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FOOTHILL/EASTERN TRANSPORTATION CORRIDOR AGENCY REFINANCES $2.3 BILLION IN BONDS

The Foothill/Eastern Transportation Corridor Agency (F/ETCA) has successfully refinanced $2.3 billion in outstanding debt that was originally issued in 1999.

“This is great news for Southern California drivers,” said Lisa Bartlett, F/ETCA Chairwoman and Mayor for the City of Dana Point.  “The refinancing enhances the agency’s financial position so that we can concentrate on providing and improving mobility.  We’ve lowered annual debt payments, which will provide pricing flexibility and cash flow for important projects.”

TCA Spring 2011The refinancing extends F/ETCA debt from 2040 to 2053, lowers annual payments through 2040 and reduces maximum annual debt payment by 24 percent.  The bonds are being structured with various call dates and will be eligible for early redemption with excess revenue if the agency’s Board of Directors chooses to do so, thereby shortening the final maturity date and eliminating the need to make additional interest payments.

“The bond refinancing reduces debt payments by $975 million between now and 2040 and will create a flexible financing structure.  The restructuring of the debt keeps the agency in a very strong financial position and allows The Tolls Roads to continue to provide a valuable choice for Orange County residents and commuters,” said Patricia Bates, F/ETCA Vice Chairwoman and Orange County Fifth District Supervisor.

Traffic and revenue on the 36-mile toll road network has been growing with Orange County’s regional economic recovery.  For the first five months of the fiscal year (July thru December), traffic has increased two percent compared to the similar period in 2012 and revenue is up seven percent.

“The restructuring brings the agency’s debt in line with current revenue projections and strengthens our financial outlook,” said Amy Potter, CFO of the Transportation Corridor Agencies (TCA).  “The Board of Directors had authorized up to a 6.5 percent interest rate for the bonds, and the final result was 6.06 percent.  The annual growth rate for the bonds has been reduced from 4.2 percent to 3.75 percent and the peak debt service has been reduced by $74 million.”

TCA Spring 2011In October, the F/ETCA Board of Directors approved the refinancing of its outstanding bonds and amendments to a cooperative agreement between the F/ETCA and Caltrans that allows tolls to be collected through 2053.  The following month, the F/ETCA received investment grade ratings from Standard & Poor’s and Fitch Ratings on its update to the proposed refinancing of the 1999 bonds.  With two ratings, the agency was able to move forward with the refinancing.

Standard and Poor’s noted that revenues have responded well to recent toll increases, that the willingness to increase tolls by management is a positive credit factor and that the restructuring plan reduces maximum annual debt service by $30 million (actual reduction is $72 million).  Fitch Ratings acknowledged that extending the debt by 13 years provides a more stable financial profile and that a history of pro-active decisions by management to raise rates is a credit strength.

“The 133, 241 and 261 Toll Roads provide a valuable link to the population centers in the Southern California region – which is the second largest metropolitan area in the country.  It’s a link to a burgeoning economic and employment center that is located in Orange County,” said Neil Peterson, TCA’s CEO.  “We are providing a valuable and affordable service to the people who are coming in and out of Orange County to get to those jobs.  Our board has a 13-year history of stepping up to the plate and meeting their financial obligations. Our toll revenues and our transactions have recovered strongly from The Great Recession and in the last three years have seen a steady increase. The refinancing provides cash flow savings to us between now and 2040, reduces the increase of our debt service requirements, lowers our maximum annual debt service, allows us a greater margin to exceed our coverage requirements of net toll revenues going forward.”

“The experience that we offer our customers is a choice of a predictable trip that saves time and stress,” said Peterson.  “The F/ETCA Board of Directors, finance team and staff are commended for the work they have put into making this refinancing a reality.”

REFINANCING OF $3.2 BILLION IN TOLL ROAD BONDS MOVES FORWARD

241 Beauty ShotWith the receipt of investment grade ratings from Standard & Poor’s and Fitch Ratings, The Foothill/Eastern Transportation Corridor Agency (F/ETCA) is moving forward with the proposed refinancing of outstanding debt issued in 1999 – a plan that was approved by the F/ETCA Board of Directors on October 10. 

The Preliminary Official Statement was released on November 21 and the bonds are scheduled to be sold the week of December 9.

