$28 Billion for a $2.8 Billion Road GRAND JURY 2020-2021 CONTENTS SUMMARY ................................................................................................................................... 1 BACKGROUND ........................................................................................................................... 1 REASON FOR STUDY ................................................................................................................ 3 METHOD OF STUDY ................................................................................................................. 3 INVESTIGATION AND ANALYSIS ......................................................................................... 4 History ........................................................................................................................................ 4 1980s – Formation................................................................................................................... 4 1990s – Construction ............................................................................................................... 5 2000-2007 – Toll Operations .................................................................................................. 6 2008-2013 – Survival............................................................................................................... 6 2014-2019 – Political Battles .................................................................................................. 6 2020-2021 – Pandemic ............................................................................................................ 7 The Future ............................................................................................................................... 7 What is the Cost of the Toll Roads? ........................................................................................ 8 Construction Cost .................................................................................................................... 8 Current Value .......................................................................................................................... 9 Total Cost .............................................................................................................................. 10 Financed Cost ........................................................................................................................ 11 When Will the Toll Roads Become Freeways? ..................................................................... 11 1. Elimination of Debt ........................................................................................................... 12 2. Elimination of the TCA ...................................................................................................... 14 3. Elimination of Tolls ........................................................................................................... 15 What About the Extra Ten Billion Dollars? ......................................................................... 17 Future Revenue ...................................................................................................................... 17 Future Construction .............................................................................................................. 19 How is Toll Money Actually Used? ........................................................................................ 21 Retiring the Construction Debt .............................................................................................. 21 Funding Additional Improvements ........................................................................................ 21 Covering Costs of Operating the Toll Roads......................................................................... 22 Advocacy ................................................................................................................................ 22 What are DIFs? ....................................................................................................................... 24 2020-2021 Orange County Grand Jury Page i $28 Billion for a $2.8 Billion Road Total DIFs Paid by the Jurisdictions ..................................................................................... 26 Automatic Rate Increases ...................................................................................................... 26 Are DIFs Necessary? ............................................................................................................. 27 Can DIFs be Eliminated? ...................................................................................................... 28 Has the SR-241 South Extension Been Abandoned? ........................................................... 29 History ................................................................................................................................... 29 Current Status ........................................................................................................................ 30 Why Two Agencies? ................................................................................................................ 33 Common Operations and Management ................................................................................. 34 Should They Separate? .......................................................................................................... 34 Should They Merge? .............................................................................................................. 36 What is the Best Use of the TCA? .......................................................................................... 37 Core Competency .................................................................................................................. 37 Transportation Financier ...................................................................................................... 37 What About Caltrans? ............................................................................................................ 39 Position on OC Toll Roads .................................................................................................... 39 Revenue Sharing .................................................................................................................... 39 Who’s in Charge Here? .......................................................................................................... 41 The Board of Directors .......................................................................................................... 42 COMMENDATIONS ................................................................................................................. 42 FINDINGS ................................................................................................................................... 43 RECOMMENDATIONS ............................................................................................................ 43 RESPONSES ............................................................................................................................... 44 Responses Required ................................................................................................................ 45 GLOSSARY................................................................................................................................. 45 APPENDICES ............................................................................................................................. 49 Appendix A ‒ Public-Private Partnership ............................................................................ 50 Appendix B – The Toll Roads FAQ Web Page ..................................................................... 51 Appendix C – Debt Payoff Analysis ...................................................................................... 52 Appendix D – Who Pays the DIFs? ....................................................................................... 56 Appendix E – Transportation Corridors .............................................................................. 60 Appendix F – The Toll Roads Customer Technology .......................................................... 63 BIBLIOGRAPHY ....................................................................................................................... 66 2020-2021 Orange County Grand Jury Page ii $28 Billion for a $2.8 Billion Road FIGURES Figure 1 - Map of the Toll Roads. ................................................................................................................................... 2 Figure 2 - Elevated segment of SR-241. ........................................................................................................................ 5 Figure 3 - SR-73 northbound approaching Newport Coast Drive. .................................................................................. 8 Figure 4 - SR-241 northbound, north of SR-261 interchange. ...................................................................................... 14 Figure 5 - San Diego - Coronado Bridge. ..................................................................................................................... 16 Figure 6 - SR-241 northbound approaching SR-91. ..................................................................................................... 19 Figure 7 - Planned SR-241 Express