Patrick DeCorla-Souza, Tolling and Pricing Program Manager, FHWA
Lee Munnich, Humphrey Institute, University of Minnesota
Kenneth Buckeye, Minnesota Department of Transportation
John Doan, SRF Consulting
Center for Innovative Finance Support
Federal Highway Administration
Second Part of a Webinar Series on Overcoming the Challenges of Congestion Pricing.
Moderator:
Presenters:
Jocelyn Bauer
Good afternoon or good morning to those of you to the West. Welcome to the second webinar in the Overcoming the Challenges of Congestion Pricing webinar series. My name is Jocelyn Bauer and I will moderate today's webinar, which will focus on Congestion Pricing Benefits, Challenges, and Opportunities. Please be advised that today's seminar is being recorded.
Before I go any further, I do want to let those of you who are calling into the teleconference for the audio know that you need to mute your computer speakers or else you will be hearing your audio over the computer as well.
Today we'll have two presenters. Wayne Berman, Team Leader for the Congestion Management and Pricing Team in the FHWA Office of Operations and Patrick Decorla-Souza Tolling and Pricing Program Manager in the FHWA Center for Innovative Finance Support.
Today's webinar will last 90 minutes. We'll take questions following each presentation and then take questions at the end if time allows. If during the presentations you think of a question, you can type it into the chat area. Please make sure you send your question to "Everyone" and indicate which presenter your question is for. Presenters will be unable to answer your questions during their presentations, but I will start off the question and answer session with the questions typed into the chat box. If we are unable to get through all of the questions in the time allotted we will get written responses from the presenters and send them out with the follow up information.
The PowerPoint presentation used today is available for download from the file download box in the lower right corner of your screen. I would also like to remind you that this session is being recorded. The recording, presentations, and a transcript will be posted to the Tolling and Pricing web site within the next few weeks and I will send out a notice when they are available.
We'll now go ahead and get started. Our first presenter will be Patrick Decorla-Souza, Tolling and Pricing Program Manager in the FHWA Center for Innovative Finance Support.
Patrick Decorla-Souza
My name is Patrick Decorla-Souza. I'm with IPD, and I'm happy to be here and introduce you to our webinar series on congestion pricing. We have divided the first webinar in three parts. I will talk about rationale and benefits of congestion pricing. After that, in part two, Wayne Berman, is going to talk about various types of congestion pricing that have been implemented in the United States as well as abroad. Finally, I will come back and talk to you about issues and challenges relating to congestion pricing, what I would like to let you know is we do have a congestion pricing primer series, the first of which is an overview. A lot of my remarks will be based on information in that overview if you would like to download it from our web site at the URL shown on the screen. So let me move in to part 1, the Rationale and Benefits of Congestion Pricing.
First I need to distinguish between tolling and congestion pricing. Tolling is quite familiar to most people. That is your garden variety toll roads that are built and tolled in order to provide sufficient revenue to pay back the bonds that were used to build a facility. In the case of congestion pricing, we also have tolls in most cases, but they vary either by time of day or by level of congestion. The advantage of varying the tolls, as against flat tolls, is that we have many benefits. The chief benefit of which is managing demand. Now I would like to say that not all congestion pricing involves tolls. We have actually a primer on non-toll strategies such as parking prices and mileage based insurance. In this webinar we are going to focus primarily on toll pricing but we have a series of webinars towards the end of the series that will focus on non-toll pricing specifically.
