What The Toll Roads Cost You Other Than Tolls

Did you know that your home had up to a nearly $6,000 tax on it that was not approved by the state legislature? That tax is what is known as a “Development Impact Fee” (DIF) and that money goes directly to the Transportation Corridor Agency (TCA aka The Toll Roads). You can see from the colored areas in the screenshot below, the areas covered and the amounts.

These amounts can go up every July and they usually do. This is why certain cities seem very obsessed with rezoning areas into residential. So far this year neither RSM or Mission Viejo have paid developer fees, but if Dove Canyon Plaza gets rezoned to residential based on the current plan, that is up to about $500,000 in DIF. If they connect the toll road by Tesoro High School, the current Oso Parkway Bridge project, and make that a toll road, then Rancho Mission Viejo suddenly becomes a service area, which means about $100,000,000 in DIF. Lake Forest is currently looking at rezoning a Nursery to residential, which would be about $5,000,000 in DIF. The former Laguna Hills Mall is being turned to residential, which will also pay DIF. This applies to every house, every office, every building, a 10,000 sq ft commercial building would be $18,240 in DIF for the one building. Did you vote for that? No, you didn’t. A little description from the TCA site:

I’ve been rather shocked in talking to local politicians, bankers, and journalists that none of them were aware of the DIF, but once you know about them, suddenly a lot of decision making makes more sense. The original concept from 1985 was a Joint Powers Authority (JPA) arrangement that would have a private organization build the roads, collect tolls, then once they were paid off, the roads would be free. The original cost was projected at $858 million but now stands at $2.3 BILLION spent with another $1.7 BILLION projected to be spent and total debt of $11 BILLION by 2053, which is the current estimate of paying off the roads. The 73 toll road was supposed to have been paid off several years ago. Much of what I refer to is coming from this 2013 study which I will include some screenshots from, but I encourage you to read, the situation is worse now than when the study was done. The opening says:

“Based on my review, the operations of these toll roads presently appear to be unsustainable and may have been unworkable from their inception,” Ms. Arduin said. “[S]ubsequent decisions by TCA board members and managers have made matters worse.” Ms. Arduin’s study shows:

• ‘Unlike virtually every other toll road in the United States, the Orange County toll roads receive annual subsidies from taxpayers for road maintenance. These subsidies — which include payments by homeowners via “developer fees” — total an estimated $1.7 billion to date.’
• ‘A substantial portion of the current debt is in the form of controversial “capital appreciation bonds,” which defer both principal and interest payments for an extended period of time. This structure permitted TCA to have much smaller debt service payment in the early years but will result in huge increases in annual debt service payments each year through maturity. For both FETCA and SJHTCA, capital appreciation bonds constitute 23 percent of total outstanding debt.’
• ‘In order to meet the toll roads debt obligations, toll rates have risen dramatically; the debt per mile for the 241 toll road (managed by FETCA) is $64 million and for the 73 toll road (SJHTCA) is $136 million, compared to $17.1 million for the average U.S. toll road.’
• Toll rates for the 241 and 73 roads are among the highest in the country. This has compelled price-sensitive commuters to avoid them and instead to drive on free public roads.

TCA’s proposal to refinance the debt by extending the repayment period has the effect of exacerbating the problem, not managing it, Ms. Arduin said. The proposed refinancing would add $1 billion to TCA’s current debt obligation, bringing the total to $11 billion.

The TCA has spent approximately $6 Billion over the last 20 years without building anything until the recent $30 million Oso Parkway Bridge project. You can look at the latest TCA budget here, the toll roads have greater debt than six individual states! You are paying multiple times and in multiple ways for the toll roads that don’t include the ever-increasing costs of the tolls themselves. The roads are built, holding the TCA to their original mandate, getting their spending under control and paying off the toll roads in an expedited fashion so they can become free to drive on as originally intended, is the goal of getting everyone informed. There is a petition going around that is requesting the State Auditors office to do a deep audit of the TCA to help with that, please sign it. I leave you with this excerpt from the aforementioned study: