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Bond Refunding Could Yield More than $100 Million in Savings for San Joaquin Hills Transportation Corridor Agency  

Board approves bond refunding expected to result in significant savings without extending bond maturity dates

IRVINE, Calif. - November 19, 2021

At its meeting on Thursday,The Board of Directors of the San Joaquin Hills Transportation Corridor Agency (SJHTCA) approved a bond refunding transaction that could result in significant savings. The SJHTCA operates the 73 Toll Road.

Current low interest rates have provided an opportunity for the SJHTCA to authorize a refunding of $1.05 billion of its Series 2014A bonds that are callable at par in 2025. The move will not extend any bond maturity dates and is expected to decrease annual debt payments every year, resulting in a reduction in debt service payments of more than $100 million, net of all transaction costs.

“Our team evaluated market conditions and developed a strategy that will appeal to both our long-time current investors and new investors and allow the Agency to reduce funding costs by issuing tax-exempt bonds. In addition, the Agency received a timely and significant rating upgrade from S&P to A on its senior lien bonds and A- on its junior lien bonds,” said TCA CFO Amy Potter.

TCA’s management strengths and long-term financial model have been recognized repeatedly by credit rating agencies including Standard & Poor’s, Fitch and Moody’s.

“I applaud my SJHTCA Board colleagues for approving this transaction to save more than $100 million in interest payments,” said SJHTCA Chair and Mission Viejo Mayor Trish Kelley. “We take our duties of fiscal responsibility very seriously and we are pleased to be able to realize such a large savings without extending maturity dates.”

“Our board’s fiscal stewardship commitment continues. In recent years, we have adopted a robust debt management policy, increased our credit rating, and bolstered credibility and transparency with our 2 million account holders and general public,” said SJHTCA Vice Chair and Newport Beach City Councilmember Will O’Neill. “Thanks to these efforts, we can now anticipate saving significant cash flow.”

The Transportation Corridor Agencies (TCA) have previously taken advantage of favorable market conditions — such as the low interest rates currently available — to improve the financial position of the Agency.

The Agency has taken strong steps over the past few years to save more than $600 million in debt service payments without extending any bond maturity dates. The Foothill/Eastern Transportation Corridor Agency (F/ETCA) completed an innovative refunding transaction in January, reducing F/ETCA’s bond payments by $214 million, without extending any bond maturity dates.

“The Board’s goal to reduce debt payments and pay down some bonds early is at the forefront of our planning. The significant savings generated by this transaction will strengthen the Agency’s ability to pay for system improvements with cash and further reduce debt,” said TCA CEO Samuel Johnson.

The SJHTCA and F/ETCA, which comprise TCA, are two joint powers authorities created to plan, finance, construct and operate Orange County’s 51-mile toll road network — the 73, 133, 241 and 261 Toll Roads.

The Toll Roads have been providing a choice for drivers for more than 20 years and the tolls collected are used to repay the debt incurred to construct the system and fund on-going operations and improvements.

The Toll Roads system, which represents 20% of Orange County’s highways, is the largest toll road network in California.

The Transportation Corridor Agencies (TCA) are two joint powers authorities formed by the California Legislature in 1986 to plan, finance, construct and operate Orange County’s public toll road system comprised of the 73, 133, 241 and 261 Toll Roads.

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