Transportation Corridor Agencies’ Innovative Financial Planning Pays Off

A History of Sound Planning

Thirty years ago, through visionary leadership, Orange County made the decision to control its future through self-reliance. The County of Orange and 18 cities devised a plan to enhance the region and provide traffic relief for Orange County’s congested freeways. This vision was brought to life through the creation of the Transportation Corridor Agencies (TCA), builders and operators of the largest network of toll roads in the state. 

When TCA was formed in the 1980s, an exploding population in the region, worsening traffic congestion and shrinking transportation funds were the reality. With fewer tax dollars available to fund transportation projects, a new approach was taken enabling TCA to plan, finance, construct and operate the 73, 133, 241 and 261 Toll Roads. Instead of government dollars, the roads were financed through non-recourse toll revenue bonds backed only by tolls and Development Impact Fees (DIFs).

The innovative financial approach executed by the Foothill/Eastern Transportation Corridor Agency (F/ETCA) and the San Joaquin Hills Transportation Corridor Agency (SJHTCA) has delivered infrastructure that today is worth more than $12 billion. The approach and plan recognized the extensive capital investment and future long-term revenue stream that accompanies tolled roads and bridges the world over. 

In 2013 and 2014, TCA’s Boards of Directors recognized the risks of economic downturns like the Great Recession and decided to take advantage of historically low interest rates to better manage its debt profile and to ensure continued growth in usage of the roads by minimizing toll increases.

These decisions along with continued financial discipline and strategic bond transactions that decreased interest payments by more than $500 million without extending bond maturity dates, have placed TCA in a strong position to weather financial storms such as the global crisis we’re all facing due to COVID-19. 

This strong position, the Agencies’ management strengths and long-term financial model have been recognized repeatedly by credit rating agencies including Standard & Poor’s, Fitch and Moody’s, who have rated all of TCA’s bonds as investment grade. 

Why Does What Happened Decades Ago Matter Now? 

Like other toll agencies across the country, when COVID hit, TCA experienced a decline in ridership. This was true for all modes of transportation, including public transit systems and rideshare companies as Safer at Home Orders persisted throughout the state. However, since May, ridership on The Toll Roads has consistently grown and significantly outpaced revised projections. As of July, The Toll Roads are back to about 74 percent of pre-COVID ridership for the 133, 241 and 261 Toll Roads and 60 percent for the 73 Toll Road.

While this is still a major impact for any business, TCA continues to make sound financial decisions and is well positioned to weather the challenges of 2020. By drastically reducing its budget, TCA adopted a plan to easily make all debt payments while still focusing on key Board priorities, using some of its unrestricted cash while protecting critical reserves.

TCA planned for a rainy day, so when the storm came, the Agencies were prepared. Times like these are when leadership, forethought and conservative planning pay off. That planning has bolstered TCA’s rainy-day fund and allowed for the continued meeting of financial obligations while preserving additional reserves for challenges that may exist in the future.

On the Right Path

While the future economic impacts of COVID-19 on our region, state, nation and the global economy are yet to be fully realized, TCA remains on solid ground. TCA’s debt structure is pre-planned and follows projected revenues. This isn’t by accident. TCA’s leadership set up this format in a very manageable, conservative fashion to ensure the Agencies would have no problem meeting financial obligations while aggressively attracting traffic from congested highways and local streets. 

TCA’s actions to manage its debt and operating costs continue to deliver. In 2018/2019, bond refunding transactions reduced TCA’s interest payments on long-term debt by $395 million without extending bond maturity dates. TCA also worked with partners across the state to adopt sticker transponders saving the Agencies $3 million per year. These decisions provided a means to support the opening of the Los Patrones Parkway county arterial as a non-tolled road by contributing more than $90 million in revenues to the project.

TCA’s two Boards of Directors also never lose site of the Agencies’ duty to the public. In light of the unprecedented challenges associated with the pandemic, staff has worked to be a resource to the community, developing messaging plans for resources, developing tools for parents and educators and adjusting its operations to better support impacted popuations.

All of this means that TCA is on course to focus on what matters – our mission of improving mobility and the quality of life in Orange County. Like so many other agencies, organizations and individuals, TCA has made hard decisions about priorities as it grapples with the effects of COVID-19. But these challenges have provided a laser focus on the goals and initiatives that mean the most to drivers. 

Our Roadmap for the Future

TCA’s has immediate near-term activities and plans to deliver improved mobility. Recently, all six lanes of Oso Parkway at the 241 Toll Road opened to drivers, along with bicycle lanes and pedestrian walkways. This marks a significant milestone in F/ETCA’s funding of the $40 million Oso Parkway Bridge Project. When completed this year, the Oso Parkway Bridge will improve traffic flow and enhance safety for drivers traveling to and from the 241 Toll Road and Rancho Mission Viejo, surrounding areas and Tesoro High School.

F/ETCA is also providing more than $200 million to deliver another key mobility project, the 241/91 Express Connector. The project took a significant step forward recently when the F/ETCA Board of Directors approved a contract to start the project’s final design phase. This proposed direct connector from the northbound 241 Toll Road to the eastbound 91 Express Lanes and from the westbound 91 Express Lanes to the southbound 241 Toll Road will provide improved connectivity between the 91 Express Lanes and the 241 Toll Road and enhance operations for State Route 91’s general purpose lanes and the northbound 241 Toll Road. The Agency is working in partnership with Caltrans, the Orange County Transportation Authority and the Riverside County Transportation Commission to deliver a suite of projects along the SR 91 corridor, improving the movement of goods and people. 

These key projects are moving forward, even at a time when the daily commute may not be top of mind for drivers. Because of TCA’s sound financial planning, we are here for the community now and we will be here when it’s time to get back on the road. 

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