Report on the Value Pricing Pilot Program Through April 2012

Executive Summary

The U.S. Congress established the Congestion Pricing Pilot Program in Section 1210(b) of the Intermodal Surface Transportation Efficiency Act of 1991. It was subsequently renamed the Value Pricing Pilot Program (VPPP) under Section 1216 (a) of the Transportation Equity Act for the 21st Century (TEA-21) in 1998, and continued through the Section 1604(a) 2005 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). This is the only program that provides direct funding to support studies and implementation aspects of a tolling or pricing project. It has been a very popular program with demand for funding far exceeding availability.

The VPPP was intended to determine how and to what degree roadway congestion can be reduced or eliminated through the use of congestion pricing strategies as well as to ascertain the level of impact these strategies have on driver behavior, traffic volumes, transit ridership, air quality, and availability of funds for transportation programs. The program provides tolling authority and discretionary grants to State or local governments to facilitate the demonstration of congestion pricing applications and reports on their effects.

Successfully Supports Department's Strategic Goals

Pricing is an important strategy in the DOT tool box that supports livability and sustainability goals because it can address transportation demand, support alternate modes, and raise revenues. It is clear that there are strong linkages in pricing projects to the livability and sustainability goals of the Administration. Pricing provides reliable and affordable transportation choices and supports alternate modes on travel. Results from pricing projects currently operating demonstrates that pricing supports livable communities by increasing transportation choices and access to transportation services. Most experience with priced lanes in the U.S. has been with High Occupancy Vehicle (HOV) facilities being converted to HOT lanes. Conversions allow some vehicles to shift from congested lanes, using the toll price to limit the degree of shifting and preserving the incentives for carpool and transit use.

Pricing supports USDOT's strategic goal of improving highway system performance. Pricing provides premium service options to choice users—for a price. It provides safe, reliable, effective, and sustainable mobility for all users. Most experience with priced lanes in the U.S. has been with High Occupancy Vehicle (HOV) facilities being converted to HOT lanes. The Miami 95 Express Lanes provide congestion free, high speed travel at 55-63 mph to ridesharing and paying customers during peak periods even while volume grows. The safety of all road users is an important strategic goal. A survey of Miami 95 Express users found that 60 percent of motorists surveyed felt that 95 Express was safe to very safe. Over 23 percent of those surveyed use the express lanes to drive to and from work because they feel safer when driving in them.

Thus far, implemented projects have been valuable in demonstrating congestion pricing to the public, and meeting strategic goals by providing reliable travel times and enhancing public transit. Pricing serves a very important enabling role because improvements to the network make other modes more reliable, safer and attractive to users. For example, on the I-95 Express Lanes in Miami where the HOV requirement was raised from HOV 2+ to HOV 3+ and carpools must register, there was a 30 percent increase in transit ridership as a result of new bus service implemented to complement the new I-95 Express lanes.

Value Pricing projects continue to demonstrate the technical feasibility of pricing and have changed travel behavior. Priced lanes have also proven that many travelers are happy to have the option of paying for a guaranteed reliable trip. Furthermore, the VPPP's support of innovative congestion reduction strategies through the deployment of priced facilities has created more efficient use of the transportation network which offers citizens the opportunity to reach services and jobs.

Key Findings

The VPPP projects and studies have provided many valuable lessons, but three key findings demonstrate the significant progress made in the past few years toward successful deployment of comprehensive congestion pricing strategies and programs:

• Equity concerns are being addressed through better planning and public outreach.
• Congestion reduction is being achieved in highway corridors and parking facilities where congestion pricing projects have been implemented.
• Pilot projects and studies are leading many metropolitan areas to develop managed lane systems and to integrate congestion pricing strategies into their regional plans and implementation programs to support larger regional congestion reduction and mobility goals.

Equity Concerns Are Being Addressed

Every congestion pricing proposal has confronted the concern that affluent travelers will benefit at the expense of lower income groups. Many have been delayed or even cancelled due to these fears. With the opportunity to assess actual impacts, operational projects have found, with few exceptions, that equity issues are not deal breakers and can be effectively mitigated.

Post implementation surveys have shown dramatic increases in the acceptability of congestion pricing as compared with pre-implementation surveys. Figure 1⁽¹⁾ shows the opinions of various income groups on allowing single drivers to use carpool lanes, post-implementation. Although the level of support is highest among those in the high-income group (71 percent), there are also strong levels of support among low-income persons (64 percent) and mid-income persons (61 percent). Furthermore, those in the lower income group were the least likely to give a "bad idea" rating. In general, favorability has been fairly level across income levels. Focus groups and open-ended questions have revealed that lower and mid-level income travelers tend to have a high urgency of on-time arrival. Actual usage of many high occupancy toll (HOT) lane facilities—high occupancy vehicles (HOV) lanes that are free for HOVs but allow lower occupancy vehicles to gain access to the lanes by paying a toll—has been fairly balanced across income groups.