In this slide that I put up here, we show you that there are various ways that we have used to reduce congestion, which is one of our main objectives here. You could either increase capacity by expanding roadway facilities or you can increase capacity by managing that roadway to maximize throughput. That's an operation strategy. Now you could reduce congestion by reducing demand. On the demand side we can reduce vehicular traffic by putting more people in to alternative modes or moving them out of the rush hour. Congestion pricing is one way we can encourage people to move in to other modes or drive during less congested times of the day. The advantage of congestion pricing over normal methods of capacity enhancement, highway capacity enhancements or transit capacity enhancement, is that when you build capacity either on highways or transit, you are not able to manage that use of the capacity unless you give price signals. I will talk a little bit about what those price signals are. They encourage people to use the facility most efficiently. That's the advantage of congestion pricing. So economists have a rationale, a reason, to advocate for congestion pricing and that is displayed in this slide here. Costs of using highways are divided in to two types of costs. Internal costs are those that the highway user directly faces, the cost of operating their vehicle, the costs of fuel, gas, the cost of oil and wear and tear on the vehicle, costs paid for by the driver. They are internal costs. There are many costs that are external, in other words they are not paid by the driver, for example, cost of congestion. Every driver on the road imposes some cost on other drivers and does not pay for those costs. Emissions is another external cost that many of us are familiar with, a big one that has been more recently of concern is carbon emissions and which leads to climate change. So when these external costs are not paid for by the driver, that encourages the driver to overuse the highway and that of course leads to inefficiency. We talk more about these economic issues on August 25th at the webinar that will be held in the series on Economics of Congestion Pricing and Impacts on Business. If you like to know more about it, join that webinar.
I said I would explain how congestion pricing works. I talked about the external cost that users don't pay for. If you add in a new variable toll that accounts for those external costs, that the user currently doesn't bear, then the user is made to face those costs. If the user is willing to pay for those costs, it means that the benefits that user derives from use of the highway are equal to the cost that they are paying. Economists call that efficient because the expression of willingness to pay is made when that user forks up the money for the toll. That results in efficiencies. Now what happens to those whose benefits are lower than the cost of the toll? They are not going to be willing to pay the toll. So they will shift to what economists call substitutes and this slide shows what those substitutes might be. For a commuter who would otherwise be driving during rush hour, if they don't want to pay the toll, they have alternatives such as transit or car pooling with somebody else. They might decide to telecommute if their employer allows them to, basically stay at home or might be encouraged to or leave earlier or later in order to take advantage of lower tolls during the off peak hours or during the shoulder hours, that would apply if their employer allows them flex time or staggered work hours.
These are the ways we manage demand with pricing and managing demand itself, of course, is efficient. It leads to efficiency, but there are several other benefits that I will talk about that result from this managing of demand. One of them is the revenue that's generated from the tolls. You have new revenue from tolls. The fact that people are willing to pay a toll is a clear signal that more capacity is needed. It could be either highway capacity, or transit capacity. When roads are provided free, you don't know if people are willing to pay for the costs of expanding that highway. When they are already paying in terms of a toll, that's a clear signal that they would be willing to fund with their tolls or pay with their tolls or pay for new capacity. Be it on the highway or on transit. And finally the pricing, because of its attributes of managing demand and generating revenue contributes to USDOT's strategic goal.
Here is highway an example of the impact of congestion pricing on reducing demand. What you see in this graph in red is the worst Monday in September, in Los Angeles. It shows you the heavy peaking during the morning and afternoon peak hours. Well on October 8th, in the same area in Los Angeles, happened to be Columbus Day, the same year, what you see with just a very small reduction in traffic on that day, very few people were off of work, mainly government workers and for that small five or 10% reduction in peak period traffic, you have a huge reduction in demand something like 40 to 50%, depending on time of day. That's in the morning, 47% evening, 37% and entire day 47%. How does all of this happen? Why do we get such a big reduction in delay even only a few people are off the road? If you are familiar with queuing models, this is what is depicted this graphic here, from 7:00 to 10:00 AM, if you have a steady arrival right at capacity, which is the lowest line there, you see that all of the vehicles go through at 68 miles per hour, free flow speed. However, if you have people arriving at a rate faster than the capacity, that's depicted by the other lines, either 20% above or 50% above, this is only during the 7 to 8:00 AM hour, you have this other profile here where people who arrive cannot get through. The area above the first line is the delays that are incurred by vehicles that attempt to use the freeway. If you take all of that area within the trapezoid above that diagonal line, and you divide it by the number of extra vehicles that are arriving between 7:00 and 8:00 AM, that one hour period in the morning, what you will get is something in the neighborhood of two hours of delay caused by each additional vehicle. In other words for example you take off one vehicle; you will save two hours of delay for everybody else. This means that for the remaining vehicles, each vehicle that would otherwise be caused delay saves about 10 minutes in travel time, based on this example here. This is a huge reduction in delay if you can get a few vehicles off of the road between 7 and 8:00 AM in the morning. Of course, if you can work back to dollars saved, that's a huge amount of savings there if you multiply all of that by the number of vehicles that cause that delay.
