Orange County Toll Roads merger being tried yet again
Posted Sat, 2007-08-11 08:40
There are new efforts under way to merge the two Orange County Toll Roads in southern California. Local officials have formed a Transportation Corridor System board of directors to make a new attempt at a merger of the San Joachin Hills Toll Road (CA73) and Foothill/Eastern Toll Road (CA133/241/251). The San Joaquin Hills TR has operated in deficit from its opening in the mid-1990s and without help would default on bond obligations whereas the Foothill/Eastern TR (F/ETR) operates with a surplus.
Almost continuously since the mid 1990s when the tollroads were opened there have been efforts to merge the two, and lawyers, financiers and other consultants have been almost constantly on the payroll. A couple of years ago those attempts were called off and an agreement put in place whereby the financially strong Foothill/Eastern paid down part of the SJ Hills debt in return for an agreement by the SJ Hills not sue F/ETR for loss of traffic when a parallel Foothill South extension is brought into service.
Back to mergering
But now it's back to merger efforts again. They now say the SJHTR debt paydown "solution" of a couple of years back fails to meet their needs for greater financial flexibility to fund improvements, including the Foothill South extension.
The new TCS board of 21 persons has appointed a financial team to develop a financing transaction in which the TSC will buy the two tollroads and merge them legally and financially. (They are already merged in operations.)
The team consists of:
- Citi
- Bear Stearns
- Goldman Sachs
- JP Morgan Chase
- Raymond Jones
- UBS
Nossaman are doing legal work and Stantek (previously Vollmer) traffic and revenue.
The transaction is likely to be around $4b.
The TCS is hoping for a final decision by the boards of directors of the three entities late this year or early next. Local officials have consistently rejected suggestions for privatization of the system, wanting to retain political control over the day to day operations. Previous efforts for a merger foundered on the different interests of jurisdictions on the profitable inland F/ETR and the lossmaking coastal SH Hills TR.
BACKGROUND
The two tollroads comprise 82km (51 miles) which do 320k toll transactions a day, and generate $191m in toll revenues.
Toll rates are quite complex but the basic toll for the full length of each for a car with a transponder is:
SJHTR (Jamboree to I-5) 17 miles off-peak $3.50 peak $4.25
FETR (SR91 to Oso Pkwy) 23 miles off-peak $5.00 peak $5.25
Toll rates are around 21c/mile to 24c/mile (13c to 15c/km).
Toll revenues in FY2006 were:
- FETR $104.7m
- SJHTR $86.2m
The two tollroads run parallel to the Pacific coast, one close by the coast, the other 10 to 15 miles (15km to 25km) inland. They are presently owned and financed by two separate joint powers agencies of a different, but overlapping set of towns and cities and the County of Orange CA but are operated by a single staff called the Transportation Corridors Agencies (don't worry about the plural suffix) though they provide road service under the brandname The Toll Roads, which is their local name.
see http://www.thetollroads.com
TOLLROADSnews 2007-08-11
There are new efforts under way to merge the two Orange County Toll Roads in southern California. Local officials have formed a Transportation Corridor System board of directors to make a new attempt at a merger of the San Joachin Hills Toll Road (CA73) and Foothill/Eastern Toll Road (CA133/241/251). The San Joaquin Hills TR has operated in deficit from its opening in the mid-1990s and without help would default on bond obligations whereas the Foothill/Eastern TR (F/ETR) operates with a surplus.Almost continuously since the mid 1990s when the tollroads were opened there have been efforts to merge the two, and lawyers, financiers and other consultants have been almost constantly on the payroll. A couple of years ago those attempts were called off and an agreement put in place whereby the financially strong Foothill/Eastern paid down part of the SJ Hills debt in return for an agreement by the SJ Hills not sue F/ETR for loss of traffic when a parallel Foothill South extension is brought into service.
Back to mergering
But now it's back to merger efforts again. They now say the SJHTR debt paydown "solution" of a couple of years back fails to meet their needs for greater financial flexibility to fund improvements, including the Foothill South extension.
The new TCS board of 21 persons has appointed a financial team to develop a financing transaction in which the TSC will buy the two tollroads and merge them legally and financially. (They are already merged in operations.)
The team consists of:
- Citi
- Bear Stearns
- Goldman Sachs
- JP Morgan Chase
- Raymond Jones
- UBS
Nossaman are doing legal work and Stantek (previously Vollmer) traffic and revenue.
The transaction is likely to be around $4b.The TCS is hoping for a final decision by the boards of directors of the three entities late this year or early next. Local officials have consistently rejected suggestions for privatization of the system, wanting to retain political control over the day to day operations. Previous efforts for a merger foundered on the different interests of jurisdictions on the profitable inland F/ETR and the lossmaking coastal SH Hills TR.
BACKGROUND
The two tollroads comprise 82km (51 miles) which do 320k toll transactions a day, and generate $191m in toll revenues.
Toll rates are quite complex but the basic toll for the full length of each for a car with a transponder is:
SJHTR (Jamboree to I-5) 17 miles off-peak $3.50 peak $4.25
FETR (SR91 to Oso Pkwy) 23 miles off-peak $5.00 peak $5.25
Toll rates are around 21c/mile to 24c/mile (13c to 15c/km).
Toll revenues in FY2006 were:
- FETR $104.7m
- SJHTR $86.2m
The two tollroads run parallel to the Pacific coast, one close by the coast, the other 10 to 15 miles (15km to 25km) inland. They are presently owned and financed by two separate joint powers agencies of a different, but overlapping set of towns and cities and the County of Orange CA but are operated by a single staff called the Transportation Corridors Agencies (don't worry about the plural suffix) though they provide road service under the brandname The Toll Roads, which is their local name.
see http://www.thetollroads.com
TOLLROADSnews 2007-08-11