The refinancing is a good financial step that takes advantage of low interest rates to lower debt payments and it will allow for fewer and lower toll rate increases in the future.  Lower toll rates mean less congestion on free alternatives and improved traffic circulation, which is important for regional mobility and recovery of the local economy.

261 Beauty Shot“This is good news for commuters and recognizes the economic recovery that is occurring in Orange County and the surrounding area,” said Neil Peterson, CEO of the Transportation Corridor Agencies.  “The refinance plan provides the agency with greater flexibility to withstand future economic downturns which is the prudent thing to do.”

The F/ETCA manages and operates State Routes 133, 241 and 261.  Traffic and revenue on the 24 miles of roadway have been growing as the Orange County economy has strengthened.  For the first four months of the fiscal year (July through October), traffic has increased 2.8 percent compared to the similar period in 2012 and revenue is up 7.6 percent.

The Toll Roads New CEO Neil Peterson Reflects, Plans For Future

neil-petersonEvery journey starts with a single step and mine ended 1,200 miles later, when I moved my home base from Seattle to Orange County to become chief executive officer of The Transportation Corridor Agencies (TCA).

I joined TCA five months ago for the unique opportunity to collaborate with two boards of directors comprised entirely of elected officials and because I see The Toll Roads as a critical – but often overlooked and undervalued – lifeline for regional mobility in Southern California that gives drivers an express choice.

State Routes 73, 133, 241 and 261 are not just Orange County roads, they are Southern California roads that are critical for people traveling to and from Los Angeles, San Diego and the Inland Empire.  Roughly 80 percent of the trips that pass through our Windy Ridge Mainline Toll Plaza are made by people who reside outside of Orange County and 40 percent of TCA FasTrak® accounts belong to out-of-county drivers.

TCA’s history is unique, inspired and full of firsts.  Our public joint powers agencies were formed in 1986 to plan, finance, construct and operate The Toll Roads – 51 miles of roadway representing the largest network of toll roads in the state.  Built with virtually no taxpayer dollars, The Toll Roads were funded through the sale of bonds to private and institutional investors, and supplemented with development impact fees.  The bonds can only be repaid with tolls and development impact fees and since the bonds are not backed by the government, taxpayers will never be liable for repaying the debt.  We are responsible borrowers who have never missed a bond payment and have always had fully-funded debt service reserves.

Going forward, we will focus on improving our customer service; focusing on our customers who make a choice every time they drive The Toll Roads.  We will listen and do everything we can to attract more drivers to The Toll Roads because it is better for everyone on every road.

We will improve connectivity.  Direct connections from the 241 Toll Road to the 91 Express Lanes and from the median of the 405 freeway to the 73 Toll Road will further advance regional mobility and benefit all residents and commuters.

We will work diligently to find an alternative to Interstate 5 going south through South Orange County.  Today’s congestion in South Orange County is bad enough.  It will get worse with the addition of 55,000 new residents in the Rancho Mission Viejo development.  We need to find solutions that all interested parties can support.

And, finally, in 2014 we will eliminate the need to stop and pay at toll booths.  We will give all drivers the experience of non-stop driving, leading to more time savings and more predictability.

In my first 100 days, I met with employees, board members, supporters, opponents, the media and our customers.  I will continue listening, meeting, seeking, working, exploring, planning, learning and mapping out the future of TCA and The Toll Roads.  I hope that you’ll join me on the ride.  Our goal: to relieve traffic in both the short term and long term.

My best,

Neil Peterson

Happy 20th Birthday, FasTrak!

Born and raised in Orange County, FasTrak® celebrated its 20th birthday today.   Two decades ago, FasTrak was launched by the Transportation Corridor Agencies (TCA) for use on the first 3.2-mile portion of the 241 Toll Road.  FasTrak — California’s first and only electronic toll collection system — is now used by five different tolling agencies and more than 3.2 million drivers throughout the state on every tolled bridge, lane, road and structure.  TCA alone has more than 863,000 transponders in circulation belonging to 427,505 FasTrak accounts.

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As part of the birthday festivities, TCA honored Trabuco Canyon resident Brian Clifton, who has the distinction of being the first FasTrak customer.  Clifton opened the very first FasTrak account in August 1993, two months before the road was opened and he continues to drive The Toll Roads on a daily basis.

