Toll Road Duo Feels Pinch

Two city councils will put pressure tonight on their delegates to Orange County’s turnpike authority, hoping to save a plan to merge operations of two toll roads and refinance about $4 billion in construction debt.

Anaheim Councilman Bob Hernandez and Santa Ana Councilman Brett E. Franklin -- two of at least six Transportation Corridor Agencies directors opposed to the merger -- will be the focus of a pair of special council meetings.

Hernandez and Franklin represent their cities on a 21-member TCA board that is scheduled to decide Thursday whether to combine the successful Foothill-Eastern tollway and the faltering San Joaquin Hills tollway to keep it from defaulting on $1.5 billion in bonds.

To pass, the consolidation requires a supermajority of 16 votes, something backers of the merger have not been able to muster for several months. If Hernandez or Franklin changes his views or one of them is replaced, the merger could be approved.

Tonight, the Anaheim and Santa Ana city councils are set to consider resolutions in support of the merger and a related $4-billion bond issue, which Hernandez and Franklin oppose. Also on the Anaheim council agenda is a measure to replace Hernandez on the TCA board in time for Thursday’s decision.

Hernandez contends that the pending council actions are a blatant attempt to silence critics and opponents of the controversial merger proposal on the eve of the vote.

He says the effort is being orchestrated by Anaheim Mayor Curt Pringle, who worked for several years as a lobbyist for J.P. Morgan Securities Inc., a member of the TCA’s team of financial advisors for the proposed bond issue.

“Pringle is behind all this,” Hernandez said. “It’s so self-serving, it’s kind of embarrassing.”

Pringle said he was reviewing his relationship with J.P. Morgan, which ended in August, to determine whether there is any conflict of interest, and said he had not yet decided whether to vote.

He said the Anaheim city attorney’s office had told him there is no conflict, while the state Fair Political Practices Commission has told him not to participate in the City Council vote because it is “a close call.”

California’s Political Reform Act, which the FPPC enforces, prohibits elected officials from voting on matters that have a “material financial impact” on any business within 12 months of receiving $500 or more in income from that business.

Pringle worked for J.P. Morgan Securities from 1999 to 2003. His agreement called for retainers ranging from $2,000 to $18,500 a month, plus expenses, bonuses and other compensation.

Though he has not decided whether he will vote on the issue, Pringle said, he favors consolidation because it will give the TCA enough money to make improvements in the tollway system that will benefit Anaheim and other cities. Otherwise, he said, the work will be delayed for years.

Franklin and Santa Ana Mayor Miguel A. Pulido, who sought the advisory vote from City Council, could not be reached for comment Monday. In the past, Franklin has warned that there might be political moves to purge merger opponents from the TCA board or influence their votes.

The Transportation Corridor Agencies, a joint-powers authority, operates a 51-mile network of highways in east and west Orange County. They include the Foothill-Eastern tollway, the San Joaquin Hills tollway and a short stretch of California 133.

After more than 20 months of study, the TCA’s staff and a team of Wall Street advisors have recommended that the operations of the San Joaquin Hills and the Foothill-Eastern be combined and refinanced with a $4-billion bond issue.

The preferred plan calls for about $3 billion in bonds with fixed interest rates and $1 billion in bonds that involve so-called interest rate swaps with financial institutions. Swaps in which fixed interest rates are exchanged for adjustable rates are considered more risky than conventional fixed-rate bonds.

Supporters contend that the plan is the only way to prevent the San Joaquin Hills from defaulting on its bonds by 2014 without jeopardizing $1 billion in planned improvements to the tollway system and construction of the proposed Foothill South extension through south Orange County.

Opponents say the consolidation plan is a risky and expensive venture that will cost the TCA at least $160 million in fees and force drivers to pay $2.6 billion more in tolls.

Some opponents support an alternative by county Supervisor Bill Campbell that would allow the Foothill-Eastern to lend money to the San Joaquin Hills to keep it out of default. Campbell’s proposal is scheduled to be considered along with the merger plan on Thursday.

Without a merger, improvements to the interchange of the Foothill-Eastern and the Riverside Freeway will be delayed for years, Pringle said.

During rush hours, traffic backs up on the interchange, and there is no direct link from the Foothill-Eastern to the 91 Express Lanes, a tollway in the Riverside Freeway median.

“We need direct connections from the 241 to the 91,” said Pringle, who asked for the advisory vote from his council. “If there isn’t a revenue stream from the Foothill-Eastern, it will impact our residents.”