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Report on the Value Pricing Pilot Program Through April 2014 Table of Contents

Advancing Congestion Pricing Over the Next 3-5 Years

Emerging Trends and Areas for Further Research

State, regional and local governments are engaged in a host of pricing initiatives with potential to reduce congestion, reduce environmental problems and support the growing trend toward livable city and suburban centers. The initiatives span the full gamut of pricing categories and strategies including road, parking, mileage, rideshare and other pricing initiatives.

While the VPPP no longer solicits proposals for funding, the program still has an important role in encouraging pricing innovations. The FHWA continues to support states' and regions' pricing initiatives by offering guidance and expertise in choosing the most promising and appropriate of the emerging strategies.. For instance, where a pricing strategy has shown good success in limited settings but has yet to receive attention for possible replication elsewhere, FHWA can develop and promote Webinars, conference sessions, peer exchanges, guidance documents and other outreach actions to draw attention to the strategy.

The FHWA will continue to take into account the pertinent developments and trends in pricing strategies showing the most promise at the local, regional and State level. The six categories of pricing strategies below represent a summary of the most important recent trends and developments:

  • Managed lane networks
  • Pricing of existing facilities
  • Parking pricing
  • Priced vehicle sharing and dynamic ridesharing
  • Pay as you drive pricing
  • Integrating pricing into long range planning

Managed Lane Networks

State and regional governments have demonstrated in recent years numerous innovative pricing applications on highways and roadways in recent years. The types of strategies include pricing of carpool ramps; dynamic pricing of Express Lanes; managed lanes with moveable barriers and pricing based both on distance and congestion levels combined with enhanced transit; all electronic open road tolling; pricing strategies tied to finance of major corridor rehabilitation and transit expansion; and pricing strategies combined with programs to accommodate lower income groups.

Beyond these innovations, an important trend deserving attention is the expansion of managed lanes from single facilities and corridors to networks, including new finance mechanisms to support network development. This trend is especially important because it promises not only expansion of efficient pricing strategies for managing congestion but new revenue sources to supplant or supplement traditional sources many States and regions are finding to be inadequate for meeting current and future transportation needs.

In particular, the following network developments exemplify this area of interest:

  • The Miami area is expanding beyond the initial Express Lanes on I-95 to extend the lanes about 14 miles to Fort Lauderdale, and to add new Express Lanes to I-75 in Broward County and to the north-south portion of the Palmetto Expressway in Miami-Dade County. Future projects planned include extending the I-95 Express Lanes further north to Boca Raton and West Palm Beach and express toll lanes for the Dolphin Expressway. In support of the network, Florida DOT developed common design and operations parameters for future projects in Miami, Jacksonville, Orlando, and Tampa.
  • The Atlanta area is adding reversible managed lanes to I-75 and I-575, and to a southern portion of I-75, beginning a network approach in the area.
  • The Washington, DC metro area is building upon public support for a 500-mile network of priced managed lanes on all the major freeways, including express-bus/BRT service. The regional planning agency is advancing the express toll lanes network as one of two long-term strategies in its Regional Transportation Priorities Plan.
  • The San Francisco area is beginning development of the first 90 miles of a projected 270-mile initial network. The initial projects will be 34 miles on I-880 and two bridge approaches in Alameda County, 12 miles on I-680 in Contra Costa County, and 11 miles on I-80 in Solano County. Initial projects are planned to be in operation by 2016 (I-680) and 2017 (I-880 and I-80).
  • The Los Angeles area is beginning sections of what will be a managed lane network. Under construction is the widening of SR 91 in Riverside County, extending the existing Express Lanes from the Orange County line eastward beyond I-15. Riverside County plans a similar project on I-15 and San Bernardino County is planning to add managed lanes to I-10 and I-15. In Los Angeles County, projects include adding managed lanes to I-5 in the northern part of the county.
  • Other managed lane network plans are in various stages in Dallas-Fort Worth, Houston, San Diego, and Seattle.

