By: Orange County Supervisor Todd Spitzer
The 241 toll road runs from the 91 freeway in Anaheim Hills to Oso Parkway in Rancho Santa Margarita. Financed by bonds that borrowed against revenues from tolls, the 241 bonds were to be paid off in 2040, at which point the 241 toll road would stop charging tolls and become a freeway. Instead, the Foothill/Eastern Transportation Corridor Agency (TCA) Board of Directors voted to refinance the bonds with $1.8 billion in additional payments and delaying the payoff date to 2053.
TCA Director Todd Spitzer opposed the vote, instead proposing a strategy to deal with the financial situation of the 241 toll road by negotiating directly with the bondholders, as the TCA did with the 73 toll road.
“The toll road is not being refinanced in order to satisfy a promise to the bond holders who understood the risk when they invested, but to maintain a credit rating that will possibly allow the TCA to finance a new road project in the future,” Director Spitzer said. “Extending the debt and tolls for another 13 years should only have been utilized after negotiations with existing bondholders was attempted and failed.”
Today, the rate covenant is 1.3 times debt service coverage; if TCA had lowered the rate to 1.0 times debt service coverage and gave up control of toll setting as it did with the 73, the 241 would have had financial breathing room.
“If the TCA is ever able to connect the existing 241 toll road to the 5 freeway and provide much needed relief to the 5 (the only north-south connector between Orange County and San Diego), the new road will actually go somewhere, namely areas of inland/eastern OC, like Ladera Ranch, Coto de Caza, Mission Viejo, and Rancho Santa Margarita,” Director Spitzer said. “If this happens, the 241 will finance itself because it will make money by having actual traffic going from the 5 to inland/eastern Orange County.”