With regard to generating revenue, that's the second benefit, it's important to understand that since most of the time we provide, we expand highways and give it away free, we don't put tolls on it. What you see in this graphic is the normal cost of adding a lane on a freeway. This is 2006 dollars, it's much higher today. But if you take those numbers, this is average normal cost, and if you convert that to what that means in terms of a 20-mile trip, each day, look at the second last row, in that column, you see it costs $7 to provide for a 20-mile trip. What people pay in terms of gasoline taxes is only $0.40. Right there you see the gap and the fact that we are not pricing the expanded or new capacity adequately and if we don't get the revenue, we cannot build that extra capacity that people might want. So here is the other rationale for congestion pricing is to make up for the gap between what it costs the public to provide that capacity and what the user pays in terms of gasoline taxes. Now, some freeways and metropolitan areas might be high cost and that's what you see in that last column. If it's a high cost freeway, that might be $29 for a 20-mile round trip, way above the $0.40 that person might pay in terms of gasoline taxes. When we charge these tolls, we know that people are willing to pay for that extra capacity and so the toll rate measures the value of the service and indicates as I said earlier, that capacity, if for example, people were willing to pay a 7-dollar toll, we would know that yes, that capacity, new capacity is worth building.
I just want to end this presentation on benefits by talking about how congestion pricing helps further the USDOT's strategic goals. These might be the regional or state goals within your state or metropolitan area. As I said, the key effects of congestion pricing are managing demand and generating revenue. Each of these two key effects helps you with your goals. State of good repair: if you have more revenue, you can keep your facilities in a state of good repair. If you are able to manage demand, spread out the traffic for example, you won't need additional capacity, so you will save money that might otherwise be needed to build new capacity, that saved money can be used to keep your facilities in a state of good repair. Economic competitiveness: for example if you relieve congestion, commercial traffic, which is very high value, can move faster, that helps the competitiveness of your regional economy as well as the nation's economy. And of course making things efficient by reducing of course the need to expand, you are promoting by using your existing capital investment, efficiently, you are improving economic competitiveness in your area. Livable communities are a little bit more of a peripheral way that congestion pricing helps livability. That's because if you are going to introduce congestion pricing, you really need to focus on what alternatives people would use if they do not want to pay the toll. You cannot do congestion pricing unless you provide alternative modes. One of the key goals of livability is to provide these multi-model choices. What is more important, though, is not just the fact that you are providing multi-model choices because you want to implement congestion pricing but it provides a source of revenue that you can use to pay for these multi-model choices.
Environmental sustainability is almost a slam dunk there. If you are reducing demand, to drive, if you are smoothing the flow of traffic, you are automatically reducing emissions. Safety for example if you reduce demand, less vehicle miles means fewer accidents. Also of course if you don't have to expand capacity, there is more money leftover that you can use to focus on improving safety. Here is the summary of benefits. There are four key areas and then the sub areas relating to our strategic goals. With that, I will turn it over back to Jocelyn Bauer.
Jocelyn Bauer
Thank you, Patrick. We did get a few questions here while you were speaking. I will just read them out for you. You can address them or Wayne and Angela could help as well. We had a question from the California Department of Transportation. He was wondering if external costs are calculated based on annuals. I'm thinking earlier in your presentation you were talking about external costs. The question is whether or not those were calculated on annual basis?
