Toll road builder files for Chapter 11

| 3/24/2010

Toll increases were not enough to save the company that built the South Bay Expressway from bankruptcy.

The 10-mile toll road in San Diego was built in 2007 by California Transportation Ventures, a group that eventually became South Bay Expressway Ltd. The group is a subsidiary of toll operator Macquarie Infrastructure Group of Australia, the same Macquarie that holds stakes in the Indiana Toll Road, Chicago Skyway and Dulles Greenway.

South Bay Expressway Ltd. filed for Chapter 11 bankruptcy reorganization in recent days according to the San Diego Union Tribune.

Company officials had projected 60,000 vehicles per day using the roadway, but daily traffic in 2009 averaged just 22,600.

The roadway will remain open as the company restructures $510 million in debts.

Land Line Magazine reported throughout 2009 that the South Bay Expressway was falling behind in traffic counts and that the company would have lost money if it had not raised tolls.

“Apart from the toll increases, traffic volumes on South Bay Expressway continue to be impacted by the weak regional housing market and a slowdown in economic activity which has also led to a decline in Mexican border crossings,” company officials stated in a 2009 financial report.

Macquarie-operated roadways have relied on toll increases – most of which have been guaranteed in contracts with state entities – to stave off financial losses.

South Bay Expressway Ltd. is less than three years into its 35-year agreement to operate the tollway. Caltrans is scheduled to take over operations in 2042.

The $635 million expressway was one of the first toll roads in the U.S. to use federal tax dollars under the Transportation Infrastructure Finance and Innovation Act – or TIFIA – program developed by the Federal Highway Administration.

– By David Tanner, associate editor

See related articles:
Toll increases help Macquarie post gains, stave off losses
Traffic continues to decline on Macquarie roads
Toll increases mean profit for private investors