High Pay, Perks for Officials of O.C. Tollways

The Orange County 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 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 Transportation Corridor Agencies paid its top three managers $66,228 in cash awards, $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 were not 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 Orange County and greatly restricted by other toll road agencies throughout the country. A similar sell-back is planned in the next few weeks.

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

Similar toll road authorities in Houston, Orlando, Fla., and Denver have budgeted or spent $41,000 to $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 roads 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 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, which 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 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.”

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,” Laguna Niguel Mayor Mark Goodman said.

He added that “that mistake was compounded by not having had them consolidated” into the Orange County Transportation Authority.

Orange County Supervisor Marian Bergeson, who represents the county on both toll road agencies, said she is bothered by the salaries and benefits and maintains 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 their positions.

“It lends itself to less accountability than a body with directly elected officers who have the ultimate responsibility for any action,” she said.

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: “They just haven’t learned. You can guarantee them that I will revisit my bill in January.”

Atop the tollway-building empire is Woollett, forced out of his job as Irvine city manager in 1989 by a slow-growth City Council majority and hired by the toll road agencies several months later at a starting salary of $118,000.

Woollett signed on at the tollways with a mandate--to get the much-delayed projects moving and smooth over relations with developers who were 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.”

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 Orange County. Add deferred salary, retirement, life insurance and health insurance benefits, and Woollett’s total compensation is $175,400 a year.

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

Woollett gets 52 days of paid leave each year--including vacation and sick time--plus 12 paid holidays. He said he received that much annual leave as Irvine’s city manager, in lieu of raises.

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

He is allowed to accumulate the time off because he is exempt from a provision barring all other agency employees from stockpiling annual leave beyond two years.

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

But a $7,062 bonus approved 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 because 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 recovered $266 million of that amount and Woollett said he expects 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. “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, 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, and earns about 32 days of paid leave per year.

Under a policy initiated by Woollett last year to compensate employees who do not take time off for vacation, Kreutzen sold back his unused vacation and sick pay for $30,630. The policy went into place five days before the cash-strapped county declared bankruptcy.

Orange County and toll road agencies elsewhere do not permit employees to be reimbursed for unused vacation or sick time until they retire or leave the agency.

But Woollett said allowing the unused leave owed to employees to be paid out annually avoids saddling the agencies with a financial obligation when workers retire. The state and the Orange County Transportation Authority also permit employees to cash in unused vacation and sick time.

Henk was hired in May, 1990, 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 performance bonuses in 1991 and 1995 totaling $20,802. Two of those bonuses, totaling $14,432, came five months apart. Last year, Henk sold his unused sick days and vacation time back to the agencies for $10,108. He earns nearly 37 days of annual paid leave each year.

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 lure Henk from recession-racked Colorado 5 1/2 years ago, the agencies agreed to give 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.

By 1992, Henk had renegotiated the terms of the loan.

Henk’s move from Colorado increased his salary from $75,075 to $96,000. But Woollett said the loan was essential in bringing Henk to Orange County.

“It was important to him to have some temporary help in finding a house for his family,” which includes five or six children, Woollett said. “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, which are being applied here, Woollett said.

Henk and Kreutzen were each given the titles of executive vice president.

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

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 early 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 $560-million cost estimate for San Joaquin Hills has more than doubled to $1.45 billion. Tollway officials say their 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 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 2000 and open four years later.

Overall, the Foothill’s cost is up to $1 billion from the $672 million predicted by Woollett and his team. 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.