Patrick Decorla-Souza
Well, the congestion costs were from Texas Transportation Institute, the annual report produced by the urban mobility study that they do every other year now. But, on an individual metropolitan area basis, as I said, the biggest externality is congestion. As I indicated each extra vehicle over and above the capacity of a freeway causes something like 2-hours, worth about $20 for example you have an average value of time of $10 an hour. The other externalities such as emissions committed by automobiles really aren't very large relative to congestion. They are of course of importance, but based on the values placed on these other externalities, they are relatively smaller than the congestion costs.
Jocelyn Bauer
Okay, thanks. We had a question about a graph that was shown. I'm going to try and get to that graph here. I think it was this graph. Is this graph still relevant to LA highways?
Patrick Decorla-Souza
They are relevant; this is a very simple queuing model. It's not necessarily sophisticated model. It's just trying to get you to understand how pricing magically can, if you just take a few vehicles off of the road, magically reduces delay by humongous amount. We have actual data. You can go to our web site, which shows you in the reports that we have commission that show that with about 10% reduction on a specific day, you have 80 or 90% reduction in delay. We have seen that in actuality on freeway systems. In Los Angeles, in this graph from 7 to 8 AM you have an excess of traffic above the capacity but then from 8:00 to 9:00 AM, the slope of the line actually indicates that had we not had those extra vehicles from 7:00 to 8:00 AM, those vehicles would have been sailing through, because they would be at capacity. They are arriving at a rate equal to the capacity. From 9:00 to 10:00, it's lower, arriving at a lower rate than capacity. Los Angeles is not as simple as this, because it's not just 7 to 8:00AM that you have extra vehicles. In most other cities that might be true, but not Los Angeles. In Los Angeles you might have extra vehicles starting at 6:00 AM, all the way up to 9:00 AM. That makes it a little more different. Bill Vickrey, one of the original advocates of congestion pricing, calculated one extra vehicle arriving in the morning rush hour causes 12 hours of delay. That delay continues throughout the day, which is what you see that first vehicle arriving at 7:00 AM, right at 7:00 AM, actually if that vehicle were not there, it would have saved 3 hours of total delay. You can sort of compute that mathematically. You can see that on the graph.
Jocelyn Bauer
We had a follow-up question. The 2-hour delay mentioned here on the chart, is that per car or the total delay?
Patrick Decorla-Souza
It's the average delay. That first car as I said was going to cause three hours of delay , the last car arriving at 7:59 AM causes only 1-hour of delay, but on average all of the vehicles, you know, cause of about 2 hours of delay.
Jocelyn Bauer
Okay. The next question: is the demand always excess capacity when congestion pricing is used to reduce demand?
Patrick Decorla-Souza
Can you repeat that question again?
Jocelyn Bauer
Is the demand always excess capacity when congestion pricing is used to reduce demand? I'm not sure I understand it.
Patrick Decorla-Souza
Well, normally using congestion pricing when the demand is above capacity. Otherwise you really don't want to introduce congestion pricing. For example in the middle of the night, it's pointless having a toll there because you have no congestion. In fact, economists will tell you it is inefficient to put a toll on in the middle of the night, at least congestion toll. You might want to recover the cost of pavement damage but that is minor, at least for automobiles, for trucks it is high. The marginal cost per vehicle driving in the middle of the night is almost zero. They should be charged nothing.
Jocelyn Bauer
Okay. One other question we have here is: does it make sense to have a pricing implemented for the entire roadway system in a state or region or pick and choose roadways for its application.
Patrick Decorla-Souza
That is an excellent question and I will show you some comparisons in the latter, last part of this presentation. As to what the different impacts are between, what we call partial pricing that is pricing only one lane on a road versus pricing all lanes and pricing only the freeway system versus pricing everything freeways as well as arterials and every road. There are advantages and disadvantages, and we will talk about them in the last part of the presentation.
