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FIRST BOSTON STRUCTURES AND UNDERWRITES LANDMARK MUNICIPAL FINANCING

 NEW YORK, March 15 /PRNewswire/ -- The First Boston Corporation last Thursday closed a $1.17 billion bond issue to fund construction of California's first public toll road, an extension of State Route 73 in Orange County, Calif.
 The bond issue, sold in two separate series, is the largest non- recourse municipal financing ever. That is, the tolls collected are projected to generate the funds necessary to meet all of the principal and interest payments due on the bonds after the scheduled opening in 1997.
 Proceeds from the sale will fund interest payments on the bonds during construction and pay for design, acquisition of right of way and construction of the 15-mile, six-lane San Joaquin Hills toll road in southern Orange County. The road is designed to relieve traffic congestion along interstates 405, 5 and the Pacific Coast Highway, three of the most heavily traveled roads in California.
 Landmark Municipal Bond Offering
 On March 3, investors from leading institutional money management and Wall Street firms purchased portions of the landmark municipal bond offering, following six months of intensive pre-sale marketing efforts. During the months preceding the sale, First Boston met with potential buyers across the country and, in early January, as part of an investor conference held in Orange County, arranged bus and helicopter tours along crowded southern California freeways and the corridor to demonstrate the need for the road to investment managers and municipal bond analysts.
 Complex Financing Meets Wide Range of Needs
 Lead-managed by First Boston, the complex financing was developed over a five-year period. A portion of the construction cost of the project is being funded with government grants and loans and the financing meets a variety of payment obligations in addition to the bonds. The financing plan also includes a number of extra non-typical security features.
 The cornerstone of the financing, however, is the long-term revenue collection plan by the issuer, the San Joaquin Hills Transportation Corridor Agency (TCA), which projects that toll receipts can meet the total level of debt service over the life of the bonds. In the first year of operation, toll revenues are expected to reach $52 million, rising to $441 million in 2030. Although the initial mainline plaza toll rate is expected to be $2.00, regular toll increases are anticipated. Any additional toll increases, as required under the financing documents, can be approved by a simple majority vote of the TCA board.
 Multi-Part Financing Structure
 Security features structured by First Boston include capitalizing interest on the bonds for six years, two years beyond the road's scheduled opening. In addition, a portion of the proceeds from financing will create a $100 million contingency fund to address contract variances or delays.
 Other security features structured by First Boston permit the issuer to sell additional bonds in case toll revenues are lower than expected, or if the TCA wishes to refund outstanding bonds and take advantage of any reductions in market interest rates.
 Citizen and Government Support
 Local support for the project is strong. A series of public opinion polls have shown a majority of local residents support the project. The TCA itself was established by local government in 1986 to finance the project and manage revenues. Elected representatives from 10 area cities sit on the TCA Board of Directors along with two County Supervisors. To help fund a portion of the project costs, local developers have agreed to pay the TCA for local building permit studies under a Development Impact Fee Program. To date, over $70 million has been collected under this program and used to acquire right of way and develop project design.
 The TCA has also received financial support from the State Government. State grants of $40 million from the California Transportation Commission and $71 million from the State and Local Transportation Partnership Program also have been granted. In addition, a $120 million letter-of-credit has been authorized by the U.S. Congress under the 1987 Surface Transportation Act to help pay for debt service, if necessary, during the first five years of operation.
 Environmental Concerns Mitigated
 In addition, the TCA has obtained all discretionary state and federal construction permits, and in doing so, has met some of the most stringent regulatory standards in the nation. The TCA addressed a wide range of environmental concerns and provided substantial mitigation for any potential damages. For example, the TCA met proactively with the U.S. Fish and Wildlife Service and obtained approval of the Agency's habitat conservation plan which included revegetating more than 200 acres of land to mitigate the road's effects on any wildlife habitat.
 Builders Offer Unusual Contract Terms
 Additional support for the road has been offered by the project builder, a joint venture between Klewit Pacific Co. and Granite Construction. The companies, two of the largest highway contractors in the United States, offered a fixed-price, $787 million "design/build" contract with a set four-year term for completing the road. The builders also loaned the TCA $6.6 million to complete preconstruction design work and agreed to accept approximately $38 million in subordinated debt as part of its contract fee.
 "This project marks a new era in transportation planning and financing," said Tom Bradshaw, managing director, First Boston Public Finance. "From the very beginning, we sought to create a financing plan that built on the strength of the coalition of government and citizen groups that were working to improve the transportation system in Orange County."
 Advanced Road Design
 The road will be one of the most advanced and efficient in the nation. An electronic scanning system will be installed to automatically identify vehicles as they pass through tollplazas at highway speeds, then debit the toll from drivers' prepaid accounts. In addition, the project design includes an 88 foot-wide median to accommodate two high occupancy vehicle (HOV) lanes, which will be built in the future.
 Planned as the first of three tollroads in Orange County totalling 67-miles, the road design includes 10 interchanges and 78 bridges. This project, linking Newport Beach to San Juan Capistrano, is projected to attract approximately 11 percent of the total area traffic in its first year of operation.
 Solid Economic Base
 A thriving economic base helps ensure the road's long-term viability. "Orange County's unemployment rate is lower than the national average and our growth is expected to continue," said William Woollett Jr., TCA chief executive officer. "We expect population growth of about 1.8 percent annually to more than 2.8 million by the year 2000. The road itself will contribute to the economic vitality of the area employing 1500 workers during construction and after construction providing an economic boost to the area estimated to exceed $5 billion over the four year construction period."
 -0- 3/15/93
 /CONTACT: Andy MacMillan of First Boston, 212-909-2808; or Corey Cutler of Dewe Rogerson Inc., 212-688-6840, for First Boston; or Mike Stockstill of TCA, 714-557-3298/


CO: First Boston Corporation ST: California IN: FIN SU: FNC

WB-OS -- NY041 -- 6070 03/15/93 13:33 EST
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Date:Mar 15, 1993
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