CONVOLUTIONS

Bay Area’s ‘toll authority’ kinda, like BATA is not just an Indian shoe maker. It also stands for Bay Area Toll Authority. Convoluted are the ways of government in general, but in California they are downright bizarre. Two separate agencies attempt to run the Bay area’s seven toll bridges and neither sets toll rates! Toll revenues totaling a quarter billion dollars annually go into two separate accounts, one administered by the state DOT Caltrans, the other by BATA. Except that BATA doesn’t own the bridges and has nothing to do with their operations, or tolling. Some toll authority!

Caltrans owns the bridges and operates them, sort of. BATA, a toll authority whose existence is a better kept secret than the Pentagon’s National Reconnaisance Office – no one at IBTTA, the trade association for tolling had heard of it, and its staff have never been seen at any toll industry functions – was formally established Jan 1, 1998 when a Senate Bill 226 came into force. BATA is a little-known arm of the Metropolitan Transportation Commission (MTC), the Bay area region’s transport planning body.

BATA lists on its board the representatives of 15 area cities and counties, two US govt departments and one spy for the state of California. No one from the dread Caltrans however!

So what do these worthies of BATA actually do? Simple answer: spend toll revenues, and borrow using prospective future tolls as security. They are in charge of decisions about using their part of the toll revenues (about 60% of the total) for support of area transit projects and for programming upgrades to the bridges, well sort of. Some of them.

Upgrades of a routine nature such as expanding the bridges or maintaining them against routine deterioration of weather and traffic are within BATA’s purview. But the most important program for maintaining the bridges on this unstable edge of the continent – protecting them against earthquake destruction – is strictly out of bounds for BATA. It doesn’t even see that money. $1 of every toll goes straight to Caltrans for seismic retrofit projects of that agency’s design on the bridges. And who decides how far a seismic retrofit is used to make other improvements?

In truth BATA is not a Bay Area toll authority at all, but the Borrowing Agency on Toll Assets (BATA) since it plans to emerge from its present obscurity and to issue bonds based on the security of the revenue of the Bay area toll bridges.

Would you lend a single $?

Now would any prudent lender lend a single crisp dollar to a bunch of people whose only job is to borrow and spend, and who have no authority whatever over the revenue and operations side of the business, the actual generation of revenues. But hey, you bluenose eyeshade, California is the land of make-believe and invention, and we’re sure, with a little professional help, these big spenders at BATA will find plenty of lenders.

This is the age of government-sponsored ‘innovatory finance’ in which the business principles we took for granted are old hat. Like:

(1) the people spending the money should be responsible for raising it, and

(2) borrowers should have the power to run the business so as to be able to service the debt.

Furgeddit. That’s all ole fogey stuff! We’re sooo much smarter now.

Intermeshing contracts

Creative lawyers will write a great set of documents to lay down all the different entities’ obligations and entitlements to one another into an impressive set of intermeshing contractual obligations and guarantees that will be a gigabyte of PDF files, all backed up perhaps by some state infrastructure bank to impress potential lenders. But taxpayers be assured, the fine print will warn, the bonds will in no way be underwritten by the state, despite all being written into a state bank prospectus.

Imposing even semi-credible contractual obligations on institutions run by future generations of politicians of differing jurisdictions and philosophies (if that’s the word) requires rare lawyerly skills. BATA will be a challenge even to the world’s leading IF-law specialists Nossaman Gunther etc of LA! (That’s where you sharpies should be buying stock, if stock they have to sell!)

That’s because the BATA doesn’t even have the nominal power to set toll rates which most toll authorities do, even though in practice they rarely cross a governor. Every toll change in California is a matter for state legislation. Or even popular ballot.

Now there’s a real challenge for the lawyers – getting future Californians to promise they’ll vote for needed toll increases in a popular ballot. (Contact Deane Hunter BATA 510 464 7790. Nossaman G 714 833 7800)