LOS ANGELES — The Orange County Transportation Authority on Tuesday plans to price $124 million in senior lien toll road revenue refunding bonds for the 91 Express Lanes.
The refunding bonds represent an evolution in terms of managed lane financing, according to OCTA officials.
The 91 Express Lanes are a four-lane, 10-mile toll road in the median of the toll-free State Route 91 Riverside Freeway, one of Southern California's most heavily traveled roads, and a critical link between job centers in Orange County and housing in Riverside County.
When the authority issued bonds a decade ago to buy the managed lanes out of private ownership, Orange County boasted the first fully automated toll road in the world and the first in the U.S. to employ variable pricing. With two lanes in each direction, toll prices vary by hour, day of the week and direction of travel based on a predetermined toll schedule that optimizes traffic throughput at free-flow speeds.
Since OCTA purchased the 91 Express Lanes in January 2003, officials said the objective has been to maximize the number of cars traveling through the SR-91 corridor, rather than maximizing revenue.
As a new concept, the original bonds required a closed lien indenture that couldn't be diluted and two reserve funds.
Today the refinancing has an open lien indenture with only the typical one-year reserve fund.
The 2013 Bonds are rated A1, A, and A-minus respectively by Moody's Investor Services, Standard & Poor's, and Fitch Ratings.
"We are very pleased that the rating agencies recognized the strong operating history of the 91 Express Lanes," said OCTA's chief executive, Darrell Johnson. "Despite the recession, the actual traffic and revenue results for last fiscal year were very close to the Stantec projections in 2003."
Barclays, the senior managing underwriter, expects to price July 30 with a closing anticipated on Aug. 7.
The 91 Express Lanes continue to be a bellwether for express lanes in the country, said Steve Abendschein, project manager for Stantec, OCTA's traffic and revenue consultant.
"I think OCTA should be extremely proud of the 91 Express Lanes," Abendschein said. "It has met its purposes of providing a free-flowing traffic arterial in the midst of one of the most densely traveled roadways in the country."
In 2003, the issuance of the bonds was maximized at $195 million dollars and no additional bonds could be issued on parity.
Today, with an open lien issuance, if OCTA chooses too, the authority could issue additional bonds for capital projects on parity with the new 2013 bonds. Officials said, however, they have no plans to issue additional bonds at this point.
"We think this is an attractive evolution in managed lanes and managed lane financing structures," said James Martling, a principal with Sausalito, Calif.-based Sperry Capital Inc., and OCTA's financial advisor.
The 2013 bond's indenture is an open lien indenture with a 1.5-times additional bonds test. The 2013 Bonds have a debt service reserve fund that will be funded at maximum annual debt service at closing due to a level debt amortization structure. The new 2013 bonds do not have the supplemental reserve fund that was required in 2003.
OCTA's Board of Directors adopted a toll policy in 2003 that automatically adjust tolls based on traffic volume to maintain a free-flow of traffic in the 91 Express Lanes. Traffic is monitored on a continuous basis and tolls are adjusted quarterly based on the volume. When hourly volumes consistently reach or exceed 3,128 vehicles per hour per direction, tolls are adjusted to maintain a predictable level of service.
Currently the highest toll rate is $9.55 from 3 p.m. to 4 p.m. on Fridays in the eastbound direction. The lowest toll is $1.40, generally from 10 p.m. to 5 a.m. in both directions. The average toll is $2.87. OCTA permits high-occupancy vehicles (those carrying three or more people) to travel for free at all times except weekdays eastbound between 4 to 6 p.m., at which time they are charged 50 percent of the scheduled toll rate.
"From a policy perspective as well as financially, the 91 Express Lanes has been a success and is considered a model for congestion management pricing," Johnson said. "We have significantly improved throughput on the SR-91 freeway, one of the most congested in Southern California."
OCTA was also able to fund the construction of new general-purpose lanes adjacent to the 91 Express Lanes in the last three years, Johnson said.
The Riverside County Transportation Commission recently sold bonds to finance an extension of the 91 Express Lanes into Riverside County.
