AB657 - Otay Mesa East Toll Facility Act: public-private partnership agreements: toll revenues.

Amended IN Assembly September 08, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 657 Introduced by Assembly Member Alvarez February 14, 2025 An act to amend Section 90 Sections 31462, 31467, 31468, 31474, 31475, 31476, and 31483 of the Streets and Highways Code, relating to transportation. LEGISLATIVE COUNSEL'S DIGEST AB 657, as amended, Alvarez. Department of Transportation: state highways. Otay Mesa East Toll Facility Act: public-private partnership agreements: toll revenues. The Otay Mesa East Toll Facility Act authorizes the San Diego Association of Governments (SANDAG) to carry out a construction project for the State Highway Route 11 corridor, including, among other things, highway improvements and international border crossing facilities, to be operated as a toll facility. Existing law authorizes SANDAG to fix and revise from time to time and charge and collect tolls and other charges only for entrance to or the use of the corridor, as provided. Existing law authorizes SANDAG to use specified alternative project delivery methods under certain conditions. Existing law requires toll revenues to be used for specified costs, as provided. Existing law defines “project” for purposes of the act to include facilities, whether or not now in existence, acquired or constructed to facilitate the movement of goods and people along the corridor or at the Otay Mesa East Port of Entry. This bill would revise and recast the act by, among other things, (1) revising the definition of “project” for purposes of the act to include facilities, whether or not now in existence, acquired or constructed to facilitate the movement of goods and people adjacent to the Otay Mesa East Port of Entry or to facilitate the generation of revenue for, or related to, the Otay Mesa East Port of Entry, (2) authorizing public-private partnerships, as specified, as an alternative project delivery method, (3) authorizing SANDAG to also impose tolls and other charges for the use of a project or property covered by the act, and (4) adding payments to a private partner under a public-private partnership agreement to the categories of costs for which toll revenues are used under the act, as provided. The bill would also make conforming changes. Existing law establishes the Department of Transportation and the California Transportation Commission and provides that the department has full possession and control of all state highways and all property and rights in property acquired for state highway purposes and authorizes and directs the department to lay out and construct all state highways between the termini designated by law and on the locations as determined by the commission. This bill would make nonsubstantive changes to these provisions. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 31462 of the Streets and Highways Code is amended to read: 31462. For purposes of this chapter, the following definitions shall apply: (a) “Best value” means a value determined by evaluation of objective criteria that relate to price, features, functions, life-cycle costs, experience, and past performance. A best value determination may involve the selection of the lowest cost proposal meeting the interests of the local agency and meeting the objectives of the project, selection of the best proposal for a stipulated sum established by the procuring agency, or a tradeoff between price and other specified factors. (b) “Board” means the board of directors of SANDAG. (c) “Bonds” means any bonds, notes, variable rate and variable maturity securities, and any other evidence of indebtedness issued pursuant to this chapter. (d) “Construction Manager/General Contractor method” or “CMGC” means a project delivery method using a best value procurement process in which a construction manager is procured to provide preconstruction services during the design phase of the project and construction services during the construction phase of the project. The execution of the design and the construction of the project may be in sequential phases or concurrent phases. (e) “Construction manager” means a partnership, corporation, or other legal entity that is able to provide appropriately licensed contracting and engineering services as needed pursuant to a CMGC contract. (f) “Corridor” means State Route 11 in the County of San Diego, as defined in Section 311. (g) “Costs” includes the cost of construction or acquisition; the cost of the acquisition of all land, rights-of-way, property, rights, easements, and interests acquired by SANDAG for the construction; the cost of demolishing or removing any buildings or structures on land acquired, including the cost of acquiring any lands to which buildings or structures may be moved; the cost of all machinery and equipment, financing charges, interest before and during construction and, if considered advisable by SANDAG, costs of accounting, consulting, printing, advertising, and travel, cost of traffic estimates and of engineering and legal services, plans, specifications, surveys, estimates of cost and of revenues, and other expenses necessary or incident to determining the feasibility or practicability of constructing, repairing, or improving a project; administrative expenses; and such other expenses as may be necessary or incident to the construction, repair, or improvement of a project, the financing of the project, the placing and maintaining of a project in operation, and any payments to an entity to cover all or a portion of the costs described in this chapter. Any money paid or advanced to SANDAG with its approval for traffic surveys, borings, preparation of plans and specifications, and other engineering services in connection with the construction, repair, or improvement of a project shall be regarded as a part of the cost of a project and may be reimbursed out of the proceeds of the revenue bonds issued for a project as authorized in this chapter. Cost includes the cost to operate, maintain, repair, or improve a project. (h) “Department” means the Department of Transportation. (i) “Design-build” means a procurement process in which both the design and construction of a project are procured in a single phase. (j) “Design sequencing” means a procurement process that enables the sequencing of design activities to permit each construction phase to commence when design for that phase is complete, instead of requiring the design for the entire project to be completed before commencing construction. (k) “Entity” means the United States or any agency or department of the United States, any State of California agency, department or political subdivision of the state, or any public or private corporation, company, partnership, joint venture, foundation, trust, estate, individual, or other legal business organization. (l) “Federal agency” means any agency or department of the United States. (m) “Project” or “projects” means any property and related facilities, whether or not now in existence, acquired or constructed to facilitate the movement of goods and people along the corridor corridor or at at, or adjacent to, the Otay Mesa East Port of Entry, or to facilitate the generation of revenue for, or related to, the Otay Mesa East Port of Entry, including property suitable for any of the following purposes: (1) International ports of entry. (2) International border crossing facilities. (3) Transportation