Opening dates: Late 1999*

****

San Joaquin Hills Transportation Corridor

Original start: Fall, 1991

Actual start: Sept., 1993

Opening dates: July, 1996 (center), March, 1997

****

Foothill Transportation Corridor South (From Oso Parkway to Interstate 5)

Original start: 1996

Actual start: 2000

Opening dates: 2004

* Solid black line denotes portion open for use

****

Corridor Costs

Here’s how cost estimates have changed, in millions:

*--*

June, 1990 Current estimate projection Eastern Corridor $630 $1,600 Foothill Corridor $746 $1,000 San Joaquin Hills Corridor $667 $1,450 Total $2,043 $4,050

*--*

Source: Transportation Corridor Agencies

Researched by MARK PLATTE / Los Angeles Times