Accompanying several projects are innovative finance mechanisms. Projects are primarily being procured and developed with one of three mechanisms: (1) design-build (procuring agency assumes traffic, operations and maintenance cost and revenue risk), (2) toll concession (concession company assumes these risks), and (3) availability-pay concession (procuring agency bears traffic & revenue risk with the concession company assuming operations and maintenance cost risks). For example:

  • In California, various entities are supporting project planning and development with one or more of the finance mechanisms. Examples include Riverside County extension of SR 91 Express Lanes east to I-15; LA Metro addition of priced managed lanes to I-5 in northern Los Angeles County; Orange County Transportation Authority plans for priced lanes to I-405 between John Wayne Airport and the LA County line.
  • In Florida, the DOT is procuring an availability-pay concession for two express toll lanes on I-4 in Orlando. Other projects referenced above are planning to use one or more of the innovative finance mechanisms.
  • In Georgia, the DOT is using design-build for I-75 in Henry County, south of Atlanta, and I-575 in Atlanta's northwestern suburbs.
  • In North Carolina, the 26 miles of express toll lanes on I-77 in Charlotte will be procured as a 50-year toll concession.
  • In Texas, various toll lane projects are financed by toll concession (I-35W, SH 288), and design-build-maintain contracts (I-35E).

Pricing of Existing Facilities

The majority of roadway and network pricing programs apply to existing facilities. Strategies typically include adding lanes or new road capacity, or conversion of HOV or shoulder lanes to priced lanes often called HOT lanes. One example from the projects in this report includes variably pricing of an existing carpool ramp connecting carpool lanes on two freeways, the SR 237/I-880 in the Santa Clara Valley of California. Other examples include new tolls on existing facilities coupled with major improvements or rehabilitation. The main operational example is tolling of the SR 520 Bridge in the Puget Sound region coupled with widening and rehabilitating the facility. The CDOT may follow suit in the future. As noted in the projects above, the Department is studying pricing of an existing elevated section of I-84 in the city of Hartford both to aid in financing major rehabilitation/replacement and to manage traffic flow.

Another category of pricing on existing facilities is variable tolls on fixed toll roads, including raising peak period tolls or discounting tolls off-peak. Examples supported by the VPPP in the past are variable pricing on the Cape Coral Bridge and Midpoint Memorial toll bridges in Lee County, Florida; variable pricing on the New Jersey Turnpike, the Port Authority of NY and NJ's Interstate bridges and tunnels between New York City and New Jersey; and variable truck tolls on the Illinois Tollway.

Though not as common as pricing coupled with new or converted use facilities, pricing of existing facilities is another strategy to be considered. Many roads and bridges in the Nation, tolled or not, are in need of rehabilitation or replacement and new or revised tolling schemes for such facilities promise both aid in financing improvements and managing traffic flows to minimize future congestion. Furthermore, as acceptability research in pricing suggests, decisionmakers and the public will support pricing of existing facilities where revenues are devoted to improvements on the facility and accompanying services such as improved transit. Support also hinges on public trust in the operating agency, good enforcement against violators and efficient, secure payment made possible with electronic systems and privacy safeguards. The FHWA will continue to disseminate evaluation results of ongoing and new evaluations of existing facility pricing through webinars and summary briefs, and encourage research on price effects and elasticities.

Parking Pricing

Parking pricing strategies have grown in recent years, spurred by several important developments. One emerging development is that research has shown that much downtown congestion is related to outmoded parking pricing rates and schedules, and also that the supply of parking is excessive and wasteful in many commercial and residential developments. As well, parking pricing technologies have advanced considerably allowing for implementation of variable pricing schedules and easier payment methods. Finally, many localities control parking through existing policy and regulations avoiding the need for new legislation and organizational development as sometimes is necessary for road pricing programs.

As shown in the parking pricing projects listed above, many promising parking programs are underway in localities aided by previous FHWA funding, technical assistance and evaluation. Stanford University is varying pricing by location and demand coupled with off-peak commuting incentives to reduce excessive parking and travel demand. San Francisco is varying on and off street parking rates by demand to get best use of parking supply, coupled with smartphone information on real time demand to help drivers find available parking. Berkeley is beginning a similar program. King County Metro is reducing oversupply of parking at residential developments coupled with encouragements for non-auto modes. Seattle is encouraging better use of commercial parking through a combination of pricing, smartphone reservation and easy payment system.

In addition to these developments already receiving FHWA attention and support, localities are studying or mounting other parking related efforts. Some include:

  • New parking taxes to encourage more efficient private and commercial parking rates.
  • Expanded preferential parking for car sharing.
  • Revised pricing and management of residential parking zones.
  • Revised public and commercial monthly permit policies and incentives.
  • Refinement and targeting of parking cash out for broader implementation.
  • Revised disabled pricing policies and enforcement to reduce abuse.
  • New encouragements for unbundling parking in residential and commercial sectors.

