National Road Pricing Conference

Proceedings
SESSION 1
The Case for Congestion Pricing — Is Revenue Generation in Conflict with Traffic Management?

Moderator: David Ungemah, Parsons Brinckerhoff

HOT 2.0

HOT lanes previously came from under-utilized HOV lanes but now there are not as many available. The need now is to maximize efficiency and expand capacity.

The first part of the conference is going to be on the possible conflicts between revenue generation and pricing as a strategy for congestion management and traffic management. Currently, toll pricing seems to offer an opportunity for reducing congestion.

Revenue generation versus traffic management seem to be the big issue right now. Yet, this issue doesn't seem to apply to toll roads. When does it apply? This issue doesn't seem to apply to new toll facilities that need the revenue to pay back the cost of construction. The issue seems to present itself when HOT lanes and toll lanes are being introduced. The concept of HOT lanes has been controversial because it converts an existing HOV lane to a toll lane. The first conversion of HOV to HOT came on I-15, which was also the first HOT lane project to have an extension.

The first HOT lane conversions were the result of many "low hanging fruit" opportunities which were HOV lanes that had excess capacity. These conversions came at a low cost and were quick implementations. These low hanging fruit opportunities are dwindling which has moved us to find new HOT lane opportunities, which I call the HOT 2.0. HOT 1.0 was geared towards maximizing effectiveness, encouraging new HOV growth and optimizing capacity on the corridor. The HOV users were unregulated with traffic management being relatively low on these facilities. HOT 2.0 is geared toward maximizing overall corridor efficiency. For example, the I-10 expansion looked at the entire corridor maximization, not just the HOT lanes. The I-10 HOT project targeted capacity expansion, created new capacity, looked to optimize return on investment (ROI) from the expansion of capacity and provided regulation of all vehicles to the facility not just toll (primarily SOV).

How can HOVs be priced or managed? PPPs will be a big part of that. The private sector needs to be brought in on policy making, not just in construction. Policy making can have a mix of strategies to enable HOT 2.0 without HOV users losing benefits of the facility. Going forward the transportation agencies will be viewed as a customer to the private sector because the transportation agencies will be enabling discounts for HOVs or allowing for accessibility for HOV users which will allow them to regulate access. The agencies will have to consider the design, the configuration and access restrictions that can best enable corridor efficiency.

The Context for Congestion Pricing
Ed Regan, Wilbur Smith and Associates

This session will be on projects that are being implemented across the US. The planning committee for this conference decided it was important to provide a context of how to price facilities, specifically on HOT and managed lanes.

Revenue potential and overall financial success depends on the operational failure of adjacent general purpose lanes. There must be congestion and worsening conditions in order to implement pricing. Pricing is a big policy issue. For example, tensions on the SR 91 project lead to the facility being sold from the private sector to the public sector due to non-compete clauses. Additionally, financing will depend on congestion and worsening conditions on free lanes.

Maximum revenues from express lanes, comes from pricing in the express lane that yields traffic in the lanes well below free flow conditions. More revenue will come when there is less traffic in managed lanes and more traffic in outside lanes. Pricing the lanes is a public policy tradeoff because a facility cannot have maximum revenues and maximum throughput to all drivers in the corridor.

There are three objectives to setting price levels:

1. Ensure congestion free trips in toll lanes, if congestion threatens to cause congestion in the managed lanes, the toll needs to be raised.
2. Optimize distribution of traffic between free and toll lanes to minimize delays in the general purpose lanes. The more vehicles that are in the toll lanes, the less that are in the general purpose lanes which will lead to less congestion.
3. Maximize revenue potential in the express lanes. Why would an agency want to maximize revenues? To fund the building of the project.

