Orange County Raises Questions Over Consultant on Toll Road

If the game were baseball, traffic forecasters Wilbur Smith and Associates would have already struck out in Orange County. Their original estimates for the San Joaquin Hills toll road were wildly off the mark, overestimating actual traffic on the road by as much as 50%.

When they tried again during the road’s 1997 refinancing, actual traffic fell nearly 20% short of forecasts. This time the repercussions were serious--causing Orange County toll road board members to dig into $40 million in reserve funds to guarantee debt on the road.

And the firm was wrong again with its original forecasts on the Foothill/Eastern corridor.

“We allegedly hire someone who is very professional and are experts in their field,” said Supervisor Tom Wilson. “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.”

Now Wilbur Smith is up for a $90,000 study of traffic patterns on the 15-mile San Joaquin Hills toll road, which runs between Newport Beach and San Juan Capistrano. Such a study, which is scheduled to be awarded at today’s Transportation Corridor Agencies board meeting, 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 the latest traffic contract is relatively minor, the questions raised about Wilbur Smith’s local track record are not.

And some board members say they have serious reservations about using the firm again. 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 faulty predictions--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 roads.

“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?” Stockstill said, adding that it would cost an extra $800,000 to duplicate work Wilbur Smith had 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.

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’s almost certainly being unable to meet promises made to private investors who bought $1.7 billion in outstanding bonds. Under terms of the bond issue, the toll road agency said it would collect $1.30 for every $1 it owed, a practice called “debt coverage” that insures 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 reserves 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 would 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.