State Route 125 is one of four different public-private partnerships authorized by the California legislature in 1991. SR 125 was designed as a toll road connecting the only commercial port of entry in San Diego to the regional freeway network, expanding international and regional trade in the area.
A 9.25-mile section of SR 125 is being constructed as a privately financed and operated toll road, featuring electronic toll collection. In accordance with legislation passed in 1989, San Diego Expressway LP holds a franchise with California and will finance and build the highway, then transfer ownership to the State. The partnership will then lease it back from the state, operating and maintaining the highway for 35 years. The 35-year franchise will allow the developer to set market rate tolls, with a maximum of 18.5 percent return on total investment. Control of the highway will then revert to the State. Other portions of the highway, providing connections to the toll road, are being through public funds.
The developers expect the project to be completed in October 2006, years ahead of when it would have been completed with traditional funding. The project is saving public monies with the infusion of investment by private entities acting in economic self-interest, such as local real estate developers who have donated $48 million of land for right-of-way, and the investors contributing more than $150 million in private at-risk equity. Private equity and financing have accounted for 78 percent of the project's costs.[405]