Mr. Regan showed charts that showed toll revenue/toll per mile, transactions/toll per mile and travel speeds/toll per mile. These charts were used when determining the toll that would be charged for the expanded express lanes on I-95. It was determined that maximizing the revenue would put about 2,000 more motorists in the general purpose lanes and reduce the general purpose speed by 7-8 mph. If the planners chose to optimize traffic overall, revenue in the peak period is decreased by around 30 percent and traffic in the express lane increases by 3,600 per hour but the general purpose lanes increase in speed around eight miles per hour. The consultants selected the rate in between maximizing revenue and maximizing throughput.

Public policy decisions about pricing goals can definitely affect revenue from projects. Similarly, policy decisions on which vehicles are exempt from tolling (HOV2 versus HOV3) can affect revenue from a project. These policies may also affect whether a project can be funded alone on tolls. The key trade-offs to consider with every project (in terms of pricing): no benefits will come if a project is never built, so you may have to implement a revenue maximization pricing strategy to finance the project. Additionally, financing strategies such as "availability payments" or other subsidy structures may allow public policy goals to be satisfied while tolls still help to get the project built.

Bay Area's Express Lanes Network
Lisa Klein, Metropolitan Transportation Commission

The California highway system has been through three eras: interstate period, self-help movement (local taxation for improvements) and express lane network (regional partnerships). The interstate period was from 1956 to 1980 when the state was in charge of constructing projects on a pay-as-you-go basis with gas tax. The self-help movement from 1984 to present was when county sales taxes financed improvement in local counties, primarily HOV lanes. The express lane network is here now and moving forward which is a regional partnership that is neither state-driven nor county-based, the network is financed with voluntary toll payments. This is more regional because traffic patterns are not necessarily county-based.

The Bay Area is looking to express lanes because the lanes can squeeze more mobility out of scarce road capacity by encouraging transit and HOV. You can "do more with less" with express lanes. Express lanes will allow for closing gaps in the HOV system and managing the carpool and bus lanes more actively which will provide better utilization of the overall freeway.

Financing is important because the gas tax alone does not maintain the facility, let alone pay for the management and operations of facilities; nor can it keep up with the need to complete the region's carpool lane system.

The approach for the Bay Area is "best fit" by trying to put new HOV lanes in existing right-of-way.

Express lanes in the Bay Area are technically HOT lanes but because HOVs and transit will be free of charge; however, we have adopted the term "express lanes", which has received better public reception than "HOT lanes".

The Bay Area Express Lane Network consists of 800 miles of express lanes (HOT lanes), which includes:

• 500 miles of converted HOV lanes.
• 300 miles of new HOV lanes with 60 percent of those "closing gaps" in the network. The new lanes represent a 5 percent increase in freeway mileage.

I do not believe revenue generation and traffic management are in conflict when looking at the bigger picture. The Bay Area is trying to raise revenue from tolls to finance a network completion to help reduce delays and emission. The Bay Area is not levying tolls to get rich; it is to complete the system with the main goal of completing the network faster. Tolls allow the project to be implemented faster and be paid off faster. It is a very aggressive goal. The improved system will help reduce travel times by up to three billion person hours and reduce CO2 emissions by around ten million tons.

There are big gaps in the network right now. By completing the network and closing the gaps it really helps create an express bus network.

The Bay Area is seeing several areas of tension right now. Currently, there are legislative issues. The idea of system completion is not a compelling enough story to make legislators move on transportation issues. It is very difficult to convey the big picture. Assembly Bill (AB) 744 which has language that states a fee structure must prioritize person throughput and travel time reliability for buses and carpools. The second bill, Senate Bill (SB) 1245, states that no tolls can be collected for vehicles meeting carpool occupancy requirements and occupancy requirements can be increased only if it will maximize person throughput. These bills are not concerned with system completion but throughput. Neither bill has been passed to date.

The best way to get the network in fast is to use a "build-in" design. This is using a painted stripe as opposed to concrete barriers with very few access ramps. There is not a lot of right-of-way to put dual lanes in these footprints. This design is not favored by the financing industry. Financing industry prefers a more robust footprint design.

