New government owner of broke South Bay Exwy CA125 cuts toll rates

May 30, 2012
By Peter Samuel

2012-05-30: The San Diego Association of Governments (SANDAG) is reducing car tolls by between 12.5% and 41% on the '125 tollroad' or South Bay Expressway (SBX.) The governing board voted unanimously May 25 for a staff plan to reduce toll rates substantially, especially electronic tolls paid via a FasTrak transponder which will go down 41% for the shortest trips  and 35% for the longest.

Tolls paid by cash go down 20% to 12.5%. These are all tolls for cars.

In addition the minimum monthly use fee - a kind of charge for the transponder and account - will drop 36% from $7.00 to $4.50. The $4.50 comprises tyne cost of the account per month of $3.50 and a $1.00/transponder account.

The minimum electronic toll of 50c is similar to that on the I-15 managed lanes toll rates which are an established toll facility of SANDAG.

In another change the pike will reduce the minimum account replenishment to $20 vs $40 now.

The changes in tolls will be implemented in about a month.

SANDAG is claiming - incorrectly - to be the first toll agency in America to reduce tolls. (see other toll reductions below) But outside of toll managed lanes across-the-board toll reductions like this are unusual.  (The most common kind of toll reduction is the extreme one of zeroing out tolls!)

A major aim of the toll reductions on the SBX is to attract traffic off the heavily trafficked I-805 freeway which is parallel and just 5 to 6 miles away. Modeling done for SANDAG suggested the toll reductions could bring an increase of 935,000 tips annually (2,560 extra on the average day) of which about a half or 468,000 a year (1280/day) would come off the I-805.

These are modest changes given that I-805 has traffic flows varying between average daily 260k and 160k going from north to south. 1280 is 8/10ths of one percent.

The 2560 extra expected daily traffic is about a 10% increase on the 26,000/day presently traveling the tollroad.

Officials told the SANDAG board that the toll rate changes was "revenue neutral" meaning it would not significantly change revenues.

A report to the board says: "The recent surveys performed by SANDAG, as well as focus groups and customer satisfaction surveys conducted by the previous operator, indicate that users are pleased with the convenience and utility of the facility itself, but many avoid it due to cost. This research confirms that reductions in the MMT and the overall toll structure should result in additional usage."

BACKGROUND: 9 miles, 15km long of 2x3 lanes the SBX opened Nov 19, 2007. It was planned as providing a quality highway connection to the area expressway network for the growing eastern fringe suburbs of the San Diego metro area on either side of it. It opened within weeks of the huge national housing and financial crisis. The suburbs it serves saw an almost complete cessation of building and widespread foreclosures and emptying of houses.

A second purpose of the tollroad was to serve a newish border crossing to Mexico at Otay Mesa, but this has not lived up to expectations either.

Traffic of the SBX was well below forecast from the beginning and 28 months after opening, on March 22 2010 the project filed for Chapter 11 bankruptcy. The investor group California Transportation Ventures majority owned by Australia-based Macquarie who owned the project had spent about $1,000m on building the road.

Traffic as measured by toll transactions was about 26,000/day in 2011 and revenue $24m for the year, both else than half forecast in 2003 when the project was launched.

In April 2011 the creditors formed SBX Equity and said the project was viable after debt had been written down from $530m to $288m. In addition a settlement had been reached with Otay River Constructors, the builders of the pike, who had been suing for extra payments.

July 29 2011 SANDAG reached an agreement to buy the project for $342m. All fixed assets are owned by the state of California but the project bought consists of a 35 year right to toll under a state toll concession issued in return for the financed construction and acceptance of responsibility for maintenance and operations.

December 22 2011 SANDAG officially became the operator of the SBX tollroad.

Throughout the bankruptcy and sale the tollroad remained fully operational and tolls were collected without interruption.

Other reductions in tolls

The Dulles Greenway in Virginia made toll reductions rather similar to the San Diego cuts in its early days, in 1996, and they increased their revenue by getting proportionately more traffic.

Also in a close analogy to the CA125/SBX case with SANDAG, Texas DOT after purchasing the Camino Columbia TR (TX255) from bankruptcy early 2004 dropped toll rates in September 2004 to $2/car and $2/extra axle ($8 for an 18-wheeler) to boost traffic. Tolls from the pike's opening in 2000 were $3 for cars and $16 for an 18-wheeler.

Truck toll rates were halved and car toll rates cut by a third.

Just weeks ago (April 16) Virginia Governor Bob McDonnell announced amendments to the toll concession contract with Elizabeth River Crossings at the Hampton Roads tunnels that provided "$300 million specifically designated to lower the tolls by 40 percent..." see http://www.governor.virginia.gov/news/viewRelease.cfm?id=1204

Readers may be able to recall other examples which we'll post here.

on the SBX toll reductions, report to board:

http://www.sandag.org/uploads/newsid/newsid_752_14422.pdf

on reorganization out of bankruptcy April 2011:

http://www.tollroadsnews.com/node/5267

SBX website:

http://www.southbayexpressway.com/

TOLLROADSnews 2012-05-30

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