If the game were baseball, traffic forecasters Wilbur Smith and Associates would have already struck out in Orange County. The firm has been way off on both original and revised projections for the San Joaquin Hills tollway and wrong on original forecasts for the Foothill/Eastern Transportation Corridor.
Still, the firm has continued to get business from Orange County’s toll roads. In fact, Wilbur Smith is up for a $90,000 traffic study scheduled to be awarded at today’s toll board meeting, although some board members say they are now questioning why Wilbur Smith is being considered at all.
“We allegedly hire someone who is very professional and are experts in their field,” Supervisor Tom Wilson said. “We [board members] have to face the public every day about what’s really going on on the road and how far off it is compared to what was predicted.”
Their original estimates for the San Joaquin Hills toll road were wildly off the mark, overestimating actual traffic by more than 40%. When they tried again during the road’s 1997 refinancing, actual traffic turned out to be 20% short of forecasts.
This time the repercussions were serious--causing Orange County toll road board members to dig into $40 million in savings to guarantee debt on the road.
The latest traffic contract would be one of the first steps toward bringing variable pricing--charging different tolls depending on the time of day--to the troubled road. While its latest contract is relatively minor, the questions that have been raised about Wilbur Smith’s local track record are not.
And some board members say they have serious reservations about using the firm. Supervisor Todd Spitzer, who chairs the San Joaquin Hills board of directors, has called for a thorough review of why projections for the road have been so wrong.
“You have directors at their boiling point and rightfully so,” he said. “If it means changing consultants, if it means changing staff, there are no options that are off the table.”
But with only two other firms nationally recognized for doing toll road forecasting--and each with its own instances of faulty predictions--the toll road staff still backs Wilbur Smith and has urged its board to do the same.
Mike Stockstill, a spokesman for the agency, said the staff believes that Wilbur Smith should be recommended based on its decade-long relationship with the toll agency.
“Do you stick with Wilbur Smith, who admittedly has made erroneous projections, or do you go with someone else and know it could take up to a year just to get new modeling in place?” asked Stockstill, who has told board members it would cost an extra $800,000 to duplicate work Wilbur Smith has already done. “None of the three firms who do this will guarantee their results.”
Ed Regan, a Wilbur Smith vice president, did not return calls for comment. But in the past, the firm has defended itself, saying it relied on too-optimistic economic forecasts provided by Orange County in making its predictions, and projections done last year for the refinancing of the Foothill/Eastern corridor are close to being on target.
The projections are critical for financing of the road, scheduled to be turned into a freeway once the debt is retired. With each refinancing, that date is likely to be pushed further back, extending the life span of the road’s joint-power authority, which has promised to go out of business when all the county’s toll roads are paid off.
Regan, who is based in Connecticut, faced tough questions about his firm’s mistakes from toll road board members at last week’s committee meeting.
Those mistakes resulted in the road almost certainly being unable to meet promises made to private investors who bought $1.7 billion in outstanding bonds. Under terms of the bond issuance, the toll road agency said it would collect $1.30 for every $1 it owed, a practice called “debt coverage,” which ensures a comfort level for investors.
The lower-than-expected traffic, however, meant that promise would be broken in the near future, compelling board members to use $40 million in savings to guarantee the debt. Even with those steps, the bond ratings on the road were downgraded by one Wall Street ratings agency, and another major agency issued a warning for the road, changing the status of the investment from “stable” to “negative.”
While board members say time pressure may make it sensible to use Wilbur Smith for the traffic study they will vote on today, that doesn’t mean the issue will go away.
“I’ll be looking for some compelling evidence as to why we don’t want to get someone else on the job,” Wilson said.
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Projections Fall Short
Traffic on the San Joaquin Hills Toll Road has consistently fallen short of projections made by Wilbur Smith and Associates for the 15-mile toll road. Current traffic on the road lags about 16% behind even revised projections done two years ago.
Original Daily Traffic Forecast*: 120,000
Actual Daily Transactions: 69,000
* For calendar years
Source: Transportation Corridor Agencies