Figure 1. Opinion of Various Income Groups on Allowing Single Drivers to Use Carpool Lanes

Revenues from congestion pricing have been used to fund improvements that support lower income travelers and provide targeted subsidies and discounts. For example, under the Los Angeles Congestion Demonstration Reduction project to convert existing HOV lanes on the I-10 and I-110 freeways to express lanes (see page 31), Los Angeles Metro (the major operator of bus and rail service in Los Angeles County) will provide a discount of $25 off of the $75 fee required to set up a transponder and will waive the monthly $3 non-user fee for express lane users with household incomes of $35,000 per year or less. In addition, there will be a rider loyalty program for frequent carpool and vanpool express lanes users. Carpools can set their transponders to two or three occupants, and they are automatically enrolled in the loyalty program to earn gift card rewards. Three-person carpools are eligible for higher rewards.⁽²⁾

Congestion Reduction is Being Achieved

The majority of projects that have been implemented in the United States (U.S.) have involved "partial" pricing on one or more lanes of an existing free facility (partial pricing is the conversion of existing HOV lanes to HOT lanes; other open lanes are not affected), increases in peak period toll rates on existing toll facilities, and pricing not involving tolls, such as innovative parking management. Some implemented projects have documented increased travel speeds in adjacent general purpose lanes as a result of diverting traffic to the tolled express lanes and shifting to other modes. Travel time advantages for transit have been maintained for projects that involve converting HOV to HOT lanes through successful use of variable pricing and many projects, such as the I-95 Express in Miami, experienced a significant drop in transit travel times.

The first project implemented in the U.S. that involved introducing a new charge on an existing toll-free facility was on the State Route 520 (SR 520) floating bridge in Seattle, Washington (shown in Figure 2), which started tolling on December 29, 2011. In their application for funding⁽³⁾, the Washington State Department of Transportation (WSDOT) proposed to apply variably priced tolls on the existing bridge in order to manage demand. The revenue generated through tolling the existing bridge will allow WSDOT to replace the existing floating bridge, which is nearing the end of its useful life. Very early results show a significant reduction in traffic during highly congested periods in favor of alternate modes and off-peak periods, indicating diversion of traffic out of the "peak of the peak" travel periods.

Figure 2. SR 520 Bridge (Source: Washington State DOT)

For more information on congestion reduction results, see the Miami I-95 Express Lanes project on page 31.

The Use of Congestion Pricing is Spreading

In May 2006, the U.S. Department of Transportation (DOT) announced the National Strategy to Reduce Congestion on America's Transportation Network, also known as the "Congestion Initiative." The intent of the initiative was to demonstrate a variety of innovative but proven strategies that could provide relief to traffic gridlock if more widely practiced. The Urban Partnership Agreements and Congestion Reduction Demonstrations (UPA/CRD) programs that resulted from the Congestion Initiative were designed to encourage more aggressive broad-scale pricing approaches. As a part of each program, multiple sites around the U.S. were awarded funding for implementation of congestion reduction strategies, including multimodal strategies to relieve urban congestion, such as tolling/pricing, transit, technology, and telecommuting/travel demand management.

The proliferation of pilot projects and studies through VPPP and UPA/CRD programs are leading many metropolitan areas to develop managed lane systems and to integrate congestion pricing strategies into regional plans and implementation programs. The Seattle and Puget Sound regions of Washington illustrate the progression from early studies of various aspects of congestion pricing, to implementation of a pilot HOT lane conversion project, tolling on existing non-tolled Interstate, and adoption of regionwide pricing in the Long-Range Transportation Plan.

The WSDOT, in conjunction with regional transportation partners (Puget Sound Regional Council (PSRC), Sound Transit, King County, and the city of Seattle), methodically studied many key aspects of congestion pricing prior to implementation of the agency's first project on the SR 520 floating bridge tolling project, which was funded under the UPA/CRD program. The WSDOT subsequently applied many lessons learned to the opening of the SR 167 HOT lanes pilot project, a conversion from existing HOV lanes. Further, in December 2009, the regional planning agency, PSRC, adopted a strategic plan entitled Vision 2040⁽⁴⁾, which calls for regionwide pricing of all major roadways by 2030. This represents a very bold advancement of pricing in that on a vote of 98 percent in favor, this board consisting of elected officials was willing to take the political risk of supporting such a "radical" policy — the first of its kind in the country. Similarly, the SR 520 bridge project recently became the first in the U.S. to apply a variable toll to all lanes of an existing non-tolled Interstate facility. (For more information about comprehensive regionwide pricing, also see the summary of the I-15 in San Diego and the San Francisco Bay Area HOV Lane Network project on page 7.)

