TOLL EXPRESS:Ninety-one X doing OK

Vehicle trips were 21.2k/annual average daily trips (AADT) in 2000, a 6% increase over 1999, which in turn had been a 21% drop on the so far record year for traffic, 1998, when AADT was 25.4k.

Transponders on issue by 91X continue to grow, slowly. By end 2000 they were 129k vs 124k in 1999 and 114k in 1998. Of course this means that trips made per transponder have declined: from 81/yr in 1998 to 60/yr now. A significant number of trips on the 91X are made with some of the 300k+ transponders issued by the county Transp Corridors Agencies (TCA) which operates three tollroads close by and with which 91X has reciprocal electronic toll collection arrangements. 91X only collects tolls electronically. ‘No transponder, no go.’

The relatively low usage rate of transponders, 60 tolls/year – most toll facilities get 100 to 200 tolls/year/transponder – evidences the discriminating way in which toll express lanes are used. Motorists equipped with transponders frequently decide NOT to use the toll express lanes, driving in the free lanes alongside. But they value the option of driving First Class sufficiently to maintain a toll account, using it occasionally.

91X has weathered the competition from the county-owned Eastern tollroad because overall traffic in the corridor has grown and it has been able to drive up its average toll rates 27% (while its volume of traffic has dropped 16% since 1998.) Average tolls are now $2.75 vs $2.67 in 1999 and $2.17 in 1998.

Tolls range between 75c and $4.25 (Friday afternoons eastbound) for the 16km (10mi) facility which consists of 2x2-lanes inside a 2x4-lane free-way. Only passenger vehicles are permitted in the 91X lanes. The toll rates vary hour by hour according to published schedule which has been revised slightly more than annually since the project opened at the very end of Dec 1995. Toll rates are posted on variable message signs just before the decision point on choosing the express lanes or the adjacent free lanes. Motorists are deterred from moving between the two by light plastic delineator posts glued to the pavement every 3.6m (12'.) In emergencies cars can bang their way through the plastic posts with at most scratches to their paintwork. Solid concrete barrier would have required space-consuming offsets or shoulder.

General manager Greg Hulsizer said recently that when traffic regularly reaches 1,600 veh/hour/lane in any time slot they see this as an indicator for a toll increase in order to prevent overloading. California Private Transp Company (CPTC) builder of the facility and owner of the franchise is entitled to adjust tolls at its sole discretion. It is subject to a ceiling rate of return on capital.

The company has made a gross profit in every year of its operations and the 2000 report says it aims to have paid off its debt by 2008, and “is well positioned to deliver solid financial returns to our equity partners over the remaining years of our franchise.” (1995-2030) CPTC is a private company whose principal shareholder is Level 3 Communications, a Denver CO-based fiberoptic networker that was spun-off from Peter Kiewit Sons the Omaha NE based roadbuilder, which conceived and executed the project. Gerry Pfeffer of Kiewit, the principal developer of the project remains on CPTC’s board of directors. The second general partner shareholder is Cofiroute, France’s largest investor owned toll operator. The French participants have taken an active role in 91X while remaining just out of the spotlight in controversies. Jean-Francois Poupinel, one of the French toll industry’s most distinguished figures has taken a personal interest in the project and was on the board of directors of CPTC from the inception of the project until retiring in recent months, while Alain Estiot, a senior Cofiroute exec is both a director and an active follower of the business as a resident of the area. Granite Construction, another roadbuilder has the third equity share having been the prime contractor, but it is not active in managing the business.

From the facility’s second year of operations it has stabilized its operating costs at about $9.2m. Policing costs have been driven down from $570k to $320k while other costs have risen about the same amount. The facility pays $1.25m in franchise fees to the state and property taxes to the county. Operating expenses are $1.20/trip.

CA-91 is the major route between coastal Orange County (pop 2.85m, grew 436k or 18% in the 1990s) and inland Riverside County (pop 1.54m, grew 375k or 32% in the 90s) which are divided by a mountain range except for the Santa Ana River canyon where the highway is located. The total highway currently runs 250k to 260k veh/day where 91X lanes are located, which is from close to the Riverside County line in Orange County westward past the CA-241 interchange to CA-55 (Costa Mesa Fwy) with which it has direct connections south as well as with the continuation of CA-91 west.

By far the strongest complaint its patrons have is that 91X is just too short. They get a great ride by the congestion on the ten mile (16km) facility itself, but problems at each end, getting to the facility and off at the end. Under its contract with the state CPTC has a right of first refusal on toll extensions either end. At the western end from CA-55 towards Los Angeles county extra lanes are old-fashioned HOV after the county rejected toll buy-in and HOT lanes. HOT lanes have also been rejected on connecting CA-57 largely because of an impasse over congestion at its present southern end at the Orange Crush IC where I-5/CA-22 and CA-57 meet. Toll express or HOT lanes on existing CA-57 only make sense, a county study showed, if capacity constraints at the Orange Crush are removed. That has been a separate toll proposal (CA-57/South) by an Interwest subsidiary, American Transp Development LLC to extend CA-57 from I-5 to I-405 further down the Santa Ana River channel. However this franchise held by Interwest is stalled out, because of county planners love affair with a trolley project, and state officials political wariness over any new toll projects. The previous transp Jose Medina was fired by the governor over the abortive CPTC not-for-profit financing fuss and criticism of CPTC’s non-compete protections.