Jocelyn Bauer
Last question: does your cost per mile graph only address capital costs does the gas tax revenue cover O&M costs?
Patrick Decorla-Souza
That's an excellent point. Generally speaking, the gasoline tax, which amounts to $0.02 per mile, covers a little more than O&M costs. When I compared the $7 to the $0.40, I should have been comparing $7 to something like maybe only $0.20 because out of that $0.40, at least $0.20 is the cost of simply operating and maintaining that highway. So the net extra revenue is only about $0.20.
Jocelyn Bauer
Okay. Thanks. Now I'm going to turn things over to Wayne Berman to give a presentation. He is the team leader for the Congestion Management and Pricing Team in the Federal Highway Administration's Office of Operations.
Wayne Berman
Thanks, Jocelyn Bauer and thanks to even who is joining us today online. Patrick did a great job at giving you some of the rationale for congestion pricing and the both economically and technically. What I want to delve in to now for a little bit is talk about the types of congestion pricing projects going on here in the U.S. and abroad. Jocelyn, turn the slide, please.
These are the really the five categories of congestion pricing that we are dealing with here. Price lanes, HOT lanes, express toll lanes and we will talk about that as we move on, priced highways, priced zones, area or cordoned pricing, priced networks and pricing not involving tolls, parking, pay as you drive insurance and few other areas. That's an important part of congestion pricing. I don't want you to go away from this session today thinking that it's just we are talking about road pricing when it comes to congestion pricing. Patrick mentioned another webinar, series of webinars that are going to happen later on in September and October that will address the topic of non-toll congestion pricing a little bit more in depth. You will see from some of the examples where parking is involved.
The first price lane I want to talk about is the granddaddy, SR91 in Orange County, California. Four new lanes were built down the median of SR91 for 10 miles and tolls on this facility vary from about $1.20 to $10, depending on the congestion that is happening. Higher toll reflects the hour with heaviest demand which generally occurs on a Friday afternoon. The next one on variable toll rates, this will give you kind of an idea of how the toll rates vary. This is from the I-15 HOT lane in San Diego, where you see a scheduling of prices tolls. Generally these vary maximum of toll rate is set for each time interval during the peak period so motorists have idea of what to expect and what toll rate they can expect so they can have a feel for when they want to travel. It helps to spread out the demand for the facility. The actual toll is set dynamically based on real-time information on demand, but the toll rates do have a maximum to it set by policy. Priced highways, this is one in Seattle. In Seattle, variable toll rate on State Route 520, we will talk about this later on. This hasn't occurred yet. There is a floating bridge there, SR52, which is being priced; it's a free bridge now. Tolls on the existing bridge are free. Some of the revenue from the tolling facility, when tolls come about, will help pay for new expanded bridge alongside of it. We will talk about this later on. This was part of one of the urban partnership projects that the department awarded funds to back in 2007. There is a lot of technology associated with this. This is expected to come on line late May or early June of this year.
This is a facility in Singapore. The charges vary from $0.50 to $2.50. Interestingly here, the speeds on a segment of expressway fall below 45-kilometers per hour over 3-month period, toll rates on the section are increased. Alternatively if speeds exceed 65 per kilometer, this is taken as an indication that the facility is being underutilized and tolls are reduced. I'm going to talk for a moment about priced zones. One of the leaders around the world is Stockholm. This is the Stockholm congestion pricing cordon around center city and there is a charge to enter and leave central Stockholm. Cordon pricing is a way to reduce traffic in major employment centers. London has a similar cordon pricing section in central London and Singapore does as well. Those are the three cities worldwide that have it. They are in downtown locations.