Moving Forward

Projects implemented under the VPPP have been valuable in demonstrating congestion pricing to the public and, in the case of HOT and Express Lanes, have provided valuable benefits, such as more reliable trips for travelers, and more travel options, such as reliable transit service. The technical feasibility of pricing has been proven, and the implementation of pricing projects has shown promising potential to change travel behavior. These projects have also proven that some travelers are happy to have the option of buying a reliable trip. Partial pricing projects have had measurable benefits, providing a choice for a reliable trip for those who need to be somewhere on time and reducing driver frustration. They have also made the concept of congestion pricing more familiar to the public, an important factor if congestion pricing is going to be implemented on a broader scope and scale. Partial pricing projects have gained acceptance from the public because they provide an additional choice, leaving in place prior options such as driving alone in congested traffic.

Due to their limited scale and scope, implemented projects have had positive but limited impacts on driver behavior, traffic volumes, congestion reduction, transit ridership, air quality, and funding for transportation. As the more comprehensive pricing programs evolve, a more sustainable transportation system will emerge. The metropolitan areas that implement extensive managed lane networks will be providing the option of reliable high-speed travel throughout the region. Unlike the traditional practice of adding new non-tolled lanes, active management of these systems will ensure travel time benefits for the foreseeable future. The travel time advantage for transit will help to provide efficient, sustainable transportation options for travelers across all income groups. Equally important is having a sustainable funding source through variable tolling for essential multimodal transportation improvements. Even if tolling will not pay in full for such projects, funding through tolling can accelerate projects in Regional Transportation Plans for delivery much earlier than the use of traditional public funding sources will allow.

FHWA Program Plan for the Next 3 to 5 Years

Over the next 3 to 5 years, Federal Highway Administration (FHWA) will support current initiatives as well as advance new thinking to evolve the state of the practice on congestion pricing along five tracks of activity:

1. Knowledge and Technology Transfer (KTT): Taking the lessons learned from the VPPP projects as well as evaluations of other congestion pricing projects (e.g., UPA/CRD Programs) and putting it into a format that other States and metropolitan areas can use (e.g., brochures, fact sheets, Webinars, and workshops) to advance their plans and programs;
2. Ongoing Project Monitoring: As required by the VPPP statute, FHWA will monitor implemented VPPP projects for 10 years to help ensure a successful and effective project as well as to learn the important results and impacts that are transferable to other States and metropolitan areas;
3. Conduct Issues-Oriented Research: As issues facing State and local agencies in the implementation of congestion pricing program emerge through project monitoring, national conference discussions, and stakeholder input, FHWA will sponsor research that can guide agencies on how best to address these challenges. Examples of issues-oriented topics that will be researched include equity, achieving public acceptance, technology applications, public transit, analysis methods, enforcement, safety, and design.
4. Facilitating a Dialogue: FHWA will continue to work with State, regional, and local agencies, as well as national thought leaders and stakeholder groups, to facilitate discussions on current and innovative concepts and approaches to congestion pricing at national conferences (e.g., the Transportation Research Board (TRB) or Intelligent Transportation System (ITS) America), localized workshops, and specialty peer exchanges.
5. Long Term Research: Working with stakeholder groups such as the TRB, the FHWA will continue to support and help sustain a long-term program of research on congestion pricing though national programs such as the National Cooperative Highway Research Program (NCHRP) and the Transit Cooperative Research Program.

Through a series of outreach efforts that cross all five of these tracks, FHWA is working to ensure that agencies have not only the funding and authority to implement pricing projects, but also the resources, tools, and guidance required to implement projects successfully.

Conclusion

The VPPP has been an effective Federal transportation program that has been critical for States and regions exploring and initiating pricing projects to manage congestion on State and regional facilities successfully. These projects have played a central role in introducing transportation professionals, political leaders, and citizens to pricing as a tool to address congestion problems and to manage our transportation system more effectively. The VPPP (along with the UPA and CRD projects) has led FHWA to frame a congestion pricing program involving technical assistance, outreach, and research over the next 3 to 5 years with respect to both tolling and nontolling programs and projects.

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