Near-Term Action - Innovative Financing Tool

SANDAG and Caltrans, along with a number of key local, state, and federal agencies in the United States and Mexico, are working aggressively to expedite the construction of an innovative port of entry in the San Diego-Baja California region with the objective of dramatically reducing border wait times. Insufficient capacity at existing border crossings in the region costs the United States and Mexico billions of dollars in foregone economic output each year. Hours-long delays are undermining productivity and industry competitiveness at the regional, state, and national levels.

The State Route (SR 11)/Otay Mesa East Port of Entry (POE) Project is employing several innovative financing and intelligent transportation system (ITS) tools to deliver border infrastructure that would provide fast, secure, and predictable crossings via tolled approach roads on both sides of the border. The tolled roads would seamlessly link a new state-of-the-art POE to the regional highway system. By applying variable tolling to the approach roads to the Otay Mesa East POE, the region aims to achieve the goal of operating the new crossing with an average 20-minute wait time while also generating sufficient revenues to finance most of the project. Based on demand estimates derived from an investment-grade Traffic and Revenue Study completed in 2014, the new POE could generate toll revenues of $4.2 billion (in constant 2012 dollars) over a 40-year period. About 75 percent of the revenue would come from passenger vehicles, and the remaining 25 percent would come from commercial vehicles. It is estimated that nearly 90 percent of the toll revenue collected at the proposed POE would come from northbound vehicles; the remaining 10 percent would be collected from southbound vehicles.

The tolls generated from the project will serve multiple purposes:

  1. directly fund capital costs;
  2. serve as the basis for bond financing;
  3. attract and leverage unique initial funding;
  4. support a pilot financing approach that is galvanizing interest and support from federal and state partners on both sides of the border; and
  5. cost effectively address regional goals of improved mobility, safety, a healthy environment, and economic prosperity.

Innovative hallmarks of the project include:

  • Building a “Smart Border” pilot by implementing Intelligent Transportation System (ITS) Technologies
  • Leveraging freight mobility resources from the States’ Trade Corridor Improvement Fund (TCIF)
  • Positioning the project to apply for federal credit assistance through the Transportation Infrastructure Finance and Innovation Act (TIFIA)

Recent project milestones include:

  • In August 2016, SANDAG and Caltrans secured a $49 million FASTLANE grant to cover construction costs on Segment 2 of SR 11 which will extend the highway another mile to the border. This funding also will cover the construction costs for the two southbound connectors linking SR-905, SR-125, and SR-11. Construction of Segment 2 is expected to begin in fall 2018.
  • Segment 1 of SR 11, from SR 905 east to Enrico Fermi Drive, opened in March 2016.
  • Construction of the northbound connectors began in October 2015 and opened to traffic in November 2016. The southbound connectors are currently being designed and are expected to begin construction in late 2018.
  • Right-of-way is being acquired for the project on both the Mexican and the U.S. sides of the Border.