Transportation officials in Orange County, California, have agreed to bail out the financially beleaguered San Joaquin Hills tollway. The deal will keep the toll road from defaulting on nearly $2 billion in bonds.
Opened in 1996, the San Joaquin Hills is a 16-mile roadway that was financed by what was at the time the largest toll-road bond in U.S. history. The roadway, along with the nearby Foothill-Eastern toll road, comprises the biggest toll-road system in California.
Designed to relieve traffic congestion from other clogged roadways in Orange County, the San Joaquin Hills has struggled with lower-than- predicted traffic and toll revenue since it opened. Under the recent bailout deal, the Foothill-Eastern will give the San Joaquin Hills $120 million and low-interest loans of up to $1.4 billion to help defray bond repayments.
The loans will come from surplus toll revenue for the heavily trafficked Foothill-Eastern. In exchange, the San Joaquin Hills board agreed not to sue the Foothill-Eastern, which is planning to construct a new 16-mile tollway, the Foothill South. San Joaquin Hills officials say that new road will remove even more traffic from their already struggling highway. This agreement allows construction of the Foothill South, the final segment of Orange County's planned 67-mile toll-road system. That segment has been on the drawing table since 1981; officials now say construction could begin in 2007, and the Foothill South could be opened to commercial traffic by 2009.