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  1. The SR 91 link was one of a number of bottlenecks in Southern California roads for which no public improvement funds were available in the 1980's. Rather than tolerate further clogging, the state turned to private toll-road investors like the California Private Transportation Corporation, which built and runs the SR 91 project, to do the improvements and charge for access. CPTC has not publicized its reasons for picking the SR 91 link, but it would be surprising if they didn't pick the most profitable-looking project they could find, that is, whatever available bottleneck seemed most likely to become the worst one with the most expected congestion to relieve.

    What their projections were, and whether they were correct, we do not know. CPTC guards its business secrets closely. But we do know that traffic in the corridor has continued to increase; that the SR 91 link is still a bottleneck which, after a sharp initial drop in delay and accidents, has continued to clog up more and more at rush hour (Sullivan, 1998). Since the opening of the Eastern Toll Road (another Orange County private toll facility which dumps traffic onto the tolled 91 segment but unfortunately has no direct connection to its toll lanes themselves), high-speed merging from adjacent links has slowed traffic and sharply increased accidents in the non-reserved lanes. Yet further widening of the segment, and/or pricing of the free lanes, could speed the traffic, cut the accidents, and make political and economic sense from the public's viewpoint. Unlike the cash-strapped 1980's and early 1990's, California had ample public funding to do the widening by the end of the 1990's. But this time Caltrans's new director, Jose Medina, threatened with a $100-million lawsuit, signed a controversial agreement to honor a no-build clause in the original agreement with CPTC, which would otherwise have lost half its toll-lane revenue to users of the proposed new free lanes. To secure the needed investment in private improvements to the link in the 1990's, the state in effect relinquished for 15 years its right to add needed public investments to the same corridor in the 21st century. To maintain free flow in the toll lanes, CPTC raised its toll rates five times between 1995 and 2000; it also dropped the HOV qualifier, and the lane is no longer technically a HOT lane. In practice the change has made little difference, since HOV occupants can still split the cost of the toll, reducing costs per passenger. Whoever runs the facility in the future is expected to keep on raising rates incrementally, as long as demand continues to increase.

    While these events were playing out, in the late 1990's, amid improbable and unproven rumors that it was losing money on the project, CPTC was secretly negotiating to sell its operations to a nonprofit successor called NewTrac for $274 million. NewTrac, organized by a coalition of Orange and Riverside County businesspeople, was to be funded by tax-exempt bonds offered by the California Infrastructure and Development Bank, a bank created to offer alternative funding for public-benefit projects. CPTC would have made an enormous immediate profit of $74 to $90 million from the transfer and been assured of retaining the operating contract, on an exclusive, no-bid basis, for 15 years. But, thanks to its tax-exempt funding, NewTrac was expected to be self-supporting, even after the massive payout to CPTC. This cozy arrangement for CPTC had some economic advantages from the state's perspective, but the huge windfall for CPTC, and the substitution of tax-exempt funding for private, on a facility where the state did not share any of the revenues, prompted many shifts in the political wind and the ultimate scrapping (as of this writing) of the proposal. James van Loben Sels, Caltrans Director under the outgoing Pete Wilson administration, hesitantly recommended approval, but he was overruled by his boss, Wilson Transportation Secretary Dean Dunphy. Dunphy counseled CPTC to take the matter up with the next administration. They did, and the succeeding Gray Davis administration's Caltrans Director, Jose Medina (the same one who honored the no-build agreement), quickly approved the deal -- but he, too, was resoundingly overruled, amid calls for legislative hearings and investigations, when its terms became public knowledge. Despite all the commotion over the project's corporate structure, financing, and tie-ins with other transportation links, the toll lanes themselves have continued to operate flawlessly.

  2. Perhaps the first lesson is that there are many things we don't know and need to find out. REACH's modeling left some major gaps, all of them having to do with giving the models higher resolution. We need to know more about pricing surface streets; pricing trucks and buses; reconciling WSA's findings with those of Deakin-Harvey; and how to use full-cost accounting systematically and consistently to make all the costs and benefits of the various strategies commensurable. None of these gaps, however, are large enough to obscure the lessons from what the models did show.

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