Nonprofit Firm to Buy Orange County Toll Road

Operators of the 91 Express Lanes, one of the few privately built and operated roads in the nation, have reached an unprecedented deal to sell the road to an Orange County-based nonprofit group.

The lanes, which had been losing money since opening in late 1995 before turning a slim profit last year, had been shopped by their owner, California Private Transportation Co., for more than a year.

The $260-million sale may signal the end of the state’s experiment in private road building, say transportation experts, many of whom had advocated privately financed roads in the face of dwindling tax dollars.

“Clearly now that they’re passing it back to some other organization, it hasn’t worked,” said G.J. “Pete” Fielding, a UC Irvine professor who is a former director of the school’s Institute of Transportation Studies. “Even under the most favorable conditions, it appears unlikely for a private road to be profitable enough.”

The lanes, two in each direction, run parallel to the Riverside Freeway for 10 miles between Anaheim and the Riverside County border.

The nonprofit group set to buy the road, NewTrac, is headed by former San Juan Capistrano Mayor Gary Hausdorfer and three Orange County businessmen. Hausdorfer declined to comment Wednesday, saying that a formal announcement was expected today.

A major obstacle to the sale had been a pending lawsuit filed by the private toll road owner against the California Department of Transportation to block that agency’s plan to add lanes to the Riverside Freeway. Three days after Caltrans agreed to abandon those plans, agency officials gave their blessings to the nonprofit group, making the sale possible.

Caltrans officials said they had to cancel the work, four miles of additional lanes along one of the region’s most congested stretches, because it violated the road’s franchise agreement.

Some industry observers question how the business will be run under a nonprofit corporation, which doesn’t have the same incentive to stay lean, and whether it eventually will seek federal and state transportation funds.

“With the government, at least you have a politician who has to run for reelection from time to time,” said Tom DiLorenzo, an economics professor at Loyola College in Baltimore who studies nonprofit groups. “And with business, you have market pressures. The stockholders can sell the stock if they don’t like the way the company is run.”

That’s not what happens with nonprofits, he said.

“I’m not that optimistic that it will be a well-run facility,” DiLorenzo said.

The current acquisition will require the sale of about $260 million in bonds, which are scheduled to be offered Nov. 30. That money will be enough to pay off investors and take over the company’s assets, according to a source close to the deal.

California Private Transportation Co. was founded by three corporations in a joint effort: French-based Cofiroute, Kiewit Pacific of Omaha, Neb., and Granite Construction Inc.