State lawmakers should look to Orange County's public toll ways as a model for the future

Two words are creating a buzz on both sides of the political aisle: toll roads.

Governor Schwarzenegger is leading the charge with GoCalifornia, a bipartisan legislative package to raise transportation funds by putting tolls on carpool lanes and building roads more quickly and cheaply through public/private partnerships. In fact, the Governor isn’t the only one who has noticed that these kinds of transportation reforms work. A 2004 US Department of Transportation report noted that public/private partnerships can encourage innovation and save time and money on infrastructure projects.

Poor road conditions and gridlock can’t be ignored. One recent study by the Auto Club reported that every year in Southern Californians spend the equivalent of nearly three, 40-hour work-weeks stuck in a car. Relieving traffic congestion will improve our economy, boost business productivity and improve our quality of life by allowing us to spend more time at home with our families. So, it’s no surprise that Democrats and Republicans are looking at tolls as an alternative way to fund road fixes and new roads.

Home to the largest network of toll highways in the state, Orange County has proven toll roads can work efficiently and economically. Orange County introduced the concept of building public/private toll roads in the mid-1980s. In 1986, state legislation gave birth to the Transportation Corridor Agency (TCA), which brought a coalition of local cities together to identify solutions to traffic problems in Orange County. It was that year that Orange County and the TCA were tasked with building 67 miles of new roads the state couldn’t afford.

Because the TCA couldn’t afford to fully fund road construction with developer fees alone, a public/private partnership was put in place that utilized tax-exempt toll-revenue bonds. The combination of developer fees and tax-exempt bonds allowed TCA to build $3 billion worth of new infrastructure — without taxpayers having to foot the bill.

Part of the reason Orange County’s toll roads work so well was the process by which contracts were awarded for road construction. Known as “Design/Build,” TCA was granted the ability to competitively bid a single contract with a private firm to design and build a road for a fixed price. Incentives for early completion and penalties for delays enabled 280 lane-miles of high-quality roadways to be built on-time, on-budget with almost no taxpayer dollars.

In addition to TCA’s using private firms for road construction, it has also partnered with private firms to create innovative systems for toll collection, enforcement and customer service. The Orange County model of government partnering with the private sector is increasingly being replicated all across the United States, and the cost savings on administrative staff are significant while local residents are protected because local elected officials retain oversight authority.

The solutions found in Orange County can be replicated all over California. Today, TCA-operated toll roads are a success, making up 20 percent of Orange County’s total freeway system and generating more then $150 million in tolls annually. Orange County’s nearly 20-year experience in planning, building, financing and operating tolls roads provides valuable lessons for policymakers looking to expand toll ways statewide:

Lesson 1: Public oversight is the key. The county’s transportation authority took over management of the privately operated 91 Express Lanes to help keep traffic moving while allowing improvements to the adjacent freeway to be built.

Lesson 2: Public entities have some economic advantages over private toll road operators. Unlike private firms, governments have access to the tax-free bond market to finance new projects, which can result in lower long-term debt costs.

Lesson 3: Taxpayers and motorists benefit from public involvement. Toll rates are set by elected officials, and if they are increased too much above market value, those same elected officials can be held accountable.

Studies confirm that Orange County’s toll roads have significantly cut rush-hour delays, and save drivers a reported 21 minutes per trip. Even those who choose not to use them benefit since toll ways free-up capacity on nearby roads.

The bottom line: Public toll roads like those in Orange County are a practical example of how government can effectively partner with the private sector to deliver critical infrastructure needs. While toll roads aren’t a cure-all, they can and should be part of the solution. If anyone questions the facts, just ask the 300,000 daily toll road drivers in Orange County.