Some people say that the South Bay Expressway costs only the person who chooses to ride on it, but people pay for it whether they ride it or not. Public funds are an integral part of this barely traveled road. The cost of the road, $635 million, was paid partly with private funds, but $140 million came from a low-interest federal loan. Additionally, in order for the toll road to be viable, two “gap connectors” had to be built at the northern end. The San Diego Association of Government’s website states that the gap connectors cost $160 million. This money came from a combination of public funds, including sales tax (TransNet, the half-cent local transportation tax) and federal highway funds. Recently, the City of Chula Vista asked for $27 million in stimulus funds to build an interchange at Rock Mountain Road.
The City of Chula Vista also subsidized South Bay Expressway. According to a 2007 Union-Tribune article, the City spent $19.5 million on tollway-related projects, including direct payment of toll costs. (Chula Vista city manager Jim Sandoval was contacted twice but did not respond to questions.)
Chula Vistans may be supporting the South Bay Expressway through local taxes in the future. In December 2008, South Bay Expressway sued Chula Vista for $10 million, alleging breach of contract. When asked if the suit was resolved, Hulsizer said that South Bay Expressway and Chula Vista were reaching an “amicable” agreement.
Ironically, while the City was being sued, Chula Vista’s Mayor Cheryl Cox nominated the South Bay Expressway for a Transportation Innovation Award, and when Forbes magazine called Chula Vista one of the ten most boring cities in the USA, Mayor Cox countered that the South Bay Expressway is the city’s third-best attraction.
Traffic density is another way people pay for the toll road. South Bay Expressway enjoys a noncompete clause with the San Diego Association of Governments, the City of San Diego, the City of Chula Vista, and other agencies. Noncompete clauses protect toll-road revenues by prohibiting enhancements on surrounding freeways that might divert toll-road traffic. According to Hulsizer, the noncompete clause allows safety-related improvements on the I-805 and anything that’s in the 2020 Regional Transportation Plan. But, Hulsizer said, “If there were to be a plan to add six lanes on I-805, and there was a negative impact on our revenue, then we would be due compensation.”
There is no doubt that the South Bay Expressway has been affected by the economic downturn, in particular foreclosures in Chula Vista. However, between 1995 and 2003, Hulsizer was the general manager of another toll road, the 91 Express Lanes in Orange County, that performed poorly even though the economy was strong. Owned by the California Private Transportation Company (CPTC), the 91 Express Lanes ran in the median of State Route 91, the Riverside Freeway.
According to a 2006 background paper prepared for California senator Alan Lowenthal, chairman of the California Senate Transportation and Housing Committee: “Although usage of the [Orange County] toll road increased from 1995 to 1998, the toll road experienced only one profitable year (1998). The CEO of CPTC suggested in a newspaper article that the company would not turn a profit until 2004 unless the company could refinance its debt or find a buyer.”
The contract between California Private Transportation Company and Caltrans included a noncompete clause. When Caltrans proposed to make safety improvements on the Riverside Freeway because of an increase in congestion-related accidents, the toll-road operator sued for violation of the noncompete clause. The issues surrounding the noncompete clause were resolved when the Orange County Transportation Authority, a public agency, bought the toll road in January 2003, paying $207.5 million for a road that had cost the operator $135 million to build only eight years earlier.
Senator Lowenthal’s report concludes, “The long-term implications for the state, for local communities, and for individual users relying on privately-operated transportation facilities as California continues to grow are murky at best.”