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Bumpy stretch for toll roads

Ridership is down in Orange County as some drivers cut back because of the economy.

May 25, 2008|David Reyes | Times Staff Writer

Traveling with the family has taken on new meaning for Richard Bangert.

Bangert, who usually makes the trek from his home in Corona to work in Orange County solo, has added his wife and 2-year-old son to the commute.

This allows Bangert, a computer systems technician, to use the 91 Express Lanes for free, taking advantage of toll-free travel with three or more people in the car.

"We're a one-income family, and I guess you would call this a wallet-based decision," Bangert said. "My wife usually drops me off at work and she visits her family with my son. At the end of the day, she picks me up and we drive home."

Bangert has also restricted his use of other county toll roads -- and he's not alone. Ridership is down by 6% for the express lanes and nearly 4% for the 241 toll road.

The downturn caught toll road officials by surprise, but they expressed confidence that the trend would reverse as soon as the economy improved.

The Transportation Corridor Agencies downplayed any effect that the revenue declines could have on a proposed toll road extension through San Onofre State Beach, or refinancing plans to merge the Foothill/Eastern with its cousin, the San Joaquin Hills tollway, into one agency.

Opponents of the toll road extension question whether it's prudent for the TCA to take on additional capital debt, especially because the California Coastal Commission has voted against the extension.

According to a new estimate, it would cost $1.3 billion -- up from $875 million -- to build the proposed Foothill South tollway. It would run 16 miles from Oso Parkway in Rancho Santa Margarita to Interstate 5 at Basilone Road south of San Clemente.

Also, the TCA has applied for a $1.1-billion government loan to strengthen the merger plan. A decision on the loan is pending with the U.S. Department of Transportation.

Lake Forest Councilman Peter Herzog, who is on the Foothill/Eastern board, was unhappy over the revenue drop but said it had to be weighed against the overall performance of the toll roads.

"I'm not that concerned because I believe this is part of a cycle and it will change," he said. "When you look at the toll road revenue over the long term, it's really solid."

Herzog and other board members are confident that the coastal commission's decision, which has been appealed to the federal Department of Commerce, will be overturned.

The Bond Buyer newspaper recently noted that TCA budgeted $111.3 million in toll revenue for fiscal 2008 and stated that if the downward trend continues, the agency would receive only $103 million, missing its projected budget by nearly 8%.

That would mean that for the first time in 10 years, revenue would fall below projections used to structure the Foothill/Eastern's initial financing.

Maria Matesanz, a credit analyst with the public finance group of Moody's Investor's Service in New York, said tollways across the nation have seen a decline in traffic and revenue as gas prices have climbed and the economy slowed.

Nonetheless, she said that the TCA's finances overall are healthy and that its outlook should be fine as long as the economic downturn is not prolonged.

If the economic woes are "protracted and people are talking about a sustained $4-and-up per gallon of gas, it could have a longer-term impact on traffic and revenue . . . and it would be something we would watch in relation to their debt service and operating obligations," Matesanz said.

Although the TCA may borrow from its reserves to meet its budget, the agency has plenty of financial cushion, with $297 million in debt service reserves, said Brenda Shott, the chief financial officer. The Foothill/Eastern has $2.2 billion in outstanding revenue bonds.

Moody's maintains a Baa3 rating on the debt of the Foothill tollway and a Ba2 rating with a negative outlook on the San Joaquin turnpike.

Loyal toll road customers such as Bangert have had to contend with years of toll increases as part of the congestion pricing strategy to keep tollway lanes flowing faster than freeway lanes.

But with fewer customers, Bangert asked: "With revenue falling and ridership down, shouldn't the toll roads consider lowering rates?"

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david.reyes@latimes.com

Times staff writer Christian Berthelsen contributed to this report.

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