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 a rerouting of the traffic from San Miguel Canyon Road to US 101; and a full interchange at SR 156 and Castroville Boulevard. The existing SR 156 roadway will be converted into a frontage road to provide access to the local community, and also to serve as a state-required toll-free parallel route.
The total estimated cost to construct this project using the conventional delivery process is $365 million, or $375 million under a tolling scenario. Currently $70 million has been secured or pledged for the project, including $18 million in FORA and TAMC impact fees. Facing a $295 million funding gap, the Transportation Agency Board of Directors approved an in-depth evaluation of tolling as an option to deliver the project.
The Level 2 Traffic and Revenue Study (Tolling Study) analyzes current and future traffic diversion, potential toll rates, toll discounts for local residents and business, and addresses other questions and concerns brought up by the Board and the public that were adopted by the Board of Directors as “Guiding Principles” for evaluating tolling.
Toll collection would be done 100% electronically via a gantry system over the expressway, similar to Fastrak in the Bay area; booths for cash collection of tolls will not be provided. A camera detection system would be used to collect tolls from users without Fastrak transponders. A toll exemption for local residents and business in the Castroville-Prunedale area was factored into the modeling analysis and results in a 15% reduction in revenues. The revenue lost from providing a partial or full local discount would increase the funding shortfall amounts projected by the study.
The Tolling Study evaluates the project feasibility and financing structure over 50 years under two delivery options. A Public Delivery option proposes that the Transportation Agency and/or Caltrans procure financing, manage design and construction, then operate and maintain the toll facility. Under the 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 assumes 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 over a 50 year time horizon. In addition to the project delivery (design, right-of-way, build) costs of $375 million, the analysis assumes that the toll revenues will also be utilized to cover the cost of financing the bonds and loans, maintaining the new expressway, operating the toll facility over time, and reconstructing the facility when it reaches the end of its lifespan.
The financial analysis shows significant funding shortfalls under both Public and P3 delivery options. Starting with the project's overall $295 million funding gap, the P3 delivery option has a funding shortfall ranging from $57.4 million to $77.6 million. The funding shortfall in the Public Delivery option ranges from $98.1 million to $119.0 million. Given the uncertainty with SB 1 funding, it is unclear whether or not implementing a toll financing structure would bring the project's funding deficiency down to a level that could successfully compete for state and/or federal competitive grants to make up the remaining funding gap under either option. While the inclusion of maintenance and replacement costs for the facility in the project costs should be a subject of negotiations with Caltrans, particularly since the new facility is likely to result in some short-term cost savings for the Department, the ability of such negotiations to help close the funding gap needs further exploration. Transportation Agency staff met with Caltrans District 5 and Caltrans executive staff in Sacramento and they expressed strong support for the project but could not make funding commitments that resolve the funding shortfall.
The Tolling Study's executive summary is attached. The full study with appendices is posted at the TAMC website and as a web attachment to this agenda item.
A supplemental Environmental Impact Report (EIR) evaluating the impacts of tolling is required before a tolling option can be pursued further. The Level 2 Traffic and Revenue Study provides information required to complete the supplemental EIR. Caltrans estimates it will take 12 to 18 months to complete the supplemental EIR. Completing the supplemental EIR will keep future policy decisions open in the event circumstances favoring tolling change.
Transportation Agency staff recommends moving forward by receiving the the Tolling Study, asking Caltrans to proceed with the supplemental EIR, directing staff to continue to monitor all options to fund and construct the SR 156 improvement project, and to proceed with constructing the Castroville Boulevard interchange as an initial segment of the full project.