San Diego’s regional planning agency is largely walking away — for now — from its controversial management of local toll roads, after years of billing-software problems that led to scathing audits and millions in legal costs. The San Diego Association of Governments is set to ink a contract wi th two Orange County transit agencies that will hand them control of the billing and financial systems for the tolled section of state Route 125 in the South Bay and toll lanes on Interstate 15 in North County. The move could save the agency more than $2 million a year, its staff said. On Friday, SANDAG’s board unanimously backed the new contract with the Transportation Corridor Agencies, or TCA, which consists of two different agencies that oversee four Orange County toll roads, as well as handle the billing system for tolled lanes on Interstate 10 in San Bernardino County. SANDAG will continue to staff toll booths and provide customer service. Problems with the tolling software on state Route 125 have dogged SANDAG for years, and exposed deeper problems in the agency’s contracting practices. In recent months, the agency was ordered by a judge to pay millions of dollars to a former finance official who said she was fired after alerting top executives to toll system problems. In an interview, SANDAG CEO Mario Orso — who was hired in 2024, after the toll-system problems burst into public view and top officials resigned — acknowledged management of toll roads has not been the agency’s strength. “It was a time to really look forward and really embrace best practices,” Orso said. “It’s okay if we don’t develop all the things here in SANDAG,” he added. SANDAG officials said the new partnership with TCA was a financial win for the agency, and that outsourcing toll road operations to Orange County would save the agency $2.4 million a year. Those savings would come from SANDAG abandoning an effort to create a new billing system for toll roads from scratch. Under its current capital spending package, SANDAG expected to pay nearly $34 million to build out a new billing system. By contracting with TCA, it will pay about $16 million in upfront implementation costs. The agency had already spent $12.5 million on planning for its own new billing system before opting to hire TCA, leaving a difference of $5 million remaining in its capital budget. Had SANDAG kept its billing system in-house, its annual operating costs would have ended up being $51.4 million a year. Its operating costs to use TCA will be $52.9 million — but capital savings will offset that, officials said. Over the next five years, SANDAG expects to save $2.4 million annually by partnering with TCA instead of building out and operating its own billing system. SANDAG has already spent millions on faulty contracts for its existing toll-road software. It kept paying software contractor ETAN millions after top officials learned of shortcomings, audits found. And after learning of ETAN’s problems, SANDAG entered a $28 million contract with Deloitte without sufficiently vetting whether it was equipped to properly monitor toll collections, a 2024 audit found. SANDAG’s contract with Deloitte ended late last year. For now, the agency is still using ETAN’s billing system, paying the company $4 million in the last two years. Orso said the billing software has improved, though still falls short of best practices, and that ETAN will be paid $280,000 a month until TCA’s new billing system goes live in the spring of 2027. Meanwhile, the agency plans to expand its use of toll lanes. Its current regional plan — effectively a blueprint for the development of the region’s transportation infrastructure — calls for billions of dollars in managed lanes to be built by 2035. Managed lanes accommodate buses and carpooling, and let individual drivers use them for a fee. At Friday’s meeting, Orso told SANDAG board directors they can expect information in the coming months about plans for a regional tolling system in anticipation of those ambitious plans. “It may look like TCA. It may also be that there’s another opportunity for the board to consider,” Orso said. “We’re leaving the door open.” ...read more read less