facilities, including highway and roadway, public transit, and nonmotorized facilities, and other projects supporting any transportation facility. (4) A bridge or tunnel, overpasses, underpasses, entrance plazas, toll houses, administration, storage storage, and other buildings and facilities, and all equipment therefor, and may include terminal facilities, customs and immigration facilities, and such approaches and approach highways as may be determined by SANDAG to be necessary to facilitate the flow of traffic or to connect a project with the existing highway systems, together with all property, rights, easements, and interests acquired by SANDAG for the construction or operation of a project, including, but not limited to, energy and communication lines. (n) “Property” means land, improvements to land, buildings, improvements to buildings, machinery and equipment of any kind, operating capital, and any other real or personal property necessary for a project. (o) “SANDAG” means the San Diego Association of Governments, as referenced in the San Diego Regional Transportation Consolidation Act, Chapter 3 (commencing with Section 132350) of Division 12.7 of the Public Utilities Code. (p) “Toll” means a toll, fee, or other charge for entrance to or use of the corridor corridor, a project, or property, and such toll, fee, or other charge as may be governed by an agreement under Section 31483. (q) “Trustee” means any financial institution or trust company actually doing business in this state. SEC. 2. Section 31467 of the Streets and Highways Code is amended to read: 31467. (a) Highway projects constructed pursuant to the act shall, at all times following construction, be owned by the department. International port of entry facilities constructed pursuant to the act, or the land on which those facilities will be constructed, shall, at SANDAG’s option, be owned either by the federal government or by SANDAG. If SANDAG chooses to own the land or facilities, it shall lease them to a federal agency. Unless prohibited by law, all other property and facilities constructed pursuant to this chapter shall be owned by SANDAG, unless transferred to a state or federal agency upon agreement between SANDAG and the relevant agency. Any department property conveyed to either SANDAG or the federal government pursuant to this section shall be conveyed free of charge and only upon a finding by the California Transportation Commission that the conveyance is in the state’s interest. (b) The plans and specifications for a transportation project developed, maintained, repaired, rehabilitated, reconstructed, or operated pursuant to the act shall comply with the relevant standards of the department for state transportation projects. Ports of entry projects shall meet the relevant federal agency’s published design standards and legal requirements. SANDAG may approve the location, design, and the materials of construction for a project constructed pursuant to this chapter after consultation with the department or the relevant federal agency, as applicable. (c) SANDAG shall carry out its highway projects in cooperation with the department and shall consult the department in the operation of a project and on matters related to highway design and construction. (d) For the purpose of facilitating a project, the agreements between SANDAG and other entities may include provisions for the lease of rights-of-way in, and airspace over or under, highways, public streets, rail, or related facilities for the granting of necessary easements, for the lease of other property, and for the issuance of permits or other authorizations to enable the construction or operation of a project. (e) Agreements between SANDAG, appropriate local, state, or federal agencies, or any other entity may be executed to identify the respective obligations and liabilities of one or more of those entities and assign them responsibilities relating to a project. The agreements entered into pursuant to this section shall be consistent with agreements between the department and the United States Department of Transportation relating to a project and may include procedures for enforcement by the Department of the California Highway Patrol. (f) Any project utilizing the department’s services shall be included in the department’s capital outlay support program for workload purposes. SEC. 3. Section 31468 of the Streets and Highways Code is amended to read: 31468. (a) The Legislature has recognized the merits of alternative project delivery methods in the past by authorizing their use for projects undertaken by school districts, the University of California, specified local government projects, state office buildings, and public transit projects. (b) It is the intent of the Legislature to provide optional, alternative procedures for delivering the project and its components pursuant to this act. SANDAG may enter into an alternative project delivery method contract authorized in this section on a project or any project component, after comparison of the traditional design, bid, and build process of construction with the proposed alternative project delivery method in a public meeting, if the governing board makes written findings that use of an alternative project delivery method on the specific project or project component under consideration will accomplish at least one of the following objectives: reduce comparable project costs, improve predictability of project costs, expedite a project’s completion, or provide features not achievable through the traditional design-bid-build method. (c) SANDAG may utilize the following alternative project delivery methods if the conditions in this section are met: (1) Design-build. (2) Design sequencing. (3) Construction Manager/General Contractor (CMGC). (4) Public-private partnerships, including, but not limited to, fee for service arrangements, concessions, or other arrangements that incorporate one or more of the design, development, delivery, construction, financing, operation, or maintenance of a project, and which may include the private partner’s payment of a concession or similar fee. (d) (1) If a contract for CMGC services is entered into pursuant to this chapter and includes preconstruction services by the construction manager, SANDAG shall enter into a written contract with the construction manager for the preconstruction services, under which SANDAG shall pay the construction manager a fee for preconstruction services in an amount agreed upon by SANDAG and the construction manager. The preconstruction services contract may include fees for services to be performed during the contract period, provided that SANDAG shall not request or obtain a fixed price or a guaranteed maximum price for the construction contract from the construction manager or enter into a construction contract with the construction manager until after SANDAG has entered into a services contract. A preconstruction services contract shall provide for the subsequent negotiation for construction of all or any discrete phase or phases of the project and shall provide for SANDAG to own the design plans and other preconstruction services work products. (2) A CMGC contract for construction services may be awarded after the plans have been sufficiently developed and either a fixed price or a guaranteed maximum price has been successfully negotiated. In the event [Text truncated for display. Full text available on Congress.gov.]