Heavy Lobbying Helps Spare Tollway Agency

In the last three months, top officials of the Transportation Corridor Agencies have gone to great lengths to keep from being absorbed by their most hated rival--the Orange County Transportation Authority.

To keep the Legislature on its side and show off its progress, the tollway agency, which oversees construction of three new toll roads in Orange County, flew the chairmen of the state Senate and Assembly transportation committees in helicopters over the projects. Tollway officials lobbied business leaders and legislators here and in Sacramento.

They refused to take a seat on a merger study committee. They advised some of those looking to bid on the study not to get involved. They announced they would be going out of business sometime in the future. They used the better part of a public meeting in February to attack the OCTA as an “empire building” agency interested in a “power grab.”

And most recently, they persuaded the local chapter of the Building Industry Assn. of Southern California to approve a last-minute request to oppose the consolidation study.

“They went on the offensive, and it was quite effective,” said William G. Steiner, a county supervisor who serves on both transportation boards. “This [merger] was a train that was rolling along, and they definitely stopped it.”

At stake are the millions of dollars the toll road agency expects to collect when the first of three pay highways opens at the end of this year along the coast between San Juan Capistrano and Newport Beach. Two other toll roads in eastern Orange County are due to open in the next six years.

Tollway officials feared that if they were absorbed into a larger agency, all existing bond covenants would unravel and force motorists to pay tolls on the roads forever. Should that happen, toll road administrators argue, the revenue could eventually be diverted to other transportation projects.

They also worried that any attempt to merge the agencies and change the existing financial structure of the projects would delay construction and jeopardize funds for the toll roads, which are designed to provide alternative routes to the Santa Ana, San Diego and Costa Mesa freeways.

Developers--who are paying half the cost of the tollways and have already contributed $165 million--fretted about having to keep donating fees after the roads are built.

“We’re a single-purpose public agency, [whose purpose] is to finance, design and build the roads and then go out of business,” said Paul Glaab, the director of public affairs for the toll road boards.

“By tinkering with that equation, you can upset the apple cart in trying to do what we set out to do.”

OCTA members, on the other hand, believed that a study was worth pursuing--at least to determine how much money could be recouped by sharing tasks. They pointed to the millions of dollars saved when they took over the county’s transit district and began running its bus operation.

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OCTA members are still puzzled about why the tollway boards so strongly opposed a study of the merger. After all, they argued, both the OCTA and TCA would have to approve such a merger, although it could also occur through legislation.

“I’m perplexed by their unwillingness to have a discussion with us or to provide information,” said Stan Oftelie, chief executive of the Orange County Transportation Authority. “It’s much too harsh a response to some simple questions, and the whole thing is being personalized to a degree that I can’t understand.”

The animosity reached its peak last month when it took two weeks just to decide who could be included in a meeting to discuss who might sit on a combined panel to study the issue.

When the gathering finally came to pass in the office of county Supervisor Steiner, the toll road representatives made a forceful presentation against moving forward with any studies.

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“The view from the [tollway] boards that this was a hostile takeover precluded any consensus from being reached,” Steiner said. “We knew that any effort to move forward would obviously be a one-way street, and that’s not the road to consensus.”

The Building Industry Assn. vote earlier this month capped months of furious, behind-the-scenes lobbying on the part of top officials from the Transportation Corridor Agencies and principals of its law firm--Nossaman, Guthner Knox & Elliott--including former BIA Executive Director John Erskine and former legislator John F. Foran.

The BIA’s current executive director, Christine M. Diemer, wrote to the OCTA, urging it to “drop any pursuit of a study.”

The transportation authority’s board of directors is expected to formally reject the idea today.

“Our thought was this: ‘Why jeopardize what has been a smooth-running operation?’ ” Diemer said.

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The consolidation issue first surfaced in the late 1980s and early 1990s, but the tollway agency successfully thwarted the transportation authority’s efforts then.

The new impetus for a merger developed after the county’s bankruptcy, when officials began looking for ways to combine a number of government agencies, hoping to save money and duplication. A similar move is afoot in Sacramento to combine all special districts, especially the dozens of water agencies that dot Orange County.

When The Times reported in November that the tollway agency had rewarded its top executives with numerous raises, bonuses and perks despite the toll roads being substantially over budget and behind schedule, concern over the projects increased on the part of the OCTA and some elected officials.

Tollway officials have said the early cost projections and schedules were only estimates and that the projects have remained on track since bonds were sold in recent years to pay for construction.

The fight between the two agencies began in earnest when the transportation authority announced in January that it was having Dan Miller, a high-profile consultant, conduct a study on the possibilities of a merger. Tollway officials immediately branded Miller an Oftelie ally and said any study Miller conducted would be biased.

During a February meeting, toll board members lashed out at Oftelie and his agency, calling the organization a “giant, breathing Tyrannosaurus rex that wants to absorb everything in its path.” When the authority invited the toll boards to join a committee to study the merger proposal, tollway officials refused.

The tollway boards--composed of city and county officials whose jurisdictions include the three planned toll roads--argued that a combined agency might cost the tollway agency control over the projects.

Most of the seats on the tollway boards are held by South County officials, who want to maintain local control over how the roads are built.

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“When you talk about consolidation, there’s always a fear of protecting turf and people become polarized,” said County Supervisor Marian Bergeson, who is a member of both the tollway boards and its rival. “What we should be looking at is what makes the most sense and getting into some form of regional government.”

Despite protests from the tollway board members, the transportation authority moved ahead with the study anyway and solicited proposals from five consulting firms.

Two submitted bids, including Miller, who put together a team composed of Bill Vardoulis, a former Irvine mayor, and the Diamond Group, a consulting firm run by former Santa Ana Mayor Dan Young and former San Juan Capistrano Mayor Gary Hausdorfer.

Wally Kreutzen, who took over as temporary top manager of the tollway boards when his boss fell ill in February, strongly advised Vardoulis not to get involved in the study, according to those who have spoken with Vardoulis.

Sources said Kreutzen counseled a second potential bidder to keep away from the study unless he was looking to make enemies with South County officials, many of whom oppose consolidation.

The OCTA’s executive committee voted last week to abandon the merger study for now, and the full board meets today to put the issue to rest.

But Glaab, the public affairs director of the tollway boards, believes the merger issue isn’t completely dead.

“I don’t think it’s gone for good,” he said. “These things are cyclical, and although it might be set aside now, I expect we’ll see it again some day.”