Lease bid would pay off toll road

Andrew Edwards

Officials overseeing the San Joaquin Hills (73) Toll Road have

received an offer from a company with a headquarters in Australia

interested in leasing the cash-strapped road.

In a letter dated March 31, Murray Bleach, the executive director

of Macquarie Securities (USA) Inc., proposed a deal to the

Transportation Corridors Agencies in which his company would pay off

outstanding bond debt on the 15-mile toll road with a 50-year lease.

The road connects Newport Coast to San Juan Capistrano.

Macquarie Securities’ portfolio includes a toll road in San Diego

County, the Sydney airport and the Rome airport. Company spokeswoman

Monica Zaied said the firm made the offer to find out if toll road

officials would be interested in talking about a deal.

The deal would be about $1.9 billion, said Bert Hack, who chairs

the board in charge of the toll road.

Hack said he was skeptical of the deal, since a lease would likely

reduce the board’s authority over tolls if revenues did not reach

projections.

“They would be able to impose tolls on us and we would have to

acquiesce,” Hack said.

Newport Beach Councilman Don Webb, who is also a member of the

toll road board, said that under a lease, Macquarie Securities would

receive all toll revenues from the road but would also assume all the

risks.

Webb said the proposal should not be ruled out, though he has not

yet taken a position on the idea.

“I think it’s a little too early to have an opinion one way or the

other,” Webb said.

Another board member, third district county Supervisor Bill

Campbell, also said it was too early to decide if the proposal made

sense.

A key issue would likely be the length of the lease. Under a

worst-case scenario, Campbell said toll road bonds would not be paid

off for 39 years, though a lease would prolong tolls for 50 years.

“I think it’s still important to make those freeways -- quote --

as soon as possible,” Campbell said.

Campbell said the road is in financial trouble because toll

revenues have not increased at the same pace as bond payments.

About one year ago, talks of a merger between the San Joaquin

Hills Toll Road board and the Foothill (241) and Eastern (261) toll

roads boards broke down. The merger was proposed to prevent the San

Joaquin Hills toll road from defaulting on construction debts.

Campbell said traffic increases and a 10% toll hike have slightly

bettered the road’s fiscal situation since merger talks stopped.

A lease is not the only solution on the table for the toll road’s

problems. Campbell said his board has proposed a settlement agreement

with the Foothill and Eastern toll roads’ boards to recover

anticipated lost revenues related to the planned expansion of the

Foothill Toll Road into San Clemente. Under that proposal, Campbell

said his board could receive a $1-billion loan and funds to account

for lost revenues. Details of that proposal, Campbell said, have been

discussed in closed session meetings and aren’t available in writing.

* ANDREW EDWARDS covers business and the environment. He can be

reached at (714) 966-4624 or by e-mail at andrew.edwards

@latimes.com.