Regional Measure 3: Consider BATA and MTC Track Records

Background of the Bay Area Toll Authority (BATA)

The Bay Area political landscape is laden with acronym bureaucracies vying for residents’ hard-earned cash.  One of these acronym bureaucracies is BATA, the Bay Area Toll Authority. BATA was intended as one of the “better” agencies, the kind that earns its keep by earning revenues.  

The California legislature created BATA in 1997 to administer auto tolls on the Bay Area’s state-owned bridges, under the auspices of the Metropolitan Transportation Commission.  With expanded authority, BATA assumed responsibility for funding and overseeing Regional Measure 1 (approved by voters in 1988), and Regional Measure 2 (approved in 2004).  In 2004, BATA started managing FastTrack on the network of Express Lanes and for parking at San Francisco Airport.  In 2005 BATA assumed joint oversight with Caltrans and the California Transportation Commission of the state Toll Bridge Seismic Retrofit Program.  Regional Measure 1 used funds collected from bridge users to fund bridge-related projects, including a new span for the Benicia-Martinez Bridge, a replacement for the west span of the Carquinez Bridge, and widening the San Mateo-Hayward Bridge.
 
Things started to change with Regional Measure 2, labeled as a “Traffic Relief Plan.” RM2 called for a wide range of projects, most of which funding transit, not bridges or bridge access.  The $1 toll increase, to $3 per crossing, passed with a simple majority of votes, even though the $1 was clearly not an increase in user fees, but a tax that benefited other then bridge users
 
As undisciplined children who feel free to escalate their bad behavior, politicians keep testing how much they can get away with.  If voters continue to vote “Yes,” the political bad behavior continues to grow.  

How Bad is Bad?

Political bad behavior can cost residents money.  Surely, legislators and bureaucrats are only human and like all of us subject to making mistakes.  However, mistakes are different from irresponsibility.  To remind voters of BATA’s and MTC’s (Metropolitan Transportation Commission, the umbrella agency over BATA and other sub-agencies) behavior, we offer the following two events:

Since the credit crisis began in 2008, failed swaps deals have cost more than $4 billion as hundreds of borrowers, from the Bay Area Toll Authority in California to Harvard University, quietly pay Wall Street firms to end interest-rate swap agreements.  "It was brilliant, and it all blew up on me," says Brian Mayhew, chief financial officer of the Bay Area Toll Authority. In July 2009 the state agency paid $105 million to Ambac Financial Group (ABK), the bond insurer that filed for bankruptcy on Nov. 9, to dissolve $1.1 billion of interest-rate agreements.  Bloomberg Business Week, November 11, 2010

They’re at it again at the Metropolitan Transportation Commission.  The planning agency that allocates transportation dollars to Bay Area counties just moved into a new $256 million office building in downtown San Francisco, which was funded largely with bridge toll money and ran 53 percent over budget.  The Mercury News Editorial, December 23, 2016.

As a result of these two events, Bay Area residents lost $105 million and did without $256 million that could have gone to improve the state-owned bridges or stave off toll increases.  

Regional Bank Capitalized with Bridge Toll Money?

An additional event needs to be noted, the status of which seems to have vanished from the MTC records.  At BATA’s special meeting of September 28, 2016, Brian Mayhew, mentioned above, and Steve Heminger, Executive Director of MTC, introduced the proposal of using BATA’s reserves to fund capitalization of a regional bank.  Presently, the reserves fund self insurance of the bridges.  The proposal would terminate the self insurance and shift liability to capital markets in the form of long term bonds (“century bonds”).  The new strategy would cover not loss of assets but loss of revenue, on the basis that the bridges are in such great shape that they will probably withstand an intense earthquake.  

During the meeting, Mr. Mayhew mentioned that BATA has a triple A rating, and therefore, there would be no problem finding investors for the proposed bonds.  There was no discussion whether the triple A rating was in part due to the adequate reserves.

Now We Have Regional Measure 3

Now we are faced with Regional Measure 3 on the June 5, 2018 ballot, which needs to be viewed in the context of BATA and MTC track records, legality (is this really a user fee, when revenue is intended to fund non-bridge projects such as MUNI transit?), and equity (is this a question of lower-income Alameda riders funding higher-income Silicon Valley non-riders?).  

Nine-County Coalition participants oppose this measure, and would like to see more focused strategies, such as employed in Regional Measure 1.