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INFRASTRUCTURE–Private Firm Takes on South Bay Toll Road Project



Transportation: State, CTV Reach Agreement To Avoid O.C. Woes

A project to create a toll road to reduce congestion in the South Bay is moving ahead , but without the problems dogging another toll road in the state.

San Diego-based California Transportation Ventures (CTV) is planning to spend $300 million to $400 million to build Highway 125 as a toll road, recouping its costs by charging around $1 to $2 per trip as drivers use the road, said Gary Gallegos, district director for the California Department of Transportation.

CTV plans to issue bonds to raise capital for construction, purchasing the right-of-way, and operational costs. Since the company hopes to attract investors from across the country, that could bring as much as $400 million of private money into San Diego County, said Kent Olsen, president of CTV.

The 11-mile highway will be built between Otay Mesa and Highway 52 in Santee. About 10 miles of Highway 125 , the stretch between highways 54 and 905 , would be a toll road, Gallegos said.

The highway would serve as an important “relief valve” for traffic congestion. Throughout the South Bay, and particularly in Chula Vista, development has taken place with the assumption the highway would be built, he said.

North-South Artery

“In Chula Vista, in the planning that they’ve done they have several large, six-lane city arterials that go east and west,” Gallegos said. “But they lack capacity north-south because all those streets today feed into Interstate 805, which is already congested.”

The toll road may also handle some of the truck traffic coming out of the Otay Mesa border crossing , which now amounts to about 5,000 trucks per day, he said.

Gallegos stressed the Highway 125 toll road project is different from a well-publicized toll road in Orange County , Highway 91.

Highway 91 has caused problems for Caltrans, which found its hands tied by a clause in the contract with the private agency operating the toll road.

That clause prohibits competition against the operators of the toll road. Simply, Caltrans was prevented from widening or making safety improvements to the adjacent non-toll section of Highway 91.

The fallout from the Orange County deal motivated local planners to go back and modify its deal with CTV, Gallegos said.

Exempts Caltrans Projects

State and local planners got CTV to sign on to the county’s Regional Transportation Plan, which the San Diego Association of Governments approved Feb. 25.

The plan, a 20-year, $29 billion plan for transportation projects in the region, includes car pool lanes and the 905 freeway , potential competitors to the Highway 125 toll road.

Projects listed in the Regional Transportation Plan are exempt from the non-competition clause, Olsen said.

CTV also agreed to other provisions, distinguishing between capacity improvements and safety improvements, with the latter also exempt, said Charles Stoll, division chief for Caltrans.

CTV also agreed to defer to a third party in the case of improvements outside of the RTP. The independent analyst will determine how much these improvements would cut into CTV’s business, and CTV would be compensated for that amount, Stoll said.

Another important difference between the two toll roads is that in the case of Highway 91, transportation planners simply took an already existing freeway, added new lanes to it, and made those new lanes toll lanes. But Highway 125 is completely new; there isn’t an already existing alignment adjacent to it.

Since it’s prohibitively expensive to build a new highway from scratch, Highway 125 probably would never have gotten off the ground if a private company hadn’t stepped forward to construct and operate the highway as a toll road, Gallegos said.

Leveraging Capital

This was especially true in the economic climate of the early ’90s, when California was going through a recession, revenues from gas taxes were anemic and highway money was being diverted to retrofitting bridges throughout the state, he said.

Despite being in the planning stages for years, it was unlikely funding would be found to build Highway 125, Gallegos said. Turning the state route into a privately operated toll road “was seen as a way to leverage some private capital to be able to build a road that was needed today.”

Another important difference is that unlike the Orange County toll road, Highway 125 had proposals from two different contractors hoping to build the route.

That made bidding for the toll road competitive , something that didn’t happen with Highway 91, Gallegos said.

CTV responded to Caltrans’ request for proposals, as did another joint venture involving several companies, including Bechtel Corp., Gallegos said.

For Olsen, there were several reasons the project proved so attractive. The TransNet sales tax was already paying for the connector between Highway 125 and Highway 54. That was one of the most expensive parts of the project, and with that out of the way, that made the highway more feasible as a private project, he said.

Construction of Highway 125 could begin as early as December and could be completed by mid-2003, Stoll said.

CTV will collect tolls on the state-owned highway for the next 35 years after that. At the end of that time, Highway 125 most likely would cease to be a toll road, Gallegos said.

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