A network introduces a level of complexity that is not seen in a single corridor. Decisions that are made to have a seamless network will affect both revenue and throughput. In order to get a seamless network, both revenue and throughput are not necessarily the most important things.

In implementing this project, it is important to keep the big picture in mind. Messages to the legislature and financing industry must be tailored to help the region meet its needs.

How Revenue and Traffic Management are Combined in the North Tarrant Expressway Managed Lanes Project in Ft. Worth
Matt MacGregor, Texas Department of Transportation

What are the main objectives for the North Tarrant Expressway (NTE)? Is it revenue or mobility? It is both. In Dallas, there is a need for congestion relief. A current look at congestion in Dallas shows most of the area has severe congestion. When the three current comprehensive development agreement (CDA) managed lane projects, NTE, I-635 Express Lanes, the DFW Connector, come online, there is less congestion in the area and with more managed lane projects congestion will continue to improve. Building the network and filling in holes can reduce bottlenecks and allow a focus on other needs. There are HOV lanes that are not currently HOT but need to go to HOT.

If you want toll rate flexibility, you need to have performance measures and a monitoring and reporting program. The ability to raise toll rates is easier when you have performance measures and reporting to prove it is necessary. Agencies can have higher mobility and higher revenue with performance measures and reporting. People have to move in order to generate revenue. Without predictability and reliability there will be no mobility or revenue. Without revenue you cannot have a project. In order to get all of these, agencies have to have performance goals and measurements. Once these are started they must be maintained.

The CDA projects underway in the DFW area are: DFW Connector, North Tarrant Express (NTE) and I-635 Express Lanes.

North Tarrant Express: $2.55 billion for construction, right of way, utilities, operations and maintenance. Project required $573 million in TxDOT funding for 13.3 miles and is expected to open in June of 2015. The CDA for segments 2E-4 are for financial planning, development planning and use little or no public funds. The concession is a 52 year agreement. The managed toll lanes are to provide a reliable average speed of 50 mph or more by adjusting the toll rate. You cannot just take the toll away because the lanes would be full just like the rest of the general purpose lanes. You have to remind people you are providing a service. An additional lane can be added in the future if warranted due to extra right of way. Additionally, general purpose lanes can be added. The facility is self-leveraging itself. It is a big footprint and gets the whole facility rebuilt. Grade separated access locations are throughout the corridor to reduce the weave. Aesthetics are important in the project. The local community came to the table to direct the look, and can additionally determine if they want to add more features to the project at their cost. The local toll authority does all the back-office operations which adds additional complexity to the project.

A key component to the CDA Exhibit 4 - Toll Regulation is the "demand factor" page of the exhibit which tells the developer how much can be charged on the lanes based on speed and number of vehicles in the lane. There is a $0.75 per mile cap on tolls but it won't get that high unless you get people in the lane. Once operating there are compliance points which must be met or there are penalties to the concessionaire. Any rebate(s) on tolls will go to the local region to do with what they want to do with it. Key components of the Regional Transportation Council (RTC) ML toll policy are:

• market based pricing,
• 50 mph speeds,
• transit friendly,
• no green vehicle discounts,
• motorcycles are consider HOV, and
• tolls remain on the project even after the CDA expires.

We all want to be in the desired range of the speed/traffic flow charts which is just above or at LOS E. Dynamic pricing is not a windfall of money, just a way to manage traffic. Performance goals and measures must be documented annually. This will be achieved by ITS and the tolling infrastructure.

Texas is interoperable and has arrangements to share tollroad transactions with NTTA, HCTRA and TxDOT.

Transparency is key to long term success and that requires good performance measurement.

The SR 520 Lake Washington/Seattle Urban Partnership Agreement Project
Craig Stone, Washington State Department of Transportation

Washington State will start tolling on SR 520 in March 2011 through an urban partnership agreement with the USDOT. Is tolling on SR 520 all about the money? Legislators would say "yes". Is it all about traffic operations? DOT partners would have to say "yes". It is important to make sure all partners are happy. The state is reintroducing tolling back into the system in Washington. It has been a generation since tolling was last used in the state. Washington has been learning about tolling from around the nation.

