Regional Alliance For Transit
1000 Union Street, Suite 206
San Francisco, California 94133
Telephone: 415 440–6895
January 26, 2010
Senator Christine Kehoe, Chair
Senate Appropriations Committee
State Capitol, Room 2206
Sacramento, California 94249
Re: AB 744 (Torrico) OPPOSE
Dear Senator Kehoe:
The Regional Alliance For Transit opposes AB 744, as it is an
impediment to meeting the requirements of SB 375 (Steinberg, 2008) and
allows toll bridge revenues to be used for non–bridge related projects.
Further, the Bay Area Toll Authority’s (BATA) large program of revenue
bond financing has a problematic history. BATA is an affiliated agency
of the Metropolitan Transportation Commission, the bill’s sponsor. The
governing board members and CEO of both agencies are the same.
AB 744 authorizes the construction of of new freeway lanes from the Bay
Area to counties beyond it, at odds with the Sustainable Communities
Strategy required by SB 375. Examples include toll lanes on I–80 from
central Solano County to the Yolo County boundary and on I–580 from
eastern Alameda County to the San Joaquin County boundary. (1)
The first priority for toll bridge revenues should be to maintain the
state–owned bridges. Encumbering toll bridge revenues to pay for
non–bridge related projects may end up requiring a higher toll bridge
rate if additional bridge expenditures materialize over time. Vehicular
traffic across the bridges has fallen each year of the past five. (2)
As of fiscal year 2008, the pledged revenue coverage of BATA’s toll
revenue bonds stood at just 1.6, close to the minimum allowable figure
of 1.2. (3) In 2002 pledged revenue coverage was much better at 8.2.
During this past decade, BATA has issued several billion dollars in
auction rate and variable rate bonds secured by toll bridge revenues
and has $4.3 billion outstanding in revenue bonds. (5) The same report
shows BATA has long term interest rate swaps with a notional value of
$2.8 billion outstanding. (6) Last July BATA paid $104 million to
terminate $1.1 billion in swaps with Ambac, which then sued BATA,
claiming the termination payment should have been even higher. (7) The
amount paid to Ambac exceeds two year’s worth of toll revenues
currently collected on both the Antioch (SR 160) and Dumbarton (SR 84)
bridges. (8) These two bridges are the central subject of AB 1175
(Torlakson, 2009, Chapter 515), which also grants additional authority
In the case of AB 744, BATA is not constrained practically from raising
the toll bridge rate to pay for the proposed high occupancy toll lane
network. (9) A review of the stewardship of toll bridge revenues
managed by BATA is worth consideration before granting any new powers
original signed by M. Williams
cc: Assemblymember Torrico
1 Fact Sheet on Assembly Bill 744 (Torrico) to Authorize a Regional
Express Lane Network, Metropolitan Transportation Commission (MTC),
2 MTC, Annual Report 2008. See Table 8, page 111 for the number of
vehicles crossing the Bay Area’s toll bridges each fiscal year.
3 MTC, Annual Report 2008. See Note 5, Long Term Debt, page 61.
4 MTC, Annual Report 2008. See Table 11, page 114 for Pledged–Revenue
Coverage figures. See also page 61, which states, “In the fifth
supplemental indenture dated February 2006, BATA covenanted to maintain
toll revenue at levels that result in net operating revenue greater
than 1.2 times annual debt service costs as defined in the master
indenture dated May 1, 2001.
5 MTC, Annual Report 2008. See Note 5, Long Term Debt, pp 55–57.
6 MTC, Annual Report 2008. See Note 5, Long Term Debt; interest rate
and forward interest rate swap agreements, pp 62–66.
7 The Bond Buyer, Friday, August 21, 2009. Ambac insures municipal
bonds and was a counterparty for interest rate swaps with BATA.
8 MTC, Annual Report 2008. See Table 7, page 110.
9 Section 3 (5) (f), ab 744, as amended July 15, 2009.