Construction is officially underway on the long-awaited US 101/SR 25 Interchange Upgrade Project near Gilroy, marking a milestone for South Bay commuters. Local officials and transportation leaders gathered on May 23 to celebrate the groundbreaking of the $136 million project, which promises to reduce traffic congestion, improve safety, and enhance regional mobility.

Led by the Santa Clara Valley Transportation Authority (VTA) in partnership with Caltrans and supported by elected officials from Santa Clara and San Benito counties, the initiative is a significant infrastructure upgrade intended to better connect residents of Morgan Hill, Gilroy, and surrounding communities.

“We are not just improving roads—we are creating lasting connections between the communities of Morgan Hill and Gilroy and our San Benito County neighbors—ensuring access to opportunity, future growth and the success of our region,” said VTA Board Chair and Campbell Mayor Sergio Lopez.

The construction zone sits just south of Gilroy where U.S. Route 101 meets State Route 25—an interchange that has long been a traffic bottleneck during peak commuting hours. According to VTA, the project will include a new direct connector ramp from southbound US 101 to southbound SR 25, upgraded on- and off-ramps, a new signalized intersection at SR 25 and Mesa Road/Southside Road, and improved access for bicyclists and pedestrians.

“This project is not just about infrastructure; it’s about enhancing the quality of life for everyone who travels through this vital corridor,” said Morgan Hill Mayor Mark Turner.

Officials emphasized that the improvements are not only about relieving traffic, but about building long-term infrastructure to support a rapidly growing region. The project is largely funded through a combination of local sales tax revenues, state transportation funds, and federal dollars—including $59 million in Senate Bill 1 (SB 1) funding for construction capital.

“This project represents a shared investment in the safety, operational improvements, mobility and future of this region. With $59 million in SB 1 funds for construction capital and support from VTA’s Measure B, we’re building more than infrastructure—we’re building long-term regional connections,” said Caltrans District 4 Director Dina El-Tawansy.

SB 1, enacted in 2017, generates approximately $5 billion annually for transportation improvements across California. The law has been instrumental in accelerating timelines for road projects statewide by ensuring stable funding for both local and state-level work.

As housing costs continue to push Bay Area residents farther from urban centers, both Santa Clara and San Benito counties have experienced sustained population growth, intensifying the need for dependable transportation routes between the two regions.

The VTA noted that the interchange is a vital connection point for commuters, freight haulers, and travelers accessing coastal destinations. Officials say the project aligns with broader regional goals for economic growth, safety, and environmental sustainability.

Construction is expected to continue through 2027. During this time, vehicle access to U.S. 101 from Castro Valley Road and Mesa Road will remain closed, and motorists are encouraged to seek alternate routes and stay updated on traffic conditions via the VTA website.

Originally reported by Gilroy Dispatch.