O.C. Considers Buying Tollway to Escape Payments to Operator

After agreeing to pay $4 million to a private toll lane operator, Orange County transportation leaders now say they must buy the toll lanes or risk paying millions each time they want to improve the chronically congested Riverside Freeway.

The Orange County Transportation Authority board agreed this week to pay the $4 million in public funds to the owners of the 91 Express Lanes for the right to improve a 1,000-yard stretch of freeway where traffic bottlenecks just east of Coal Canyon Road.

The owners of the toll lanes, which run down the center of the freeway for 10 miles, have the state-granted power to challenge improvements to the Riverside Freeway or be compensated for the possible loss of customers.

Even though they agreed to the $4-million payout, OCTA officials say they’d rather buy the entire toll operation than spend seven figures each time just for the right to reduce congestion on one of the busiest state highways in Southern California.

“There’s the frustration of having to shell out money whenever we need to make an improvement,” said Cypress City Councilman Tim Keenan, vice chairman of the OCTA board. “If we could get control of the Express Lanes, the dominoes would fall.”

Transportation officials face a similar situation in other areas of Orange County, where OCTA could be forced to compensate operators of the Eastern, the Foothill and the San Joaquin Hills toll roads. The Transportation Corridor Agencies, which oversees the operation of all three turnpikes, also has a protection clause that could force the OCTA to pay for the right to improve freeways near the tollways.

The $4-million payment to owners of the 91 Express Lanes marks the first time such a compensation clause has been exercised. Keenan and his OCTA colleagues say the only way to avoid such payouts in the future is to purchase the tollway.

Although OCTA has no other immediate plans for widening the freeway, its officials say there is the potential for other projects in the future because of the region’s explosive population growth, particularly in the Inland Empire.

Standing in the way, however, is the 30-year franchise agreement between Caltrans and the California Private Transportation Co., owner of the turnpike.

The contract grants the Express Lanes the right to veto freeway improvements and new road construction if those projects threaten to take away motorists, who pay up to $8 for a round-trip during rush hour. The agreement covers 30 miles of the Riverside Freeway from the Los Angeles-Orange county line to Interstate 15.

Managers of the Express Lanes say that they’re willing to discuss a sale, but that the cheapest and quickest way to improve the Riverside Freeway is to extend their pay road into Riverside County. They say they are also willing to negotiate other highway projects that could further relieve congestion.

For the lane addition, “we were able to reach a compromise that everyone is happy with,” said Greg Hulsizer, general manager of the Express Lanes. “The $4-million payments recognize the importance of our franchise and the need to make improvements to the 91.”

Supporters of the tollway say that without protections from competition, no private company would have been willing to build the Express Lanes.

The same reasoning is behind franchise agreements with the Transportation Corridor Agencies, a governmental body that operates 51 miles of toll roads. While it does not have veto power over nearby highway projects, the agency must be compensated for potential losses of business.

OCTA officials say the transportation agency agreement might force them to hand over tax dollars just for the right to undertake five roadwork projects along the San Diego and Santa Ana freeways.

Of the two tollway systems, the most controversial agreement involves the 91 Express Lanes, which opened in 1996. Although the four-lane turnpike has provided some relief to motorists, critics say it is a stumbling block for future attempts to reduce congestion.

Riverside County has gone to court in an attempt to overturn the tollway’s protection agreement with the state. The lawsuit, which could go to trial later this year, claims that the agreement is unconstitutional.

On a second front, OCTA is trying to buy the lanes to regain government control of the Riverside Freeway. Negotiations are set to begin in the weeks ahead and price will be a key factor. There has been some speculation that the lanes are worth $200 million to $300 million. They were built for $135 million.

For now, the only way for a public agency to get around the agreement is to compensate the owners of the Express Lanes for toll-lane customers who might shift to the free lanes if congestion is eased.

For OCTA’s current bottleneck project, authority and Express Lanes engineers calculated what they thought would be the potential loss in tollway traffic from adding a sixth lane on the westbound side of the highway. The lane would extend 1,000 yards east of Coal Canyon Road.

After negotiations, they settled on a $4-million loss in business for the tollway. The total cost of the project, including the payment, is about $12 million.

“This is proving to be a very costly way to go,” said Riverside County Supervisor Bob Buster, an opponent of the Express Lanes. “To have an impact on the 91, OCTA has to either purchase the lanes or buy back the franchise bit by bit.”

Buster said Orange County should consider joining the Riverside lawsuit or at least monitor its progress before making a major commitment to buying the turnpike. If Riverside County prevails, Buster believes, the purchase price might be far lower than what Orange County is able to negotiate.

OCTA officials are evaluating their options. They say there is a good possibility of closing a deal if buying the lanes turns out to be cheaper and more effective than doing a series of small projects to relieve congestion. They also say the lawsuit could take five to 10 years to resolve.

OCTA board Chairman Todd Spitzer, who is also an Orange County supervisor, contends the authority has considerable leverage against the Express Lanes to keep the asking price down. Pressure is coming from Riverside’s lawsuit, he said, as well as anti-tollroad sentiment and a proposal to build a new highway through the Cleveland National Forest to better connect the counties.

“We have the clout to get them to the table,” Spitzer said. “We are not going to be taken by these folks. I’ll be first to walk away if they are going to exploit us.”