Some of these initiatives are at a stage amenable to research, issue paper development and pilot programs. Others may have sufficient documented success in several settings to be candidates for broad dissemination via webinars and guidance documents. For example, preferential parking for carsharing may fit more into the latter category; new parking taxes into the former.

Priced Vehicle Sharing and Dynamic Ridesharing

Priced vehicle sharing and dynamic ridesharing have the potential to combine with other congestion pricing, transit/HOV, and parking pricing strategies to reduce auto ownership and usage. Many programs are based upon fixed pricing; however, an emerging trend is that some are exploring introducing market-driven variable pricing.

Carsharing typically involves a partnership between a commercial operator and city whereby the operator arranges to position vehicles in designated public or private parking spaces. Recently, systems have opened with agreements in place to allow shared vehicles to park in any legal on-street parking space within a specific geographic area. Another emerging trend is that carsharing has become commercially viable in many U.S. cities, having launched in the past several years with the assistance of the FHWA VPPP and other sources of seed funding. Innovation and competition among for-profit operators has driven significant progress in the industry in the past few years.

Similarly, bikesharing programs have emerged in many U.S. cities, having been popular overseas for decades. Programs operate under a few different models including public agency operator, non-profit, and for-profit, which can have an impact on objectives and deployment. All are focused on providing an alternative to other modes, including private vehicle, transit, and walking, to reduce vehicle trips and miles traveled. Revenue-generation also influences operations, as budgets must be met, regardless of operating model.

Dynamic ridesharing programs have flourished in many heavy commute corridors, as an alternative to driving alone and mass transit. The proliferation of smart phones has enabled real-time ride matching among potential drivers and riders where current traffic congestion and transit loads can influence participation by both parties. Fortunately, applications designed specifically for these projects include special features to prevent distracted driving while vehicles are in use. This can help to ease peak period usage of transit and roadways, delaying the need for the extreme expense of major capacity improvements.

Distance Based or Pay as You Drive Pricing

Another approach to altering vehicle use that has begun to emerge is the use of distance-based or pay-as-you-drive pricing to convert some of the fixed costs of owning and operating a vehicle to variable costs. One example is more variability in insurance and/or leasing costs based on mileage. Another approach includes travel prices based on VMT. Both approaches potentially encourage drivers to be more efficient in trip making and reduce driving at congested times and places depending on how prices are set. A mileage fee also can be varied by vehicle emission class and/or weight, serving the objectives of reducing emissions and accounting for added road wear from heavier vehicles. An added objective of VMT or mileage fees is to preserve or increase transportation revenues, a critical need in many localities and States.

Both categories of distance based pricing are in line with national, State and local goals for reducing emissions and traffic congestion and with growing interest in alternative transportation financing. Furthermore, unlike some other pricing concepts, mileage fees are not only applicable locally or regionally, but have potential at the State and national levels too.

As projects above demonstrate, FHWA has supported several distance based pricing initiatives. The MnDOT examined MBUF as an alternative to the fuel tax, including demonstration involving smart phone technology to collect fees.

There are several particular issues with distance-based fees that need additional attention. At the research level, it is important to track successful international implantation of broad mileage fee programs targeted to light-duty vehicles and/or trucks. Examples include programs in Germany, Switzerland, Austria, the Czech Republic, Hungary and Slovakia. Emerging specific issues deserving particular focus include:

  • Price effects on vehicle use, ownership, and alternative mode use.
  • Costs and savings across uses, the insurance industry and public sector implementing agencies where applicable.
  • Comparison between mileage fees and traditional gas taxes as to effects on driving and revenue potential.
  • Public reaction and acceptability particularly on data handling and privacy matters.
  • Policy, regulatory and organizational implications associated with both insurance based and vehicle mileage fee systems.

Integrating Pricing into Long Range Planning

The pricing strategies addressed in this report fit with several major goals common to State and regional plans including reducing single occupancy vehicle travel during peak periods (e.g., by encouraging shifts to carpools, transit, and other HOV options). Appropriate application of these strategies can provide reliable travel options (e.g., by providing a congestion-free priced option) and reducing emissions (e.g., by reducing traffic delay and sluggish traffic flows). Furthermore, the various pricing strategies can optimize existing road capacity rather than build new capacity, important in times of fiscal constraint. Pricing strategies could also improve transportation system reliability, valuable to the freight and business communities; increase safety by reducing congestion and associated accidents and delays important to all travelers; improve bus speeds important to transit users. Parking pricing could reduce cruising for parking and volume of parking demand important for downtown business vitality and safety for pedestrians and cyclists; and support transit expansion depending on net revenue allocation plans.