“It’s been 20 years and my family and I still use FasTrak all the time,” said Brian Clifton.  “For us, it has become a way of life and the time savings are critical for getting us to our jobs and the important events throughout Southern California.  I can’t imagine what my life would be like without FasTrak and The Toll Roads.”

The Toll Roads' staff took some time today to celebrate and wish FasTrak a happy 20th birthday!

The Toll Roads’ staff took some time today to celebrate and wish FasTrak a happy 20th birthday!

“When TCA opened the first FasTrak system in the state, our hope was to transform the lives of harried Southern California drivers by using cutting edge technology to save them their most precious commodity: time,” said Orange County Supervisor Patricia Bates, who served on the San Joaquin Hills Transportation Corridor Agency Board of Directors 20 years ago and is a current board member. “We are beyond pleased to see that drivers throughout California see the value of FasTrak, which has become an indispensable part of their daily lives.”

 

F/ETCA Board Votes To Refinance Debt, Strengthen Financial Position

133 Toll Road

133 Toll Road

At its meeting last week, the Foothill/Eastern Transportation Corridor Agency (F/ETCA) Board of Directors approved a plan to issue toll road refunding revenue bonds totaling $2.3 billion, which will allow for the refinancing of current bond obligations. The Board also approved amendments to a Cooperative Agreement between the F/ETCA and Caltrans. These actions w

ill allow the F/ETCA to restructure its debt and lower annual debt payments.

“Easing traffic congestion is our top priority. Our actions today will help us take the steps necessary to ensure that our finances will be sound and we can continue offering Southern California commuters a safe and reliable toll road choice that saves them valuable time,” said Lisa Bartlett, chairwoman of the F/ETCA and Dana Point’s mayor pro tem.

Neil Peterson, CEO of the Transportation Corridor Agencies, outlined three reasons for approving the Cooperative Agreement and refinancing during the meeting:

1) The refinancing will put the agency’s finances in order;

2) lowering annual debt payments will provide cash flow for important projects such as the State Route 241 to 91 Express Lanes direct connector; and

3) lower payments will provide for pricing flexibility to allow the agency to partner with regional transportation organizations to improve mobility through increasing use of the toll road system.

241 Toll Road

241 Toll Road

“The more people who choose to drive on The Toll Roads, means less congestion on free alternatives. Less congestion improves mobility and traffic circulation for everybody in the region,” said Peterson. “The refinancing plan is similar to refinancing your home mortgage. The current market situation will allow us to lower our annual debt service growth rate, lower annual payments and reduce the maximum annual payment.”

A refinancing plan was approved in June, but it was not executed because negotiations on the ultimate language in the Cooperative Agreement was not finalized until last week. The Cooperative Agreement amendment that will allow the F/ETCA to collect tolls until 2053 is required to issue the refinance bonds. Since June, interest rates have risen to a level that would not allow the agency to improve its finances. In the past few weeks, interest rates have fallen. That — coupled with some modifications to the original plan — makes refinancing economically prudent.

“Today’s decision is good news for business. It is important to an efficient and effective movement of people and goods that California’s transportation systems are fiscally sound. With a region’s mobility comes a more predictable economic recovery,” said Lucy Dunn, president and CEO of the Orange County Business Council.

One important aspect of TCA’s refinancing program is the use of short-term, fixed-rate Rate Reset Bonds (RRBs), which gives the agency maximum flexibility as interest rates change. RRBs have been used by many other issuers, including the State of California, the University of California and, recently, Grand Parkway toll road in Texas. The refinancing will lower the annual debt growth rate to 3.6 to 3.75 percent instead of the current 4.4 percent rate on existing debt.

261 Toll Road

261 Toll Road

The Board’s actions come as ridership is increasing on the routes operated by the F/ETCA – State Routes 133, 241 and 261. For the first three months in the fiscal year that began in June, traffic has increased two percent compared to the similar period in 2012 and revenue is up by more than seven percent.

Ridership is beginning to grow after U.S. toll roads saw a significant decline in traffic because of the Great Recession.

“Subject to market conditions and interest rates, the plan is to sell the bonds before Thanksgiving and close the transaction in early December,” said Chief Financial Officer Amy Potter.