Washington State is using a three-part strategy to address congestion, and tolling helps to address each area:

• add capacity strategically – address key chokepoints and bottlenecks,
• operating efficient roadways – get the most from our assets, cannot build way out of congestion,
• managing demand – provide more travel choices and options for people and freight.

In 2007 the Tacoma Narrows Bridge opened with electronic tolling and toll booths. It has been a success. People have seen speeds increase 25-40 mph and 30-40 minute travel savings. This project has been all about the money. The bridge charges a flat rate toll.

The SR 167 HOT lane project opened in 2008 and has been able to move traffic in the HOT lanes as well as the adjacent general purpose lanes. This is a dynamic rate project which has a minimum toll of $0.50 up to a maximum of $9.00, which it has hit only four or five times. This project has been all about traffic management.

SR 520 corridor is an existing facility that was paid for by tolls which were removed later. The Toll booths came out in 1979. Now the state needs to replace and widen the bridge. Tolling on SR 520 is both about the money to finance the replacement, and about improving traffic management with variable tolling. In 2008 the legislature set up policies on how tolling would be used in the state. They also implemented a Toll Implementation Committee (TIC) to listen to the public about how tolling should be set up for SR 520. This allowed the TIC to get the story out and explain why the bridge would have early tolling during construction and instead of waiting until the new bridge is complete. $250 million of the financing comes from early tolling.

There are two bridges across Lake Washington, SR 520 and I-90. There are big questions about the diversions which will cause traffic management issues on I-90 when SR 520 begins tolling. Financing the project has been the biggest issue. Washington State Department of Transportation (WSDOT) does not believe enough funding is available to reconstruct SR 520 without tolling I-90. This project will have variable time of day tolls. Flat rates will not provide enough revenue. Tolling will be all electronic without toll booths. WSDOT uses the speed-flow 'boomerang' chart to show that 45 mph provides the most throughput and how pricing will be set to allow traffic to operate more efficiently. WSDOT research determined that 76 percent of customers will not change their travel behavior, while the others will switch to transit, use alternate routes, or not make the trip.

How does tolling help with the 2040 regional transportation plan? It is believed that tolling will help the environment by reducing CO2 gas emissions, funding and congestion/mobility. By 2020, WA is expected to have 300 miles of express lanes in place. Some of the facilities will be dual express lanes on I-405 (similar to I-10). It is expected that new bridges and new capacity would be tolled. By 2030, WA expects to have all limited access facilities tolled in the Central Puget Sound region. Ninety-eight percent of municipalities agreed to this plan when it was adopted in May of this year. Only 2 mayors did not support the plan. One was a mayor of a rural city who said there is no way to toll all facilities and one mayor from a major city that said the plan did not go far enough.

Audience Questions

• Have you run through the numbers if the system has to go up to an HOV3+, and are you looking at expanding express bus service?

  Klein: We need to do more research in this area. To expand transit services we will have to be more aggressive with LOS requirements.

• How do you enforce the managed lanes and what are the challenges of this?

  MacGregor: It is up to DART and The T (local transit providers) to provide enforcement. The developer is also supposed to provide assistance with this by providing a light that will turn on when someone is a violator. There is no automated enforcement for managed lanes at this time.

  Stone: All HOV lanes have lights on the gantries. We do not believe this is a big problem in the WA area. WA has one of the highest compliance rates for seat belt use and other laws. Everyone must pay on these facilities with the exception of transit and agency vanpool exemptions. For the bridges in WA there is no HOV violation, only toll evasion.

  Klein: On the Express Lanes on I 680 in Alameda County there are indicator lights that alert the California Highway Patrol. Currently CA is testing the feasibility of all vehicles having toll tags. These toll tags will have switches that allow users to "self declare" and only vanpools should be able to flip the switch to not pay a toll. The area is moving towards having toll violations but for now the area uses HOV violations.