This gives you a feel for Stockholm's cordoned toll rates. The graph shows how the rates vary throughout the day at the toll began at the cordoned line. New York City Mayor Bloomberg proposed a cordon around midtown, downtown Manhattan in 2007. It was submitted to the Department as part of the Urban Partnership program at that time. The annual net revenues were projected to be $500 million, taken in and it was the money was to be dedicated to transit. New York Mayor Bloomberg proposed a cordoned scheme for the Urban Partnership Program, but it failed to get approval from the state legislature. However, continues to be explored in the city and other ways to introduce pricing in to midtown Manhattan. Fully priced road networks, there are a few of those for trucks only, they occur in mainly European cities. Germany is probably one of the leaders here in doing that as well as the Czech Republic, they have a significant price network for trucks only. Existing network, but to use that network the trucks pay a price. But for all vehicles, Singapore, the Expressway System I mentioned earlier, and in the US, Seattle is as I mentioned SR520, they are moving towards full facility pricing on all of their facilities. San Francisco and Atlanta are looking at it, full facility networks in their plans. Atlanta is more of a managed lane program opposed to entire facilities being priced.
As I said the long range plan in Seattle, Washington has the entire system tolled over the next 20 years or so. Variable tolls will be used to manage demand; Patrick explained the rationale for that. Seattle's traffic choice of study, which was for the basis of the plan, is for all freeways and interior networks in the Seattle area. Such a strategy would have a high benefit cost ratio and bring in revenue for transportation investment and operations. This is number five: pricing not involving tolls. This is an important part of congestion pricing too. San Francisco area parking pricing on curbside and off street parking, they have a project underway as part of the Urban Partnership Programs that's going to launch later this month, April 21st. Mileage based car insurance, there are several pilots around the country that have been supported by the value pricing pilot program. California is exploring a lot with employer based parking cash-out programs. There are a number of upcoming webinars on this topic in September, October and November. Stay tuned and keep an eye out. I'm not sure those are the exact dates. Things do change. If you can kind of keep that in mind for the fall and we will talk a little bit more about pricing not involving tolls at that time.
Key US projects. One of those I kind of like to delve in to a little bit in to the key projects we are learning about now. They are a partnership program, Congestion Reduction Demonstration program, initiatives of the US Department of Transportation 2007 and 2008. About $850 million was allocated to 6 sites to conduct congestion pricing demonstration programs. These sites are Miami, Minneapolis, San Francisco, Seattle, Atlanta and Los Angeles. I want to talk about each of these projects. They are significant and generating a lot of interest around the country as well as a lot of good information about really the impact and effectiveness of congestion pricing. This map kind of shows the locations of these facilities, these new projects around the country. Let's start the next slide with Miami. Miami started back in 2008, early 2009, phase 1. Essentially what they did was restripe their lanes and to create a second HOV lane. HOV lane had existed on northbound and southbound of I-95. They started with the northbound segment first, as phase 1a, restriped the facility, added ramp metering and increased the transit. You see on the right side of the photo there, the two lanes that are priced dynamically priced and expand to the 10- lane facility to 12 lanes. About a year later they did the same thing on the southbound lanes. The photo here doesn't show it; it only shows the HOV lane. The point is that the right side is now reflected on the left side, too. The tolls vary. Three new transit routes introduced to support it. They added ramp metering as I said, with dynamic pricing. They also increased the HOV occupancy rate from HOV2 to HOV3. This was significant because nobody thought it could be done really that easily, and Miami did it. So others are beginning to take lead in being able to do that. This also freed up a lot of capacity that now could be priced, too. That's an important piece.
