The Rosy Path Takes Its Toll

What a reality check the financing of the San Joaquin Hills tollway has become since the early heady days of planning. Optimistic predictions about growth and revenue provided the music to investors’ ears to get the 15-mile corridor built. Today, with ever-increasing debt payments due and ridership falling well short of projections, the road has been assigned junk-bond status by one Wall Street rating agency, and the toll agency is trying to avoid falling short on promises made to investors.

For years, the agency has been shuffling to make the picture look rosier. But it now seems clear the road is in real financial trouble. One lesson of the story is that you can always find a consultant to tell you what you want to hear when you are starting out. Back in 1992, advisors to the tollway were tallying lavish usage projections to get the bonds sold. And as so often seems the case on major infrastructure projects in Orange County, more modest plans fell on deaf ears. There was a time when there could have been a smaller road, and toll pricing might have been tailored more easily to accommodate fluctuating demand.

With at least one other major toll road in South County still on the drawing boards, and in environmentally sensitive lands at that, the need for scaled-back ambitions and better financial scrutiny before laying pavement is obvious. Toll roads remain an alternative when roads are congested, or when new development is really far enough out of the way to require a fast, direct route. The other toll roads in the Transportation Corridor Agencies’ portfolio, the Eastern and Foothill corridors, are doing better. However, the dynamics of making a toll road work are tricky enough to warrant more care in projections.

And don’t look to the state for a bailout; the quasi-public agency was created to build toll roads in Orange County precisely because the state couldn’t afford to do it. If these roads are going to work, they must be a real choice, and motorists won’t make the choice if they have free alternatives, or it’s too expensive to ride. The success of the road improvements financed by Measure M sales-tax revenue during the 1990s has provided riders with a free route from the south to central parts of the county. Moreover, the optimistic job-growth projections for the toll-road corridor never materialized after that decade’s recession.

But as the county deals with another economic downturn, it is important also to look at the drivers’ pocketbooks. Already paying gas taxes to finance roads, voters in Orange County decided in 1990 to pay the half-cent sales tax. Now, with the toll road in trouble, riders pay as much as $3 each way. Six dollars a day translates into about $120 a month to come out of a family budget. Looking at having to pay $1,400 a year for a toll road, most suburban families have to weigh choices on how to spend that money--on club teams, braces, summer vacation or whatever.

When the economy is soft, people will forgo the extras. Without a bigger base of people who must ride to avoid delay, the road today looks as if it were built too soon.

In the meantime, the corridor must deal with the financial reality. A refinancing and consolidation with boards of the other corridors may provide a short-term fix and is probably the best interim solution.

The corridor agencies do need to keep the system afloat to meet current obligations. But sooner or later, they have to find a better way to get more cars on the road.