In 1986, the California legislature authorized local governments to create "joint-powers" agencies with the right to finance and build roads and collect tolls and development impact fees. Orange County responded by creating two transportation corridor agencies, the San Joaquin Hills TCA and the Foothill/Eastern TCA. The agencies consist of elected representatives from 15 cities and three supervisory districts within the county.
The San Joaquin Hills and Foothill/Eastern TCAs have identical organizational structures, powers, and staff, and they are involved in similar financing arrangements. The two agencies combined have raised a total of about $3.6 billion to cover project costs. About 77 percent of that financing is from bonds, 7 percent from development impact fees, 9 percent from interest, 5 percent from the state, and 2 percent from other sources. The bonds are non-recourse bonds, and are therefore not backed by local or state governments. Bondholders can look only to toll revenues, development fees, and interest earnings for repayment, though they do qualify as municipal bonds, and therefore the interest is exempt from federal income taxes. In order to further enhance the marketability of these bonds, the federal government gave each of the transportation corridor agencies a standby line of credit of $120 million.
Development impact fees have played a key role in financing the Orange County toll roads. The fees are based on the number of trips on the toll roads that development is projected to generate. Geographic locations close to the roads carry higher impact fees than those that are farther away. For residential development, rates are higher for single-family houses than for multiple-unit buildings. Commercial development fees are based on square footage. The development impact fees have provided seed capital for the projects, a responsibility that private investors have been reluctant to assume as they consider the initial stages of highway projects to be a risky period.
Once opened to traffic, the Orange County toll roads are transferred to the state of California. The state, however, gives the TCAs the toll franchise until the debt is paid off (the bonds have 40-year maturities). The state assumes tort liability as well, but unlike the arrangements for the 91 Express Lanes, it also assumes responsibility for all operations and maintenance (except as related to the collection of tolls).