Otay Mesa East Toll Facility Act: public-private partnership agreements: toll revenues.

Assembly Member Alvarez weaves policy substance for the Otay Mesa East corridor into a broader financing and delivery framework, authorizing public-private partnerships and a wider set of tolling and project-delivery options for the State Route 11 corridor and the Otay Mesa East Port of Entry. The measure expands the definition of “project” to include adjacent facilities and revenue-related assets, authorizes tolls for project-related property, and adds payments to private partners under public-private partnerships to the categories of toll-revenue expenditures, while signaling cross-border tolling arrangements with Mexico subject to federal approvals.

The proposal broadens the scope of assets and delivery methods. The project definition now encompasses facilities adjacent to the Otay Mesa East Port of Entry or those that facilitate revenue generation for the port, and may include international ports of entry, border-crossing facilities, transportation facilities (including transit and nonmotorized options), bridges and tunnels, toll houses, and related equipment, with potential inclusion of energy and communications lines as determined by SANDAG. Ownership would keep highways with the Department, but port facilities and their land could be owned by SANDAG or the federal government (with lease arrangements if SANDAG owns). All other project-related property would normally remain with SANDAG unless transferred to another agency by agreement. In addition to traditional methods, the act explicitly authorizes alternative project delivery methods, including design-build, design sequencing, CMGC, and public-private partnerships, the latter potentially involving private concessions or fee-for-service arrangements and, in some cases, the private partner’s receipt of a concession. Provisions detail preconstruction arrangements, ownership of preconstruction work products by SANDAG, and the conditions under which a CMGC contract may proceed, including how fixed-price or guaranteed maximum price terms are negotiated and how work is allocated between the construction manager and subcontractors.

Tolling and revenue mechanics are recast to accommodate the broader framework. SANDAG would have authority to impose tolls for entrance to or use of the corridor or project, with the possibility of toll arrangements governed by cross-border agreements. The structure contemplates periodic reviews of toll adequacy—within two years after opening the initial toll-supported project and biennially thereafter—and allows discounts and premiums to influence usage, including incentives for high-occupancy vehicles, electronic toll collection, and off-peak travel, while permitting adjustments tied to economic indices. Tolls would be set in alignment with policies established in cross-border agreements, and toll revenues would be allocated to specific cost categories, including debt service, operating and administration costs, payments to federal, state, or local agencies, capital improvements, projects expanding transportation options, payments to PPPs, and other related obligations. Administrative costs are limited to 3 percent of toll revenues, and expenditures must be supported by a board-approved annual expenditure plan with public notice and testimony requirements. Toll collection can terminate when bonds are repaid, PPP obligations end, and other project costs are fully satisfied, unless a two-thirds board vote extends collection.

Cross-border coordination and governance are central to the bill’s structure. The cross-border tolling framework would permit SANDAG to coordinate tolling with Mexico, including joint toll collection and revenue-sharing arrangements, subject to federal law and approvals. Agreements may address toll collection on one side of the border, equitable allocation of revenues, financing of operating and capital costs, information sharing, investment of funds, toll-rate setting processes, termination or unwinding of arrangements, liabilities and indemnity, dispute resolution, and auditing mechanisms. Revenues transferred to a party other than SANDAG under cross-border agreements would not be subject to the chapter’s restrictions upon transfer, so long as the arrangement complies with the cross-border agreement and applicable federal requirements. The measure also preserves a framework of public involvement, annual post-audits by a certified public accountant, and ongoing oversight through public notices and votes in key decisions. Federal compliance remains a prerequisite for cross-border implementation.

Together, the provisions place the Otay Mesa East corridor within a more flexible, multi-party framework that blends traditional public ownership with private financing and operation, expands the asset base that can be funded through tolls, and opens a cross-border dimension with Mexico. The approach emphasizes public transparency and accountability through public notices, hearings, annual expenditure-plan updates, and routine audits, while expanding delivery options and financing mechanisms that hinge on debt service, PPP commitments, and cross-border revenue arrangements, all coordinated with federal standards and approvals.