State Treasurer Refuses to Back 91 Express Lanes Bond Issue

California Treasurer Phil Angelides said Monday that he could not support a proposed $274-million bond issue to finance the purchase of the 91 Express Lanes by an Irvine-based nonprofit group because of concerns over potentially unrealistic projections on the toll lanes.

“I could not satisfy myself as to the public benefits to this transaction,” said Angelides, the state’s top fiscal officer. “I had questions as to whether the revenue projections, growth projections and cost projections could ever be realized.”

Angelides, the only elected official on the board of a state bank that approves loans and issues bonds on behalf of cities, counties and nonprofits groups, abstained from a Nov. 23 vote on the toll lanes project.

But California Trade and Commerce Secretary Lon S. Hatamiya and state Finance Secretary B. Timothy Gage, appointees of Gov. Gray Davis, voted in favor of the project, which will be funded through the state bank.

Despite his reservations, Angelides said he would not block the project’s bond sale, scheduled for Thursday. Such a move would come only if the treasurer believed the deal was illegal or was facing unfavorable market conditions, his office said.

However, Orange County Treasurer John M.W. Moorlach said he called Angelides on Monday and asked him why he wasn’t doing anything more to question the sale.

“‘If you didn’t feel comfortable, you should have tabled it or voted no,”’ Moorlach said he told Angelides in a telephone conversation Monday.

The 91 Express Lanes deal, announced last month, calls for a private operator, California Private Transportation Co., to sell the lanes to NewTrac, a nonprofit group of Orange County and Riverside County businessmen. The private operator has been losing money on the road since it opened in December 1995. Although the operators had begun turning a modest profit last year, the toll lanes were back in the red earlier this summer.

Some Riverside County officials have been the most critical of the proposed sale. County Supervisor Bob Buster plans to ask his fellow supervisors today to join him in an effort to block the bond sale.

“I’m trying to raise the biggest ruckus I can to see if we can’t hold up this bond sale and get a fair, open look at whether they are paying too much for the value of the toll lane franchise,” Buster said, adding that drivers taking the Riverside Freeway are already facing one of the most difficults commutes in the region.

“I was always concerned that we’d lost control over this key arterial link,” he said. “Now it appears that not only are we continuing to not have any control, but the private owners could be making away with unfair profits again at the community’s expense.”

NewTrac Chairman Gary Hausdorfer did not return calls seeking comment Monday. His public relations manager, Laer Pearce, issued this statement: “We don’t participate in witch hunts. Especially when there are no witches.”

Angelides said he was particularly concerned about the road’s projections.

If traffic levels on the toll lanes fall short of projections, NewTrac will have difficulty raising enough money to make payments on its bonds. Toll revenue must increase by nearly 6% annually in order for NewTrac to meet its obligations, according to bond documents and ratings reports.

Yet use of the toll lanes has been slipping steadily since reaching an all-time high of 27,553 cars in July 1998. About 8,634 fewer cars used the toll lanes this past July.