LOS ANGELES — The beleaguered Orange County Transportation Authority garnered another round of criticism recently — this time from a San Francisco nonprofit recommending that the tollway agency postpone planned extensions to its toll road until state authorities can review the operation.

An oversight panel chaired by California Treasurer Bill Lockyer announced in December that it was analyzing the bond debt of two Orange County, Calif., toll roads to determine if they can take on more debt to fund the planned extensions.

Then, on Wednesday, the Pacific Research Institute released a study on the 241 and 73 toll roads concluding that "the operations of these toll roads presently appear to be unsustainable and may have been unworkable from their inception."

The study — conducted by Donna Arduin, former California Finance Director — found the projects that received an estimated $1.7 billion in taxpayer subsidies have been marred by unsustainable debt levels, cost overruns, and financial mismanagement.

"Subsequent decisions by TCA board members and managers have made matters worse," Arduin said.

Unlike virtually every other toll road in the United States, the Orange County toll roads receive annual subsidies from taxpayers for road maintenance, according to the report. The subsidies, which include payments by homeowners via developer fees total an estimated $1.7 billion to date.

CDIAC's review will focus on the viability of the TCA's plan to refinance outstanding debt, said Tom Dresslar, a spokesman in the treasurer's office.

"We're waiting for the TCA to complete an updated traffic and revenue study," Dresslar said. "Our current understanding is that the updated study will be finished sometime around the end of this month. That report will kick-start CDIAC's review."

Barbara Daly, a TCA spokeswoman, said TCA's "bond financing plan is being developed and we anticipate presenting it to the Board of Directors in this fiscal year."

After the TCA has approved the plan, CDIAC will review the details, she said.

She added that nothing in the PRI report is new and the agency disagrees with various aspects of the report.

"The Foothill/Eastern Transportation Corridor Agency is an independent Agency with its own dedicated revenues created under state statute," Daly said. "We operate in an open and transparent manner and communicate frequently with investors."

The San Joaquin Hills Transportation Corridor Agency and the Foothill/Eastern Transportation Corridor Agency are legally separate operations but are jointly run by the same management team under the auspices of the TCA.

The San Joaquin tollway in particular has struggled for years against a heavy debt burden amid weak traffic.

The San Joaquin Hills agency restructured $2.1 billion in debt in April 2011, gaining approval from bondholders to lower the debt-service coverage requirement to 1.0 times from 1.3 times and extending maturities to 2042. The bonds were originally slated to be repaid in 2033.

Analysts told The Bond Buyer at the time that the restructuring offered relief in the early years, but weakened the credit.

The restructuring was expected to save the toll road agency $550 million in debt service costs from fiscal 2012 through fiscal 2024, but debt service in each fiscal year from 2025 through 2036 would rise by $43 million, according to disclosure filed with the Municipal Securities Rulemaking Board.

Following the restructuring announcement, Standard & Poor's put San Joaquin Hills' BB-minus rating on negative credit watch. Moody's has an underlying rating of Ba2 on San Joaquin Hills bonds with a negative outlook, while Fitch Ratings rates them BB with a negative outlook.

TCA's board approved a $2.4 billion refunding slated for March, but Daly said it hasn't taken place yet
"When we do access the markets for a refinancing, we will prepare the proper disclosure and communicate our story to investors," she said.

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