SR-91 Express Lanes, Orange County, CA

Project Overview

The 91 Express Lanes are a 10-mile, four-lane express toll-lane facility in the median of SR-91 in Orange County, California, extending eastward from the SR-55 interchange near Anaheim to the Riverside County line. The facility consists of two lanes in each direction, which are separated from five general purpose lanes in each direction by tubular markers. There are single points of access and egress on each end, with no intermediate entrances or exits.

The 91 Express Lanes feature a fixed-schedule variable toll structure, with rates varying between $1.45 and $9.85 based direction of travel, day of the week, and hour of the day. The toll rate schedule is adjusted quarterly. Three person car pools receive a 50 percent discount during weekday afternoon peak periods, and may use the lanes for free at other times.

The express lanes were originally developed under a long term public-private partnership (P3) concession by a private consortium, the California Private Transportation Company (CPTC), opening in 1995. In 2003, the Orange County Transportation Authority (OCTA) purchased the operating franchise for the 91 Express Lanes from CPTC, and the lanes were returned to public control. OCTA contracts with Cofiroute USA (one of the original partners in the CPTC) to operate the express lanes.

Project History

With traffic and congestion levels on the SR-91 freeway increasing sharply in the 1980s, the California Department of Transportation (Caltrans) proposed building a four-lane High Occupancy Vehicle (HOV) facility in the median of the highway in order to increase capacity in the corridor. However, after gaining the necessary environmental clearances, the project stalled due to controversy over HOV lanes, and its funding was redirected to other projects.

In 1989, the California legislature enacted AB 680, which authorized Caltrans to enter into agreements with private entities for the construction of up to four toll projects around the state that would supplement existing state-owned transportation facilities. The legislation authorized Caltrans to grant easements, issue permits, and lease those facilities to the private entities for up to 35 years. AB 680 also allowed private concessionaires to identify specific projects where a private facility would perform favorably.

The CPTC—then a subsidiary of architectural firm CRSS—proposed to Caltrans to construct the planned SR-91 HOV lanes as express toll lanes under the AB 680 legislation. CPTC and Caltrans were able to successfully negotiate a build-transfer-operate franchise agreement for the project, which was awarded in December 1990. Under the agreement, while CPTC maintained control over the toll rates, CPTC’s rate of return would be capped, with any excess profits to be split equally between Riverside and Orange counties. The contract also included a non-compete clause that prohibited capacity improvements to the parallel general purpose lanes on SR-91.

In 1992, CRSS’s majority interest in the CPTC was purchased by Peter Kiewit Sons, Inc., and Cofiroute SA, a French toll road operator; Granite Construction also joined CPTC as a limited equity partner and the construction contractor for the project. The introduction of tolling to the project also triggered additional environmental reviews, which were completed in 1991, and sparked controversy, including two lawsuits that were successfully resolved. Construction of the new lanes began in mid-1993 after financing for the project was arranged, and the new facility opened to traffic in December 1995. The 91 Express Lanes became one of the world’s first fully-automated toll facilities, with tolls collected only electronically, and pioneered the concepts of variable pricing and premium service lanes in the U.S. It was also just the third toll facility to be implemented on a P3 basis in the Interstate era.

While the lanes were popular, continued traffic growth in the corridor lead to worsening congestion levels on the parallel general purpose lanes. Growing traffic on the express lanes also led CPTC to begin charging HOV-3+ vehicles to use the facility at a discounted rate. At the same time, the non-compete clause in CPTC’s contract prevented Caltrans from making any improvements in the corridor.

In April 2002, the OCTA reached an agreement to purchase the operating franchise for the express lanes from CPTC for $207.5 million in order to eliminate the non-compete restrictions. State legislation (AB 1010) was enacted that fall to allow the purchase, which closed in January 2003. Following the sale, OCTA eliminated tolls for HOV-3+ vehicles during most periods, and Caltrans added a fifth general purpose lane in each direction. In 2014, the Riverside County Transportation Commission initiated a $1.3 billion project to extend the 91 Express Lanes by eight miles to I-15.

Project Financing and Delivery

CPTC’s initial financing for the $126 million project was provided by a group of commercial banks and institutional lenders. A group of three banks provided a $65 million variable-rate bank loan with a 14.5 year term. Peter Kiewit Sons’, the lead investor in CPTC, agreed to purchase the $35 million institutional tranche of debt after the initial investor pulled out; this debt was subsequently sold to CIGNA Investments in 1994, at which time a fourth bank also joined in the financing of the project. OCTA’s reimbursable design and environmental permitting costs for the project were converted to a $7 million subordinated loan. CPTC also provided $19 million in private equity for the project, and made commitments of contingent equity in the event of any revenue shortfalls.

In 2002, CPTC refinanced the remaining debt on the project with $135 million in taxable toll revenue bonds. In January 2003, OCTA acquired the project at a cost of $207.5 million, including $72.5 million in cash from OCTA’s internal reserves and the assumption of the recently issued toll revenue bonds for the project. Later that year, OCTA refinanced its entire interest in the 91 Express Lanes by issuing $200 million in tax-exempt toll revenue bonds.

Updated: Tuesday, September 9, 2014
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