California has a new pilot program for PPPs. California was one of the first states to authorize PPPs in the late 1980s but California allowed its legislation to lapse in 2003. Before the legislation lapsed, California developed two projects as PPPs. First, California completed the privately financed 91 Express Lanes project as a PPP. The project involved building, financing and operating 10 miles of express lanes in the median of SR-91 in southern California. The project was the first fully automated toll facility in the world and the first application of value pricing in America. The concession for the 91 Express Lanes was subsequently purchased from the concessionaire by the Orange County Transportation Authority because a non-compete provision prevented the construction of competing capacity, but under public ownership the project is still a success with toll revenue exceeding expectations. Second, California granted a concession for a private concessionaire to design, build, finance, operate and maintain the 10-mile South Bay Expressway toll road in San Diego as a PPP. The South Bay Expressway opened to traffic in November 2007.
California passed new enabling legislation in May 2006.67 As with its earlier law, the new California law did not provide broad authorization for PPPs, but rather limited authority for certain pilot projects. The new law permits the development of four projects as PPPs, two in southern California and two in northern California. Each of the authorized PPPs must be for a project that improves the movement of goods in California. Commercial vehicles may be tolled, but non-commercial vehicles may not be tolled. Toll rates must be fixed in the concession agreement and increases must be approved by Caltrans following a public hearing. Concession agreements must be submitted to the State legislature for approval and at least one public hearing must be conducted before the legislature provides approval.
California's new legislation also provides specific rules with respect to competing facilities. Non-compete provisions, which prevent the construction of any transportation alternatives that would compete with the toll facility, are prohibited. A concession agreement may entitle a concessionaire to compensation for lost toll revenue if a competing facility is constructed, but this provision would not apply if a competing facility is part of a regional transportation plan, is a safety project, is an improvement providing only incidental increases in capacity, is a HOV lane project, or is a project located outside the boundaries of the PPP project, as defined in the concession agreement.
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67 California Streets and Highways Code, Section 143.