Under the leadership of Jerome Stocks, SANDAG just purchased the privately owned South Bay Toll Road for $345 million, with loans against your Transnet sales tax dollars. A lot of justification for the price paid was based on the cost to build the road, which was a lot more than the profit potential of the road, which is what the private market would use to figure out the value of the road. Hum, right?
So what was the market value? It sure would have been good for the sale to have been put out for competition to find out for sure. An open bidding process? That happens, but is relatively rare under Jerome Stocks' leadership. It is easy to believe that we might have gotten the toll road for a hundred million less!
The sellers, the old owners of the toll road, said the value was $287 million. That wasn’t just an off the cuff estimate. It was the value they submitted in court documents, according to this April UT story. The PEOPLE SELLING the property said it was worth $58 million less than what the taxpayers purchased it for (On the other hand, the developer owned UT called the sale price a "fire sale" level, because the road cost so much more to build, of course).
If I build a bike from scratch in my garage at a production cost of $12,000, does that mean the market value will be $12,000+? Probably not. If you say yes, I will start building your bike tomorrow. Otherwise it would be lucky if I could get $300, as it will likely be a clunky bike. Our city leaders have a long history of overpaying for things and saying it is A-okay to do so.
According to Mayor Stocks, buying the road means they don’t have expand other nearby freeways with TransNet dollars. A savings? Maybe not. According to two reporters, the private for-profit toll road (partially supported with Federal funds), was set to be turned over to the government at the end of its contract (a length similar to the Transnet program). So, we bought something we were going to get anyways, and this benefit we purchased for $300 million would have been delivered for FREE later.
Buying the road means drivers will pay lower tolls. Not buying the road probably meant the same thing. The tolls were too high to attract a lot of traffic and it is likely that the next private owner would have lowered the tolls to boost volume. No? Maybe the taxpayers could have come out ahead if they subsidized the tolls on the Toll Road until the road was turned over to the government rather than buying it outright.
Did SANDAG consider the County-wide long-term financial and transportation outcomes under the different scenarios? Two reporters tell me they didn’t see it. Gary Gallegos the executive officer at SANDAG wouldn’t respond to my public records request for that analysis (if it existed) and Jerome Stocks wouldn’t show me where to find such comparisons (he said they existed and cut off communication when I asked where to find it).
Jerome has been a leader in overpaying for real estate, especially when his friends are involved. It is not surprising that he has not fixed the problems that allow for million dollar mistakes to be repeated. We’ve called for a real estate transaction policy to be implemented, repeatedly.
The call for saving Encinitas millions of dollars that has been rejected:
Responsibility for errors or omissions belongs to Gary Gallegos and Jerome Stocks for their lack of openness.