F/ETCA Says Caltrans is Interfering with $2.4 Billion Toll Road Refinancing That Will Benefit Commuters; Lessen Need for Toll Increases; Reduce Congestion


caltrans (select to view enlarged photo)

IRVINE, CA--June4 14, 2013: The Foothill/Eastern Transportation Corridor Agency (F/ETCA) has approved a $2.4 billion refinancing plan of its outstanding toll revenue bonds to take advantage of lower interest rates and lower its annual debt payments. The only thing slowing down implementation is California's transportation agency, Caltrans.

“I recently heard an advertisement on the radio that concluded by saying that refinancing your home was the biggest no-brainer in the history of mankind. They were wrong. This refinance is the biggest no-brainer in the history of mankind.”

F/ETCA manages and operates the 133, 241 and 261 Toll Roads in Orange County, Calif. and approved the refinancing plan that will lower average debt payment growth from 4.4 percent to 3.5 percent or less.

"We are ready to go to market once Caltrans signs amendments to the cooperative agreement we've had in place since constructing the 133, 241 and 261 Toll Roads," said Lisa Bartlett, chairwoman of F/ETCA and mayor pro-tem for the City of Dana Point. "Just like refinancing your mortgage, the plan will line up payments with projected revenue streams. Lowering annual debt payments means there will be less pressure to increase toll rates to meet financial obligations, to the benefit of every commuter in the region."

Bartlett said lower toll rates will also mean less congestion on free alternative routes and improved traffic circulation, which is important for regional mobility and recovery of the local economy.

On Monday, the New York based rating agencies, Standard & Poor's and Moody's Investor Services, announced that they have given the refinancing plan investment grade ratings contingent on the signing of a Caltrans cooperative agreement. The amendment had been negotiated and was approved by the F/ETCA board of directors on May 9, 2013. Caltrans signed a similar amendment for the 73 Toll Road in 2011.

The agency began negotiating an amendment to the cooperative agreement with Caltrans in February. Since that time interest rates have risen, costing Southern California drivers who commute in the country's most congested region $100 million.

Prior to the 12-1 vote several F/ETCA Board Members spoke out about the plan.

"I recently heard an advertisement on the radio that concluded by saying that refinancing your home was the biggest no-brainer in the history of mankind. They were wrong. This refinance is the biggest no-brainer in the history of mankind." --Director Chuck Puckett, councilmember, City of Tustin

"I support the TCA staff and the advisors of national promise that they worked with to develop this refinancing plan. There are many excellent benefits to refinancing and this is a necessary step for the agency." -- Director Tony Beall, Mayor, City of Rancho Santa Margarita

"Refinancing gives us greater flexibility for building a better reserve and better revenue stream." --Director Sam Allevato, mayor pro tem, City of San Juan Capistrano

"I support the refinancing. We need to be good stewards with the people's money and I compliment and thank the TCA staff on the work they have done. It is fiscally wise to take advantage of these historically low interest rates." --Scott Voigts, mayor, City of Lake Forest.

The refinancing could include approximately $1.4 billion of 2013 Series A, Senior Lien Toll Road Refunding Revenue Bonds, approximately $600 million of 2013 Series D, Senior Lien Forward Delivery Bonds and approximately $200 million of 2013 Series B, Junior Lien Toll Road Refunding Revenue Bonds, all of which will be tax-exempt bonds. In order to achieve the board-established goals of the financing and ensure compliance with various federal regulations, the agency also is considering the issuance of a tender Invitation relating to a portion of the outstanding Series 1999 Bonds to be refunded. Depending on whether a tender occurs, the amount of 2013 Series D Forward Delivery Bonds will be reduced and the 2013 Series A, current delivery bonds will be increased.

Standard & Poor's rated all senior lien bonds investment grade at "BBB-". Moody's Investor Service gave an investment grade rating of "Baa3 --Outlook Stable" to all of the senior lien bonds, which are the primary credit of the agency. Standard & Poor's and Moody's also issued ratings of "BB+" and "Ba1--Outlook Stable," respectively, on a small amount (approximately $200 million) of Junior Lien Refunding Bonds (Series 2013B) that F/ETCA may issue if market conditions are attractive and they provide a more cost effective and more flexible debt structure.

About F/ETCA

The Foothill/Eastern Transportation Corridor Agency is a public agency governed by local elected officials responsible for the planning, financing, construction and operations of 36 miles of roadway comprised of State Routes 133, 241 and 261. For the most recent fiscal year, F/ETCA transactional toll revenues were up seven percent, total operating revenues were $129.4 million and 56,173,061 transactions were recorded on the roads.

The Foothill/Eastern Transportation Corridor Agency is a public agency governed by local elected officials responsible for the planning, financing, construction and operations of State Route 133, 241 and 261. For the most recent fiscal year, F/ETCA transactional toll revenues were up seven percent, total operating revenues were $129.4 million and 56,173,061 transactions were recorded on the roads. Public oversight ensures that the interests of local communities and drivers are served and that TCA continues to meet the region's growing need for congestion-free transportation alternatives.

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