San Diego agency to buy South Bay Expressway for $345m

The Macquarie-backed toll road, which opened in 2007 with a 35-year concession, filed for bankruptcy last year. The San Diego Association of Governments has voted to acquire the lease, but a final decision may take a few more months.

A San Diego regional agency has agreed to acquire the lease on the South Bay Expressway, the Macquarie backed-toll road which filed for bankruptcy last year, for $345 million.

The board of the San Diego Association of Governments (SANDAG) has approved the acquisition of the South Bay Expressway concession, but the acquisition still hinges on input at an August 26 public meeting, according to a SANDAG spokesperson.  A final decision is not expected for a few months, the spokesperson said.

SANDAG is comprised of 18 city governments and the San Diego county government, according to the association’s website. SANDAG focuses on public planning, transportation and research.

The 10-mile South Bay Expressway toll road, which is located near the US-Mexico border in southern California, opened in 2007. The former Macquarie Infrastructure Group (MIG), which has since split  into two separate Sydney-listed companies called Macquarie Atlas Roads and Intoll, originally owned a 100 percent equity stake in the developer of the road.

MIG closed financing for the $658 million project in 2003, including a $140 million loan from the US Transportation Infrastructure Finance and Innovation Act (TIFIA) lending programme, the first such loan given to a privately backed toll road. The project agreement included a 35-year toll concession, according to the TIFIA project profile.

But South Bay filed for bankruptcy in March 2010, “due to market conditions that eviscerated growth and traffic projections” as well as “costs associated with extensive, ongoing litigation” with contractors, according to filing documents.

A spokesperson for SANDAG said the association’s board has considered reducing tolls on the roads, depending on the financing agreement.