The State Route 156 West Corridor project consists of constructing a new four-lane highway, called the Monterey Expressway, parallel and immediately south of the existing SR 156; a new SR 156 to US 101 interchange; and an interchange between SR 156 and Castroville Boulevard.  The existing SR 156 roadway gets converted into a frontage road providing access to the local community.  The total estimated cost to construct this project using the conventional delivery process is $365 million.  Currently $70 million has been secured or pledged for the project.  Facing a $295 million funding gap, the Transportation Agency Board of Directors approved a contract with Kimley-Horn and Associates, Inc. in November 2015 to conduct an in-depth evaluation of tolling as an option to deliver the project. 

The Level 2 Traffic and Revenue Study (Tolling Study) is significantly more detailed that the “Sketch Level” Traffic and Revenue Study previously completed for the SR 156 Corridor Project.  The Tolling Study analyzes current and future traffic diversion, potential toll rates, toll discounts for local residents and business, and other questions and concerns brought up by the Board and the public, and adopted by the Board of Directors as “Guiding Principles” for evaluating tolling.

The Tolling Study evaluates the project feasibility and financing structure under two delivery options.  A Public Delivery option would have the Transportation Agency and/or Caltrans procure financing, manage design and construction, then operate and maintain the toll facility.   In a Public-Private-Partnership (P3) delivery option the financing, design, construction, and ongoing operation and maintenance of the toll road would be managed by a private partner/concessionaire in accordance with terms negotiated under a concession agreement. It is worth noting that the Public-Private Partnership authorization in state law expired on January 1, 2017 and has yet to be renewed.  

Both delivery options assume securing financing in the form of bonds and federal infrastructure loans to construct the project. The P3 option includes additional private equity in the financing package, assumes reduced project construction costs, and estimates a project delivery time period three years shorter than the Public Delivery option. The Tolling Study evaluates the feasibility of delivering the project based on the timing and availability of various fund sources under both options.   

The most difficult stage of financing is to secure enough funding upfront, for pre-construction activities (engineering and right-of-way acquisition), as well as to construct the project before toll revenues are generated. Results from the financial analysis shows funding shortfalls in both Public and P3 delivery options.  Starting with the project's overall $295 million funding gap, the P3 deliver option has a $75 million funding shortfall remaining. The Public delivery option has a $107 million funding shortfall. The project would have to successfully compete for state and/or federal competitive grants to make up the remaining funding gap under either option. These figures represent the baseline study results. The consultant team is currently performing a stress test that refines the impacts of the forecasted congestion on the alternative routes. An initial review of the diversion sensitivities indicate a reduction in the shortfalls for both the P3 and the Public delivery options. Results from this analysis will be available in October.    

At the August Board meeting Transportation staff and the consultant team will provide an initial overview of the Tolling Study including how travel demand and the revenue from tolling are estimated; how the financial feasibility analysis evaluating the feasibility of funding construction, operating costs and lifecycle costs for a toll facility are calculated; and an assessment of the projected diversion rates to local roads as well as roadway and intersection operational impacts for the project study area. The full Tolling Study is scheduled to brought to the Transportation Agency board's October meeting for action.