CHICAGO — With a shakily balanced fiscal 2010 budget now in place, Illinois Gov. Pat Quinn turned his attention yesterday after seven months in office to putting his stamp on a major bond-issuing state agency with the appointment of new board members to the Illinois State Toll Highway Authority.
Quinn named regional planning professional Paula Wolff as the agency’s new board chairwoman, and filled two expired board positions with veteran Chicago banker and financial adviser Bill Morris and Aurora Mayor Tom Weisner.
“It is my privilege to appoint these three highly ethical, experienced, and professional managers to the board of the Illinois Tollway. Each will be a strong and steady advocate for everyone who uses and supports our vital tollway system,” Quinn said.
Wolff is a senior executive with Chicago Metropolis 2020 and a former president of Governors State University. Morris is a senior vice president and manager of public finance for D.A. Davidson’s Chicago office. The firm is shutting its Chicago office down today, however, and Morris said yesterday he intends for now to travel and focus on public service while exploring future opportunities.
The terms of six of eight board members are currently expired.
The announcement comes as the agency is facing a state legislative hearing next month to answer questions on recent contracting scandals and other issues. Quinn’s announcement followed the resignation a day earlier of tollway board chairman John Mitola, who was named six years ago to the post by Quinn’s predecessor Rod Blagojevich. Quinn, the state’s former lieutenant governor, took office in January after the General Assembly removed Blagojevich following his December arrest on federal corruption charges.
Mitola resigned for family reasons and to give the governor the opportunity to appoint his own chairman, according to his resignation letter. Mitola’s four-year term was to run until 2011. Mitola led the board as the agency embarked on a massive rebuilding and expansion of the now 286-mile system five years ago. The $6.3 billion capital program relies on $3.5 billion of toll revenue-backed new debt. The authority in May sold $500 million of taxable Build America Bonds in one of the final new-money deals to finance the program and is eyeing another possible new-money sale and a refunding issue this year.
The capital plan won public and political support as a means to relieve toll booth congestion and fix aging highways. A strong selling point was its reliance on additional tolls only from cash-paying motorists and truck drivers, while leaving existing rates intact for motorists who shifted to the I-Pass electronic tolling device. In addition, congestion at toll booths was eased by shifting some lanes to open tolling so motorists don’t have to stop.
The legislation also included reforms pushed by lawmakers like state Sen. Jeff Schoenberg, D-Evanston, who were critics of the agency that had a long history of ethical scandals under prior administrations. “It’s absolutely striking that someone who has been front and center for so many major decisions at this controversial agency would suddenly disappear so quietly into the night,” Schoenberg said of Mitola’s resignation.
The program has generally won favorable reviews, but the agency has come under scrutiny from lawmakers and federal authorities for some of the contracts awarded, including ones given to contributors to Blagojevich’s campaign coffers.
Last fall, the authority and Blagojevich announced a $1.8 billion second phase to the capital program that calls for the construction of car pool or “green lanes,” an interchange at the Tri-State and I-57, improvements to the I-290/I-90 interchange, and other projects. Commercial vehicles will pay higher rates beginning in 2015 to help fund the program.
The second phase has come under heightened scrutiny following Blagojevich’s indictment as federal prosecutors alleged that he sought $500,000 in campaign contributions from a contractor who would benefit from the new program. Concerns were raised that it was Blagojevich’s efforts to extract the funds ahead of the effective date on Jan. 1 of new campaign contribution rules for state contractors that prompted quick passage of the program.
Mitola ordered the agency’s inspector general Tracy Smith to review the approval process, and she issued a report this past spring saying it was appropriate and there was “no evidence of impropriety.” Those projects, however, remain on hold given the change in state leadership. The agency also had a difficult time keeping an executive director after Brian McPartlin’s departure last October. The attorney general refused to grant him an exemption from state rules that would have allowed him to go to work for a business that did business with the tollway.
The tollway’s $3.3 billion of debt is rated AA-minus with a negative outlook by Fitch Ratings, while Moody’s Investors Service rates the authority Aa3 with a stable outlook and Standard & Poor’s rates the system AA-minus and stable. Net revenues of the system secure the bonds. Fitch blamed the outlook change earlier this year on the potential drop in debt service coverage levels if toll revenues fail to grow rapidly. The authority’s current revenue projections call for collections to rise by 21% to $736 million by 2011.
