Two area firms invited to bid on state toll roads.

Two area firms invited to bid on state toll roads 

One of the four projects to be in Los Angeles County

Two Los Angeles County-based companies have been given the opportunity to bid on four multibillion-dollar state highway contracts that will be awarded this September.

The two companies -- Pasadena-based Parsons Municipal Services Inc. and Los Angeles-based Daniel Mann Johnson & Mendenhall -- are among 10 construction consortiums selected by the California Transportation Department to bid on the building of four private toll roads in California. At least one of those toll roads will most likely be built in the Los Angeles area, sources said last week.

Also last week, Caltrans officials issued to the qualifying consortiums its list of requirements to be included in each bid submitted. The bidding consortiums now have about six months to prepare their toll road proposals before submitting them to Caltrans, which will announce its winners this September.

Parsons Municipal Services, a subsidiary of The Parsons Corp., is heading a four-member consortium named California Toll Road Development Group. The other members of Parsons' consortium are Banque Nationale de Paris, Westpac Banking Corp., and Compagnie Financiere et Industrielle des Autoroutes, which is also a major financial backer of the Eurotunnel being dug under The English Channel.

Daniel Mann Johnson & Mendenhall belongs to a two-member consortium along with San Francisco-based Perini Corp.

Unlike existing toll roads, which were built and are operated by the state, these four new toll roads will be constructed exclusively with private funds and operated by private firms under 35-year-long exclusive franchise agreements with the state.

All monies collected from passing motorists will go into the private firms' coffers, not into the California State Highway Fund.

Each of the four toll road projects will cost between $200 million and $3 billion to construct, industry sources estimated. And the operating consortiums will have absolute freedom in establishing the prices charged to passing motorists.

But even with stiff tolls, sources estimated that the consortium's will have to collect several years worth of tolls to just break even on their multibillion-dollar investments.

"People generally think of businesses as only being interested in making a quick profit, but this is a 35-year opportunity which shows we're interested in the long term," said Debra Williams, a spokeswoman for The Parsons Corp. "There's going to be a number of years before we see any money back from this."

The private consortiums will only be allowed to retain revenues equal to a predetermined "reasonable rate of return on their investments." Any money collected above that amount must be turned over to the State Highway Fund.

While having a steady, predictable rate of return for 35 years might sound good, the firms could run the risk of losing public goodwill if they're indentified as the party that's dipping into motorists' pocketbooks.

Parsons' Williams, however, said motorists will actually be grateful for the toll roads once they see the resulting improvements in traffic flow.

"These toll roads are going involve a whole lot of new technology," she said. "It won't be like the old toll roads where cars are backed up for miles because people have to stop their cars to pay. These roads will have microwave sensors that read matching sensors on cars. As cars pass, the reading sensor will record the motorists' information and the motorists will receive a bills in the mail, just like they do from the phone company."

The toll roads' private operators will most likely charge higher tolls during peak traffic hours, Caltrans officials said, to cash in on higher traffic flows.

Bidding consortiums can choose to either submit one proposal to Caltrans or try to win all four mega-contracts.

However, Caltrans officials said no consortium is expected to propose building more than two of the roads because of the massive capital requirements involved.

Under provisions of a law instituted last June (AB680), at least one of the four toll roads must be built in Southern California and at least one must be built in Northern California.

Caltrans originally sent out its "request for qualification" statements last October, inviting any interested parties to submit their qualifications for consideration. Thirteen construction consortiums responded to that call, but only 10 were found to have qualifications sufficient enough to bid on the multibillion-dollar jobs.

California's toll road legislation originally grew out of a study released in May 1988 by the Reason Foundation, a Santa Monica-based public policy think tank. The study found that local and state governments could dramatically increase efficiency by privatizing road construction, airport operations and other activities traditionally handled by government personnel.

While California was the first state in the nation to seriously consider instituting private toll roads, it probably will not be the first state to realize that goal.

Construction of private toll roads is expected to begin in the state of Virginia this spring, while actual construction of the roads in California remains several years away.