Regional Alliance For Transit
Founded 1992

1000 Union Street, Suite 206
San Francisco, California 94133
Telephone: 415 440–6895
Email: raft@mtcwatch.com
Web: www.mtcwatch.com

January 26, 2010

Senator Christine Kehoe, Chair
Senate Appropriations Committee
State Capitol, Room 2206
Box 942849
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. (4)

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 to BATA.

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 to it.


original signed by M. Williams

for RAFT

cc:    Assemblymember Torrico
    Senator Pavley

1 Fact Sheet on Assembly Bill 744 (Torrico) to Authorize a Regional Express Lane Network, Metropolitan Transportation Commission (MTC), August 2009.

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.