OC toll roads: Why not have a sale?

I wanted to circle back to a story that ran in The Times over the weekend: The toll road agency in Orange County is seeking a $1.1-billion loan from the federal government because of the drop in the number of motorists who are willing to pay to use the 73, 241, 133 and 261 toll roads.

As my colleague Susannah Rosenblatt explained, the Transportation Corridor Agencies already has $4.6 billion in bonds it's trying to repay. As Rosenblatt pointed out, the agency's own website says that current bonds "can only be repaid by future tolls and development fees, taxpayers are not responsible for repaying the debt if future toll revenues fall short."

That no longer appears to be correct. The federal government, of course, is taxpayer funded.

The obvious question is this: If you own a business and people are no longer buying your product because of the cost, would perhaps lowering the price be a remedy? At present, for example, it costs $5.25 to drive the 12 miles of the southbound 73 toll road at peak hours, according to the TCA's trip calculator. That's not cheap.

Agency spokeswoman Lisa Telles told me today that she's asked that often, but there has not been a discussion recently about lowering the tolls. Telles added that one problem is that traffic is off everywhere -- so the number of potential toll road customers is down -- and that tolls would likely have to be cut significantly in order to attract new customers.

"To cut tolls in half, we would have to double the traffic to make up the revenue," she explained.

I countered that the toll roads could cut tolls 25% and that would mean a net gain in revenue if traffic is doubled. Telles pointed out that the risk in doubling traffic is that speeds could slow down on the toll roads, giving less incentive for motorists to buy their product.

It's hard to say if that will happen. The 73 toll road, for example, carried an average of about 78,000 vehicles per day in September 2007 on its three lanes in each direction. In September 2008, the road carried about 83,500 vehicles daily. To put that in perspective, stretches of the 10, 405, 101 and 210 typically carry between 250,000 and 300,000 cars per day and sometimes more, according to Caltrans. And the 73 toll road is in the process of adding a fourth northbound lane.

I also talked with Bob Poole, the director of transportation studies for the Reason Foundation, the libertarian group that is big on toll roads as market-based solutions to traffic. I asked Poole about lowering tolls -- there's nothing more market-based than supply and demand, after all.

"They have a real problem with the 73," Poole said. "They can't afford to take in less revenue by lowering the rates."

In other words, it's those pesky bond repayments that are killing the 73. Telles, too, agreed that projections for the number of motorists who would use the 73 have never been met since the road opened fully in 1996 -- about the same time that the notorious 5-405 bottleneck at the El Toro Y was improved, giving motorists less incentive to shortcut around it on a toll road.

In short, the 73 is a rare example in the Southland where supply exceeds demands on the roadways. I still think a reduced-price strategy is the way to go. What would you do if you were calling the shots?

-- Steve Hymon

Photo credit: Don Kelsen / Los Angeles Times

Comments

[LAtoOCdriver]

If they really want to increase usage, ask the state legislature to suspend VC 22349(a) for the toll roads from dawn to dusk. VC 22349(a) is the state speed limit of 65 MPH. the road would fall under VC 22350 (basic speed law, the "safe and prudent" law) and VC 22348(b) (reckless driving, exceeding 100 MPH). it costs the state nothing, increases the attractiveness of the road and everyone who drives that road goes 80-85 MPH on it already.

[Sighburrdood]

Damon had this to say: "At best you probably save 15 minutes, which is apparently not worth $5 to most people (it isn't to me)."

I think MOST of the drivers on the TollRoads earn more than $20 bucks an hour, and prefer to save on gas, as well.

[JoeShmoe]

Refinancing is good business for toll road investors, not for taxpayers or drivers.

Buy out the TCA and make the existing roads free.

[JoeShmoe]

The TCA is not in the business of traffic relief. Just look at their sales pitch trying to get you to fork over the $5. Their commodity is unclogged roads. The incentive to drive on the 73 is that it isn't crowded. If the 5 gets so crowded that people actually start driving on the 73, then they end up backing up the 73. But then their paying customers sit in just as much traffic. So they have to raise the rates to disincentivise the non-wealthy from switching over to the 73, thereby keeping congestion down on their pay-to-play road. This then causes even further congestion on the 5.

Free roads simply get more crowded with increased traffic, while toll roads just get more expensive. They DO NOT resolve the underlying traffic issues!!

[tomoflakeforest]

Your correciton of:

FOR THE RECORD:
Toll agency loan: A headline on an article in Friday's California section about the effort by Orange County's Transportation Corridor Agencies to acquire a $1.1-billion government loan said the agency is requesting a federal bailout. The word "bailout" should not have been used. The agency is requesting a federal loan, to be repaid with future toll road revenue, to help refinance the agency's existing debt.

Is pretty smal and hiden comparied to the "bailout" message you ran a shot time ago. Sure would be nice if you could get your facts first and tell the whole story. refinancing is just good business when it makes since as it does here.

[Tigershark]

Let 'em go belly up!

[Oscar]

I got a couple of ideas...

1) How about adding a bike freeway. it would be very scenic and connect to the Laguna and Aliso wilderness parks.

2) Friday night street legal races! Shut down the Freeway in one direction, increase the toll and hold street legal drag racing, less cars higher tolls, and racing fun!

[BOB2]

The Ponzi scheme known as the Transportation Corridors Agency knows no shame. The financial scheme has always been a lie, and the attempt to co-mingle the junk bonds fromt the SR-73 is an attempt to shelter the developers from having to bail out this fiasco that was primarily to benefit Irvine and KB homes.

If they fail to fleece the taxpayers with this scam, it will certainly jeopardize the next part of the Ponzi scheme selling the bond to build the Foothill extension through San Onofre State Park. The usual politics that south OC residents can expect from their "in the pocket" of developers/Park destroyer elected officials.

[Brian]

It's not surprising that the 73 isn't achieving its projection numbers, after all, it was the first toll road ever in California. There was nothing to compare it to when they came up with the original estimates.

By comparison, the 241 Toll Road is running above its projections because it had the 73 to compare to when it opened.

Reducing the cost won't draw enough cars to make a difference. Imagine if there were a McDonalds selling fries for $2 and a Burger King giving away fries for free. It doesn't make sense to tell McDonalds to reduce its asking price to $1... it'll never compete with free, unless the drive-through line gets too long.

With gas prices going back down and once the housing market turns around and the 14,000 homes are built in Rancho Mission Viejo, the I-5 will be impacted and the 73 will get more cars.

It's good that a public agency like TCA operates the road because they have a mission of traffic relief. If the bond-holders ran the road, there is nothing to stop them from raising the rates to $20 each way... why not? They wouldn't care if they lost two-thirds of their customers, they'd just want to make their money back on the one-third that would use the 73 like an autobahn.

As it is, during rush hour the 73 does get backed up (which is why they are adding a lane) and during non-rush hour times it's nearly empty (again you can't beat free!). But either way, it's good to have an alternate route available.

[Peter McFerrin]

The 73's success depended critically on the development of a huge amount of land that instead became Laguna Coast Wilderness Park and the Aliso Woods Regional Park. Its use as a diversion around the El Toro Y was secondary compared to its intended use as the primary means of accessing high-end residential development that never happened.

The 73 could still become viable if the 241 extension doesn't happen, because the development of Rancho Mission Viejo will put a massive amount of traffic onto I-5--some of which will divert to the 73.

[Damon]

Looking at traffic on Google maps tells the story. Set the time for rush hour in the morning and you'll see that the 405/5 only has one or two bottlenecks and is smooth sailing the rest of the way.

At best you probably save 15 minutes, which is apparently not worth $5 to most people (it isn't to me).