Tollways’ boards told to make choice

Alicia Robinson

Toll road governing board members may be at an impasse once again

since the agency that insures its bonds said it won’t back an

alternative plan.

An ad hoc committee of the toll roads’ governing boards on

Wednesday discarded six new proposals to bail out the failing San

Joaquin Hills Toll Road because the bond insurance agency involved

wouldn’t back the new plans.

On March 17, the committee will look at two versions of an earlier

$3.9-billion bond proposal to merge operations of the San Joaquin

Hills Toll Road and the Foothill and Eastern toll roads.

After the boards twice postponed a vote on the merger and asked

for alternative proposals, it’s hard to say whether they will approve

a merger plan this time around, said Gary Adams, a Newport Beach city

councilman and member of the toll roads’ governing boards.

“Clearly some people will need to change their minds for it to

pass, and I don’t know what’s going to happen,” he said.

Representatives for MBIA Inc., the agency that insures the

existing bonds for the toll roads’ boards, said they would be unable

to insure any of the plans other than the original merger, said Peter

Herzog, chairman of the Foothill and Eastern toll roads’ board.

MBIA, the world’s largest credit insurer, wanted a long-term

solution to the San Joaquin Hills Toll Road’s financial problems, and

the merger plan was the one that provided it, said Clare Climaco,

toll roads agency spokeswoman. Toll road boards and staff members

have considered hundreds of plans over the two years they’ve been

mulling the merger, she said.

The boards will consider the $3.9-billion bond plan for the merger

in two variations. One would include all the bonds being at fixed

interest rate bonds, and the other would issue some bonds at fixed

rates and some at variable rates, lowering the overall cost to pay

off the debt.

Adams and Costa Mesa Mayor Gary Monahan, who is on San Joaquin

Hills Toll Road board, said they are willing to back some form of the

original merger plan.

But a dissenting vote is expected to come from Orange County

Supervisor Bill Campbell.

“I have no idea [how others will vote], but I, for one, don’t

intend to vote for either one because I saw better proposals

[Wednesday], in my opinion,” Campbell said. “But unless these fail,

those other proposals will never be considered.”

MBIA prefers the merger proposal because it would be the most

lucrative and would relieve the insurer of its current obligations

for toll road debts, Campbell said.

Some board members are concerned about the San Joaquin Hills Toll

Road’s future if a solution is not approved soon. Because of

overestimated revenues, the San Joaquin Hills Toll Road faces

financial default as soon as 2005. Officials have said financial

default means MBIA will take control of the toll road, so tolls will

increase, toll collection will last longer and some traffic might

avoid the toll roads and instead clog surface streets.

“I don’t think there are any other financial options,” Adams said.

“I think that’s abundantly clear at this point.”

Herzog said if the San Joaquin Hills Toll Road goes into default,

it will be the second largest default by a municipal agency in U.S.

history.

“We have a plan in front of us that has market ratings, that is

insured and that can be done, and it would be a true failure in

leadership if something isn’t done in looking at these two remaining

plans,” he said.