Let's move onto the next slide, to Minneapolis. Again, there was I-35, HOV lane converted to a high occupancy toll lane coming to the south of the region in to Minneapolis. It's a combination of HOV lane. Once it crosses their cross town boulevard, closer to the downtown, it becomes price dynamic shoulder lane; indeed the shoulder is now a travel lane in the northbound direction during the peak period to add extra capacity, that extra capacity is priced. With all the projects it's important to remember that will there are complimentary strategies that have to be put in to place. You can't just price a facility. You have to support it and indeed they did in Minneapolis by providing 6 new and expanded park and ride lots, 27 new buses, they have a transit advantage bus bypass area, on several key congested areas, as the facility entered the downtown area on Marquette and 2nd Avenue, they installed bus lanes on those facilities downtown. Traffic signing and active traffic management was a big part of. There is driver assistance for shoulder running buses so that the buses could stay in the lane. This is technology in the bus. Telecommuting was actually a big part of the program as well. The Urban Partnership Program was supported by transit and telecommuting, and technology were kind of the 4 T's we talked about in the program.
San Francisco, Urban Partnership Program includes a whole package of things including parking pricing in the large scale of downtown area on street and off street, real-time information that informs the customer's helps to manage demand and supply for parking. Parking information provided on the 511 network. Over 6000 metered on street spaces and parking spaces in the 14 garages are a part of it. It's a pretty significant piece of the parking pie in the San Francisco and downtown San Francisco that's priced to be able to manage congestion. As I said that's going to be launched dedication April 2, so that's coming up real soon.
Now Seattle, this is going to start in late May or early June, that time period. As I said it's taking existing free bridge with no tolls and putting a price on it. Supporting it with significant transit service as well as active traffic management, overhead signs, variable speed limit, lane controls, its got employer buy in. There will be a whole range of activities over Lake Washington and the 520 corridor. This is really the first attempt in the United States to take a free facility and put a price on it. Again the significant piece here is that it's been supported by a number of different strategies, technology, employer support, as well as significant telework program, too. It's really an important corridor to test out. In fact, this is one of the cities where we are doing a travel behavior survey, surveying people before the pricing starts and surveying them after to see how well the pricing, the impact of the pricing changes their travel behavior.
The next slide is on Atlanta. This is HOT lane network, converted from existing HOV facility on a 20-mile segment of I-85 in the Atlanta area. The high occupancy vehicle designation was increased from HOV-2 to HOT-3. This is the second attempt to move the occupancy rate higher to create more capacity that can be priced. It's supported by park and ride lots, and significant number of commuter buses and facilities. This is expected to be launched in August of 2011. That's coming up too. Atlanta is another city where we are working with the Volpe Transportation Center to do an individualized survey of the impact of congestion pricing had on travel behavior.
Los Angeles will have another new conversion of HOV facility to HOT for I-10 from I-605 to Union Street in the downtown area as wells I-110 from Artesia to Adams Boulevard. Again, as with the others, it's supported by enhanced transit service, bus rapid transit called Silver Line, new feeder service, new buses using compressed natural gas on I-10 and I-110, additional bus routes supported by van pools, over 100 new van pools, traffic signal priority at key points in the corridor to improve traffic, and park and ride improvements along the entire corridor. That is just a little bit of a kind of a quick rundown of what is going on around the country. We are anxiously studying these. We have a number of folks out there in the field. There is a national evaluation going on for the Urban Partnership and Congestion Reduction projects generating information about the impact of the programs on whole range of topics from congestion to quality, equity, acceptance, and other issues. I think Patrick is going to talk about that, those kinds of things at the next section of this. With that, Patrick, Angela and I are on call to answer any questions you have.
Jocelyn Bauer
Great, Wayne. You do have a number of questions. Let me get started with them here. I know we probably won't be able to get to them all before Patrick gives the closing presentation, but we will get through a few of these here. Let me start here. Have you done studies on mixed mode travel costs, for example trucking routes or times, to facilitate freight movements?
Wayne Berman
Patrick, you want to handle that one?
Patrick Decorla-Souza
Well, if you are talking about truck only toll lanes, there have been studies done by the recent foundation on truck only toll lanes and some metropolitan areas such as Los Angeles have done studies on truck only toll lanes within the metropolitan areas.
Jocelyn Bauer
How is incident-based congestion factored in to setting toll prices?
Wayne Berman
By incident based you mean, if there is a traffic incident?