An emerging trend is that several regional and State governments are making pricing increasingly central to their State and regional planning processes and documents. This centralizing trend entails comprehensive pricing plans including road and network pricing coordinated with parking pricing, transit service and expansion, vehicle sharing and broad demand management strategies. Examples include comprehensive pricing in the regional and State plans for Puget Sound area, San Francisco Bay area, Washington, D.C. and at both the regional and State level in Maryland, Virginia, Minnesota and Texas.

Current and Planned Outreach and Technical Assistance Activities

As noted previously, while MAP-21 did not allocate funding to the VPPP program, FHWA will continue to provide support to regions and States in planning and implementing pricing projects through outreach and technical guidance. The expansion of congestion pricing across the U.S. depends heavily on educating States, MPOs, the public, and decision makers about congestion pricing and equipping them with informational resources and materials to help them develop and implement congestion pricing projects. The FHWA has several outreach initiatives planned over the next 3 years, including:

  • Webinar Series on Overcoming the Challenges of Congestion Pricing
  • Back Office Issues Peer Exchange and Primer
  • Dynamic Ridesharing Primer
  • Second Generation Congestion Pricing Projects Primer
  • Parking Pricing Workshops
  • Peer Exchange on the Impact of Congestion Pricing on Transit and Ridesharing
  • Congestion Pricing Web site Updates
  • Developing Analytical Methods to Measure Pricing Impacts

Webinar Series on Overcoming the Challenges of Congestion Pricing

The FHWA intends to continue this successful Webinar series, described earlier in the report, with Webinars held on a quarterly basis. Potential topics for upcoming Webinars include Shared Use Mobility, Interoperability, and Transit and Ridesharing.

Publications and Information Products

The FHWA has developed numerous primers and research reports to help guide State and local agencies and decisionmakers in implementing congestion pricing strategies. These include the Congestion Pricing Primer series, which covers topics such as non-toll pricing, technologies that enable and complement congestion pricing, transit and congestion pricing, economics of congestion pricing, and income-based equity impacts of congestion pricing. The FHWA is currently in the process of developing a primer on Back Office Issues, which will address administrative and back office technical aspects that are critical to the operation of a variably priced system. Issues to be addressed include the impact of business rules on back office operations, adjudication process for violators, efficient processing of video tolls, and interstate sharing of Department of Motor Vehicle records. A peer exchange, further described in the following section, was convened in May 2014 to gather input for the primer content. A primer on Dynamic Ridesharing is also planned, which will involve discussions with managers of the VPPP priced dynamic ridesharing projects and a policy peer exchange workshop to discuss issues and challenges related to integrating dynamic ridesharing and pricing. The FHWA also intends to develop a primer on the Evolution of Second Generation Congestion Pricing Projects. This primer will explore how the success of HOV to HOT conversions has led regions to develop networks of priced Express Lanes and regional congestion pricing strategies. It will also identify challenges and opportunities facing agencies that are looking to expand the second generation pricing strategies.

Workshops and Peer Exchanges

The FHWA held a Back Office Issues peer exchange in May 2014 in Baltimore, Maryland. The peer exchange brought together 11 experts from around the country to discuss issues related to how policy decisions drive business rules, interoperability, back office efficiency, enforcement, data analysis and warehousing, transparency, privacy, and private sector involvement. The input from the peer exchange will be used to develop the Back Offices Issues primer previously described.

A series of Parking Pricing workshops is currently planned to start in June 2014, oriented toward agencies that are planning to or are already in progress of implementing parking pricing. The workshops will focus on the successes and lessons learned from SFpark. A representative from SFpark will be the primary presenter at these workshops and will discuss the specifications and details of the SFpark implementation. The FHWA intends to hold one pilot workshop and up to ten additional workshops in locations around the U.S.

The FHWA will also be sponsoring several peer exchanges, both in person and virtual, focusing on topics such as the impact of congestion pricing on transit and ridesharing, administrative technology aspects and issues associated with congestion pricing and dynamic ridesharing.

Congestion Pricing Web Site

The FHWA will be launching a newly designed and organized Congestion Pricing Web site in 2014. The Web site will provide comprehensive information on Congestion Pricing and related Federal programs. The site will provide links to publications, tools, and other resources to help agencies implement Congestion Pricing. In addition, the VPPP quarterly reports will continue to be posted to the Web site, providing updates on each VPPP project.