Numbers Belie TCA Marketer’s Rosy Scenarios

At a time when Orange County’s toll road agencies are launching a multimillion-dollar marketing campaign to increase ridership, new documents released Wednesday show toll road officials have dramatically scaled back ridership and revenue projections.

The new figures, part of a bid to refinance about $1.6 billion in bonds on the Foothill and Eastern toll roads, have traffic on the roads lagging as much as 22% behind original projections and revenue over the next 35 years falling as much as 43% short of estimates.

Toll road officials say the numbers were based on 1990 census data that proved overly optimistic about economic growth in the region. Even with a booming economy of late, officials said the recession earlier this decade slowed growth in the Inland Empire, which had been projected to provide much of the congestion that would make the toll roads desirable alternatives.

“If you’re looking for where something was done not right, the effect of the recession in Riverside and San Bernardino counties was not factored in as much as it should have been,” said Tony Hughes, managing director of Salomon Smith Barney Inc., the investment group that manages the toll agencies’ bonds.

Hughes and Colleen Clark, chief financial officer for the Transportation Corridor Agencies, said they are confident the latest figures are more accurate and defended the earlier estimates.

“We’ve learned a lot and are incorporating all that we’ve learned as we’ve gone along,” Clark said. Toll road officials already refinanced about $1.4 billion in bonds for the San Joaquin Hills toll road, which also lagged far behind original traffic projections. The Foothill/Eastern bonds could go on sale as soon as July 12, if the plan is approved by board members at their meeting July 8 and the market is favorable.

While the refinancing plan includes far more conservative projections for traffic, officials say increasing ridership remains a priority. To that end, the toll road agencies today began a $2.4-million contract with Irvine-based Johnson/Ukropina Creative Marketing. The move marks the first time the TCA will direct its own marketing efforts.

“Drivers make a daily decision on whether or not to use the toll roads,” said Lisa Telles, spokeswoman for the agencies. “It’s important that people be reminded that there’s an option.”

Toll road officials said they believe refinancing and marketing together will help them reach their goal of repaying the bonds and turning the roads into freeways. But the effort to increase ridership through advertising comes on the heels of two moves sure to be unpopular with some toll road customers: a $1 monthly fee for low-use transponders and a possible fare increase in peak hours.

Even with these potential obstacles, the marketing contract contains revenue goals of $54.5 million for the San Joaquin Hills toll road and $63.9 million for the Foothill/Eastern toll road for the current fiscal year. If Johnson/Ukropina fails to meet these goals, it must provide $30,000 of free advertising next year.

So far Johnson/Ukropina officials, who did not return several phone calls, have been quiet about how they plan to meet those goals. But at the June 4 meeting, owners and employees of the marketing firm presented some ideas to the board of directors.

One proposal used testimonials from people who use the road. Possible subjects included a couple whose relationship was eroding until the toll road allowed them to spend more time together and a son who used the toll road to fulfill a commitment to spend more time with his mother after his father died.

Another campaign compared the toll road to pictures of great accomplishments, such as the wheel. The tag line said: “It’s the greatest thing to happen to driving since . . . well, you know.”