Sale of Private Orange County Toll Road Hits Potholes

ANAHEIM —  A decade after a controversial state law first allowed private companies to build and operate California highways, the only major project to emerge--Orange County’s 91 Express Lanes--is mired in trouble, with critics charging that the public interest has been sacrificed for private gain.

High-ranking state and local officials this week halted the proposed sale of the money-losing toll lanes by a private company eager to ditch them four years into a 35-year lease.

Concerns raised by the state treasurer and attorney general, among others, include whether the firm, the California Private Transportation Co., had too close a relationship with NewTrac, the nonprofit group of local businessmen slated to buy the lanes for about $225 million.

But beyond the attempts to sell the project are significant questions about the wisdom of the policy that made the Express Lanes possible in the first place. Critics now say that the grand experiment in privatizing state roads has done more harm than good.

And the law that allowed it to happen, they say, created a fundamental conflict of interest between the state’s obligation to upgrade its freeways and a private company’s need to turn a profit.

“I think the legislation was an outrageous giveaway of a historic link between our two counties,” said Riverside County Supervisor Bob Buster. “The state allowed some private entrepreneur to hold commuters hostage.”

Critics of the law said that point was made clear earlier this year when Caltrans attempted to widen California 91, which runs parallel to the toll lanes, to make the road safer. California Private Transportation immediately sued, saying that it would cut into the company’s ability to make money.

“This is an issue of public safety versus private profit,” Caltrans spokeswoman Deborah Harris said when the lawsuit was filed. “Basically, we are trying to improve the safety in that area because we have noticed there is an unusual pattern of accidents because of dense traffic.”

Under terms of the agreement they reached, however, no improvements will be done in that area for at least six years--or until the traffic on the heavily congested road increases 53%.

“You have to get to the point when traffic is absolutely stopped and people are agonizing and not getting home to their families,” said Kay Ceniceros, a former Riverside County supervisor and Transportation Commission chairwoman. “These people are being held hostage.”

Toll lane officials say that without their investment, the extra lanes would not exist. They also say their lawsuit was necessary because Caltrans’ plan to improve the Riverside Freeway violated their contract for the road and would have drastically damaged their business.

The proposed sale, they say, will benefit the public by returning $9 million in planning funds to Orange County transit officials. If the lanes make more than enough money to meet debt payments, they say, NewTrac could return as much as $6 million each year to Riverside and Orange counties for transportation needs.

And Wall Street analysts say the legal settlement was essential to the 91 Express Lanes getting the bond rating needed for California Private Transportation to sell the toll road to NewTrac, an Irvine-based nonprofit group.

NewTrac had planned to sell $274 million in state-backed bonds this week, but a barrage of criticism and a threatened lawsuit from Riverside County transportation commissioners delayed the sale. Their primary fear is that the new agency will sharply hike tolls on the Express Lanes to pay off the bonds.

Private roads--long a pet project of economists and transportation experts--got the green light in an era of downscaled government and shrinking tax funding for new road construction.

The idea was particularly popular with Orange County transportation planners who in 1989 were desperate for any way to add capacity to an overburdened freeway system that had seen minimal improvements for more than a decade. Orange County officials pursued and were granted two of the four pilot projects that received the Legislature’s approval, the 91 Express Lanes and a toll road extension of the Orange Freeway that is still on the drawing table.

Monte Ward, head of special projects for the Orange County Transportation Authority, said that at the time, private roads had one main appeal: They had the chance to be built.

“For a long period of time, we went with very little if any construction or improvements on Orange County freeways while there was tremendous growth,” Ward said.

But state Atty. Gen. Bill Lockyer, who as a state senator was a chief opponent of the original 1989 legislation that gave the go-ahead to privatizing roads, said the concept was bad policy from the start.

“It was a short-term benefit versus long-term injury to public road and highway construction, and we’re already seeing the effects,” Lockyer said.