Toll Road Panel Formed

With the sale of the 91 Express Lanes to a nonprofit group in limbo, members of the Transportation Corridor Agencies decided Thursday to form an exploratory committee prepared to enter into any discussions over the fate of the troubled tollway.

“All I am saying is there is no option that should be off the table for discussion,” said Orange County Supervisor Todd Spitzer, a toll road board member who made the suggestion to form the committee. The Transportation Corridor Agencies operates three toll roads in Orange County.

Some of Spitzer’s colleagues were more direct.

“We certainly know how to operate toll roads,” said Supervisor Cynthia Coad, also a toll road board member. “We’ve done a wonderful job building them, and operating them. We’ve obviously got the expertise and the other group has made it clear they don’t want to operate that one anymore. We’re just gathering information and we’ll be there if they want to talk.”

Officially, TCA formed a five-person committee to review the sale of the 91 Express Lanes and “to represent the TCA in any potential discussions that might seek to involve the TCA.”

Besides Spitzer and Coad, Mission Viejo Councilwoman Susan Withrow, Orange Mayor Joanne Coontz and Yorba Linda Councilman Mark Schwing will serve on the committee.

“We’re poised to act, but we have nothing to act on--at least not yet,” Schwing said. But he added that it made some sense for the TCA to operate the 91 Express Lanes, the first privately owned toll lanes in California.

Officials with the California Private Transportation Co., which is seeking to sell the road, and the nonprofit entity NewTrac, the proposed buyer, did not return calls Thursday. Their public relations manager, Frank Wilson, said the two groups would not be making any comments for now.

“Basically, they are evaluating everything,” Wilson said. “They are assessing the reaction. They just need a couple of days to let the dust settle.”

On Wednesday, state Treasurer Phil Angelides halted the proposed $274 million bond sale that would have financed NewTrac’s purchase of the toll lanes. California Private Transportation Co. and NewTrac officials had also decided to postpone the bond sale. But Angelides beat them to the punch, saying the bond sale had been postponed “indefinitely.”

A Wall Street analyst said Thursday that NewTrac could lose its current bond ratings, which are low-investment grade, on the bond issue unless it quickly submits new time frames and its strategy for the sale.

“Unless there is a determination by early next week, we will withdraw the ratings,” said Chee Mee Hu, an analyst for Moody’s Investor Service. “If the sale is postponed for a long period of time, then it doesn’t make sense to have ratings out there. It would be ratings for something that doesn’t exist.”

NewTrac could always revise and resubmit its proposal, Hu said. But ratings agencies would have to weigh the risk to investors of potential litigation by the Riverside County Transportation Commission and the Riverside County Board of Supervisors, which have threatened to sue, as well as a well-publicized probe by California Atty. Gen. Bill Lockyer.

Some investors are already skeptical of the plan. During a conference call a week ago with NewTrac executives, bond sale underwriter Lehman Bros., and potential investors, representatives from some of the nation’s largest investment firms expressed concern about whether the transfer was done at “arm’s length.”

Potential investors, representing firms such as Oppenheimer Funds and John Hancock, mentioned the negative press coverage of the 91 Express Lanes. They also questioned the projected toll revenues, saying they appeared too optimistic, and they demanded a clearer explanation of how the purchase price was determined.

“I think this project has a history of some controversy. To some extent, NewTrac inherits that,” NewTrac Chairman Gary Hausdorfer told the potential investors.

Hausdorfer said that most of criticism was coming from “two or three individuals in Riverside County.” He said the project’s detractors were confused, and wanted the toll agency to act as a government body instead of a private, nonprofit corporation.

NewTrac may also lose its endorsement from the Orange County Transportation Agency, said Spitzer.

“Our support was contingent on this being an arm’s-length transaction,” Spitzer said. “Given the fact that this appears not to be an arm’s-length transaction, then OCTA’s support is up in the air. There are some very substantial questions that need to be answered.”

Also on Thursday, Riverside County Supervisor Bob Buster scheduled a trip to Sacramento next week so that a delegation from Riverside, Orange and San Bernardino counties could meet with state legislators, Lockyer and Gov. Gray Davis--or members of their staff. Buster wants to recruit state officials to buy out the interests of the California Private Transportation Co., return the toll lanes to the public and lift the fees.

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BACKTRACK

After insisting that it needed to add auxiliary lanes on the 91 Express Lanes for safety reasons, Caltrans reversed itself earlier this year after it was sued by the lanes’ private operators. Under terms of the settlement agreement, no improvements will be done in that area for at least six years or until the traffic on the heavily congested road increases 53%.