Report on the Value Pricing Pilot Program Through April 2016

Executive Summary

Congestion pricing works by shifting some rush hour highway travel to other transportation modes or to off-peak periods. By removing a fraction (even as small as 5 percent) of the vehicles from a congested roadway, pricing enables the system to flow much more efficiently, allowing more vehicles to move through the same physical space.¹

Although drivers unfamiliar with the concept initially have questions and concerns, drivers who are more experienced with congestion pricing usually support it because it offers them a reliable trip time.  Transit and ridesharing advocates also appreciate the ability of congestion pricing projects to generate revenue and the financial incentives that make alternatives to driving more attractive.

The U.S. Congress established the Congestion Pricing Pilot Program in 1991.  It was subsequently renamed the Value Pricing Pilot Program (VPPP) under Section 1216 (a) of the Transportation Equity Act for the 21st Century in 1998, and continued through the Safe, Accountable, Flexible, Efficient Transportation Equity Act:  A Legacy for Users. While the program was continued there were no additional funds appropriated under the FAST Act for discretionary grants.   The purpose of the VPPP is to demonstrate whether, and to what extent, roadway congestion may be reduced through the application of demand-based pricing strategies.  The program seeks to measure the magnitude of the impact of such strategies on driver behavior, traffic volumes, transit ridership, air quality and availability of funds for transportation programs.  After 2012, no additional funds were authorized for the discretionary grant component of the VPPP; however, the ability of the Federal Highway Administration (FHWA) to enter into cooperative agreements for projects that require tolling authority for their implementation under this program has continued.

While the program no longer actively solicits projects, FHWA was able to award funding to five new projects in 2015 using remaining Fiscal Year 2012 VPPP funds and re-purposed VPPP funds from completed projects.  The FHWA staff continues to provide significant technical assistance to all project partners for project development, execution and evaluation, including implementation and pre-implementation activities.  The FHWA staff also oversees the development and distribution of quarterly reports detailing how the objectives of the VPPP are being accomplished.

Key Findings

Through a comprehensive Congestion Pricing Program that includes the VPPP, as well as follow-on initiatives such as the Congestion Reduction Demonstrations (CRD), Urban Partnership Agreements (UPA), and Express Lanes Demonstration programs, FHWA has now funded more than 135 congestion pricing projects and studies across 19 States and the District of Columbia.  The projects supported by the VPPP demonstrate the technical feasibility of congestion pricing and, where implemented, have influenced user decisions to change their travel behavior.  Projects and studies conducted as part of the VPPP have provided many valuable lessons.  Furthermore, the UPA/CRD Programs included a very robust evaluation component, which allowed the U.S. Department of Transportation to assess impacts at a high level of detail.  Many of the UPA/CRD findings were consistent with observed conditions and anecdotal evidence from many projects funded over the years by the Program.  Several findings demonstrate the significant progress made in the past few years toward successful deployment of comprehensive congestion pricing strategies and programs, especially in congested urban areas:

• The VPPP helped to spark the rapid increase in priced managed lane deployments and the continued acceptance and deployment of this strategy in major metropolitan areas across the United States.  In the late 1990s, there were only four priced managed lane facilities operating in the United States, and few transportation professionals had firsthand experience with implementing or operating these facilities.  As of 2016, there are 33 operating managed lane facilities nationwide, more than double the number (14) that were in existence when the 2012 FHWA Priced Managed Lanes Guide was written.²  There are currently an additional eight managed lane projects in construction, and approximately 14 others in planning.  For all VPPP High Occupancy Toll lane projects, there has been a marked increase in new accounts/transponders, tolled trips, and gross revenues, indicative of a growing acceptance of pricing.
• Pricing also has a positive effect on transit ridership.  Express buses using tolled lanes had faster speeds and shorter travel times.  Bus ridership on priced managed lane corridors (e.g., the UPA/CRD) increased by a greater percentage than ridership on other parts of the respective local systems.  On the SR 520 Bridge in Washington State, pricing succeeded in reducing traffic volumes by 34 percent in the first year, while transit ridership grew by 38 percent.
• The VPPP has created interest and enabled deployment opportunities within congested urban areas for other demand-based pricing strategies to further improve use of transportation alternatives on a broader scale.  The deployment of non-toll congestion pricing strategies such as parking pricing, pay as you drive insurance, car sharing, bike sharing, and dynamic ridesharing have been growing and have experienced strong successes as well.  For example, in King County, Washington, the Right Size Parking (RSP) project has attracted national attention.  Several regions and cities around the country are currently working to replicate the RSP study and web calculator concept for their own planning purposes, including the San Francisco Bay Area, the District of Columbia, Boston, and Chicago.  Overall, this study, through outreach and creation of a web-based toolkit, has significantly advanced the industry’s understanding of residential parking dynamics.
• Parking pricing efforts have led to increased usage of previously underutilized parking spaces.  As part of the SFpark pilot project in San Francisco, California, pricing was effective in gradually reducing the prevalence of blocks with high occupancy and increasing occupancies on underutilized blocks.  The LA Express Park project staff also observed a similar trend in occupancy due to price changes.
• Equity impacts have proven to be minimal, yet remain a concern to the public.  The UPA/CRD projects did not generally have any negative equity impact and succeeded in expanding travel options through transit improvements and by expanding the range of parking price and convenience options available to drivers.  Nevertheless, surveys at several sites indicate a persistent perception of unfairness in the pricing efforts.
• The VPPP has been a tremendous asset to partners in the transportation industry over the past two decades.  Project partners often express their opinion that priced managed lanes would not be nearly as widespread without the program's influence.  The program has supported the visibility of these projects through its consistent involvement with industry forums such as the Transportation Research Board, the American Association of State Highway and Transportation Officials, the International Bridge, Tunnel and Turnpike Association, and FHWA-sponsored regional workshops.

Moving Forward

Congestion pricing remains an important congestion management strategy in the toolbox for FHWA.  The FHWA anticipates that, in the future, synergies among demand-based pricing approaches will enhance significantly the effectiveness of comprehensive and coordinated regional programs.  Second generation pricing approaches will combine regionwide pricing strategies, such as vehicle miles traveled fees, cordon pricing, and regional pricing along with non-toll strategies.  The FHWA will continue to use proven outreach strategies to educate and inform State and local agencies about demand-based pricing strategies, including tolling and non-tolling efforts, with the ultimate goals of 1) mainstreaming demand-based pricing into the mindset of transportation professionals as a viable option, and 2) expanding public acceptance of demand-based pricing.