At the eastern end of 91X in Riverside county the institutional climate is equally stormy. Riverside residents are the main patrons and tollpayers of 91X commuting from bedroom communities there to job-rich Orange county. Riverside county throws up more than its share of populist demagogues who would expropriate 91X or have the state buy out its franchise and “free” the lanes that exist (thanks to investors) in Orange County at the same time that they want CPTC or other investor money to help improve CA-91 from the Orange county line east to I-15!

CPTC say in their annual that improvements at this eastern end (to I-15) are “desperately needed.” CPTC are a participant with the county in the studies of 91-expansion in Riverside, but at the same time they are the subject of county supported lawsuits and attacks.

CPTC delicately dance around this with the statement that “California’s dynamic political environment is still debating the transp policy that will ultimately guide the state’s development over the next 25 years...” 25 years!?! It seems most unlikely any policy will last anything like 25 years. More likely that there will be repeated conflicts and argument producing cycles of majority support for toll-financing and then the balance will shift to opposition to tolls. The support for tolls will probably arise out of voter refusal to provide tax financing at a time of heavy congestion and a strong need for new road capacity, while opposition to tolls will grow precisely after toll facilities like 91X lanes have come on line, been successful and relieved the congestion. In those phases of the political cycle only the property rights of investors and the franchise contract will protect the toll facility from populist political predators.

COMMENT: 91X must be counted as a very considerable, if not a total, success. The concept of toll express lanes has proven workable, attractive to a substantial clientele of motorists, and profitable to the investors. All these three key issues were in doubt when the project was launched because it was the first of its kind. The half-toll and quick trip for carpoolers has increased vehicle occupancy in the overall corridor. There has been acceptance, too, of the widely differentiated tolls by time of day, and of the concept of premium service in return for a toll. The project gets regularly hit with the alliterative pejorative “Lexus Lanes.” But what premium service is not used more by higher income people? Next-morning Federal Express is probably used more often by rich guys too, but it can be a life saver for anyone when things absolutely must go quickly. The hyper-egalitarian hit on 91X of “Lexus Lanes” has not had much resonance among ordinary people, though it does provide a critical talking point for journalists, commentators and other critics who chatter vaguely about ‘equity.’

The facility has attracted two strands of more destructive criticism over (1) an abortive move to sell the CPTC franchise to a not-for-profit in 1998/1999 with state infrastructure bank underwriting (2) publicity for non-compete clauses in the franchise contract following a move by Caltrans to add free lanes. The first controversy CPTC brought entirely on itself but the issue was unrelated to express lanes or tolling as such. In the case of the extra lanes controversy Caltrans was clearly at fault in attempting to circumvent the non-compete clauses of CPTC’s contract, which state that extra free capacity may only be added to address safety issues. Non-compete clauses are known by people working in the toll business to be vital to the viability of toll projects. There was nothing unusual about CPTC’s non-compete clauses, but many citizens first heard of them during them controversy when CPTC sued Caltrans to stop the extra lanes. CPTC was cast in a bad light as constituting a roadblock to an improvement of the free lanes that motorists wanted. Looking back, the public should have been better informed about the existence and importance of the non-compete arrangements at the time of the franchise and when the road opened.

91X has been much visited, much studied, much admired, and much celebrated – CPTC’s report lists no fewer than 11 different awards it has received – but the big disappointment is that it is not yet emulated.

CORRECTION NEEDED: CPTC in its annual report again lists among its ‘firsts’ that it is the “first privately financed tollroad in the US in more than 50 years.” The Dulles Greenway which opened four months earlier in August 1995 earned that particular ‘first.’ The Ambassador Bridge, Detroit and the Detroit-Windsor Tunnel were even earlier private toll facilities, toll crossings if not toll roads. Being picky about semantics: all toll facilities in the US could be said to be ‘privately financed’ in that the great bulk of their capital is provided by private investors in toll authority bonds sold in the municipal capital markets. What is distinctive about the Dulles Gway and 91X is that their equity capital is provided by investors as well as their lent capital, and that their governing boards of directors are appointed by those investors. What makes them different then is not so much that they are privately financed, as CPTC terms it, but privately owned and controlled. The rewards of profit and immediate risks of loss, the appointment of the governing board of directors, and the disposition of the business assets is in the hands of investors compared to the more common US and Japanese pattern for the equity and governance to be in state or local government. Since the investors want return on capital and the shares are tradable, decisions about the business will be determined more by market considerations of comparative rates of return and impacts on business net worth than by local politics – as tends to be the case with government owned and controlled toll facilities. (www.91expresslanes.com)