When a Highway Becomes an Impulse Buy - Voice of San Diego

Land Use UNVEILING THE UNSEEN

When a Highway Becomes an Impulse Buy

San Diego’s regional transportation authority bought a highway on layaway. What else can it buy?

 

Six months ago, a private toll road in the South Bay became part of San Diego’s public transportation network.

The San Diego Association of Governments, the county’s coalition in charge of regional planning and transportation, bought State Route 125, also called the South Bay Expressway, from a private company facing bankruptcy for a third of what it cost to build.

SANDAG sees the highway grab as a cost-effective way to speed up its goal of relieving South Bay congestion. But it could also set an interesting precedent.

SANDAG already has laid out a 40-year transportation plan, the 2050 plan, that visualizes how the region will continue to meet its transit needs. SR-125 isn’t part of that plan. If SANDAG can choose to borrow future funds from TransNet — the half-cent sales tax extended by voters in 2004 — to act on an unexpected opportunity, then just how far can it step outside the bounds of its own planning document?

That question hits at the heart of the standoff between transit advocates and SANDAG over the 2050 plan.

Many of the rail-based transit projects envisioned in the plan are scheduled toward the end. Transit advocates want them moved up much sooner.

If borrowing from future TransNet revenue is allowed, then reprioritizing transit projects could realistically be an option, too.

Mortgaging a Highway

SANDAG financed the $341.5 million purchase with TransNet funds, along with $100 million in federal loans to be repaid through toll revenue, along with operations and maintenance costs.

The idea behind the purchase was simple: Rather than continuing to expand Interstate 805 in the South Bay to relieve congestion, SANDAG could instead purchase an already-built highway, at a bargain-basement price, and direct overflow I-805 traffic to the new road, which stretches 10 miles from State Route 54 near the Sweetwater Reservoir to State Route 905 near the Otay Mesa border crossing.

Map courtesy of SANDAG

SANDAG would scale back SR-125 tolls by 30 to 40 percent to entice people off I-805.

If the plan worked, it’d achieve one of the long-term goals of SANDAG’s 2050 plan — decreasing traffic on the southern portion of I-805 — about 25 years ahead of schedule, and at a cheaper cost to boot.

It wouldn’t totally obviate an I-805 expansion, but it would cut the need from four new lanes to two.

And in the early going of operating its new toll road, SANDAG is beating its own targets, according to a report delivered at a retreat earlier this month.

In the first six months with cheaper tolls, usage of the South Bay Expressway increased more than 20 percent compared with the same six-month period a year earlier. SANDAG had hoped for a 15 percent bump, according to its report. The number of customers using FasTrak, SANDAG’s electronic toll collection system, also broke expectations, climbing 11 percent by the end of 2012.

SANDAG’s board will have to weigh adjusting tolls based on usage.

SANDAG’s loan payments increase over time, so toll revenue will need to do the same to cover them, said Director of Operations Samuel Johnson.

“Reducing tolls to increase traffic isn’t a 1-to-1 relationship,” he said. “A 25 percent decrease in tolls doesn’t mean we increase traffic 25 percent. It just doesn’t work that way. So we need to set tolls that would accomplish the board’s goals: increase use and maintain fiscal responsibility.”

Newfound Flexibility

Regardless of how SANDAG’s board chooses to operate the road going forward, the justification for the purchase is clear.

The project was built for roughly $1 billion by California Transportation Ventures, which later faced bankruptcy as the South Bay Expressway saw low usage.

By buying the highway and scaling back the I-805 expansion, SANDAG would save taxpayers $268 million, it estimated.

Realizing those savings meant stepping outside its detailed project list.

“As our board looked at the big picture and the 2050 plan, one of the key goals was to increase mobility on I-805,” Johnson said. “We’ve accomplished the same thing of mitigating congestion, and we do it two decades ahead of schedule. The specific project wasn’t in the plan, but it achieved the concept of improving mobility.”

Opponents of SANDAG’s plan, who scored a recent victory in court, are seizing on the idea that deviating from the project schedule is OK, so long as it’s in pursuit of the plan’s broad objectives.

The Cleveland National Forest Foundation, one of the groups suing over the plan, has proposed shifting all rail-based projects into the next 10 years.

The group’s “50-10” plan would borrow future TransNet funds to pay for the projects, just as SANDAG did to purchase SR-125. TransNet revenue is split equally between transit projects, local roads and highways. A supermajority of SANDAG’s board can vote to change that allocation.

“The toll road shows SANDAG has the flexibility to do things differently (than the 2050 plan), and they have an extreme amount of latitude on how to use TransNet funds,” said Jack Shu, director of the Cleveland National Forest Foundation.

“If it’s true that you can borrow money ahead, it gives you flexibility even without a change in allocation,” he said.

Shu sees it as a precedent that makes his organization’s plan to fast-track transit projects much more likely, regardless of the outcome of the existing lawsuit.

SANDAG isn’t so sure.

“The answer is: maybe,” said Gary Gallegos, SANDAG’s executive director.

Purchasing SR-125 instead of expanding I-805 was possible for a very specific reason, Gallegos said.

Both the highway-widening and the road purchase were funded by TransNet, which only accounts for 15 percent of funding within the 40-year plan.

Projects funded through a combination of sources would require a revenue source to pay back any future borrowing, just as the SR-125 purchase pays back the $100 million federal loan using toll revenue.

That wouldn’t be possible for any current transit projects, which only recover about 40 percent of their operating costs, said Gallegos.

According to SANDAG, if a hypothetical project doesn’t include a positive revenue stream to pay back a loan, the only option to change its place in the 2050 plan is with a two-thirds vote of SANDAG’s board.

“If you’re going to deviate, you need to show how you’re going to pay for it,” Gallegos said. “There’s no magic bullet. You either need to show a revenue stream or how you’re paying for it. It’s a zero-sum game.”

I’m Andrew Keatts, a reporter for Voice of San Diego. Please contact me if you’d like at andrew.keatts@voiceofsandiego.org or 619.325.0529 and follow me on Twitter:

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