Jocelyn Bauer
Yeah. Congestion caused by traffic incidents. How is that factored in to setting the price for the toll?
Wayne Berman
I don't believe it is. Patrick or Angela, do you want to chime in on that one?
Patrick Decorla-Souza
Basically if you really tried to price during an incident, the tolls would be exorbitantly high because capacity would be reduced. You would be charging something like $200 a trip, and that would not be politically palpable. If you wanted to price an incident, the person who causes the incident would be the one paying. I mean depending on what approach, if you are talking about getting traffic through, during an incident, you would really have to jack up prices so high that it would not be possible, I mean politically to do so.
Angela Jacobs
If there is an incident on a facility priced, I don't believe now the prices would change, people would have to be diverted off of that facility if it's significant. I think the hope is that with pricing there would be enough of a gap in headway that there would not be incidents, incidents would be reduced.
Patrick Decorla-Souza
On SR91 when such a thing happens, if an incident causes traffic to slow down below a certain level of service, those who faced that delay are eligible for credit so they wouldn't be charged a toll. They wouldn't jack up the tolls on SR91. Let's say one lane was out of commission, they might have to make the tolls $50 or something in order to make sure that only as many vehicles as can use the lanes available lane would actually enter.
Wayne Berman
I think part of the key there is to be able to have good information so that people know if there is an incident on the lane that not to use it that day and not get charged for it.
Jocelyn Bauer
Okay. Another question is whether or not you have seen any universities that implemented a cordoned area?
Wayne Berman
We actually have California, Berkley who we are working with parking pricing program and Stanford who we are working with them on parking and cordoned pricing on the Stanford campus too. There are some that are happening.
Jocelyn Bauer
Then, someone else remarked that one of the photos that you had shown looked like it showed congestion in a priced lane. The person asked if isn't that what congestion pricing is supposed to mitigate?
Wayne Berman
Is that Miami? I think it might have been Miami? I wanted you to look at the right side of the photo where the lane is operating quite freely. This is a slightly older picture. On the left side, the HOT lane hasn't been implemented. At the time this photo was taken the HOT lane wasn't implemented. On the right side is the HOT lane. The Miami project was implemented in two stages, phase 1a, which you have a picture of in the northbound direction, phase 1b in the southbound direction did the lane. We didn't have a picture of that one handy. But indeed both sides now do have HOT lanes.
Jocelyn Bauer
Another person asked is there a difference between dynamic pricing and variable pricing?
Wayne Berman
Yes. I think the way we try and look at it is dynamic pricing is based upon the congestion levels that are occurring. There might be a range of high and low, but prices vary depending on the congestion at that time. Versus more of a scheduled variable pricing like I showed for the I-15 project, where people know in advance what the price is going to be. Dynamic is a little bit more real-time depending on the congestion levels.
Jocelyn Bauer
Well I think those are all the questions we will handle right now. We will let Patrick conclude the presentation and if we have time after that presentation, we will go back to some of those questions as well as new questions that we get. Patrick, feel free to take it over.
Patrick Decorla-Souza
Thanks, Jocelyn. In this final segment, I'm going to talk about issues and challenges and basically introduce you to some upcoming webinars where you will learn more about some of these issue how to address them. Here is a listing of the issues: institutional equity, technology, effectiveness, and public acceptance. On the institutional issues webinar, which is up coming in just about four or five days, next Tuesday, and you can sign up if you haven't already, we are going to talk about various types of institutional issues. As many of you know, having the appropriate legislation at the state and federal level is one of the key issues. Does the law allow you to do what you want to do? We will cover that at the federal and state level. We will have some projects talk about some of their planning and project development experiences. As many of you know, the environmental justice issue is one of the key issues and making sure you incorporate that in to your planning and project development process is extremely important.
Also, the case studies that we will be presented on April 19th will cover a very important issue, the interagency collaboration. Here for the first time, as Wayne showed you on our UPA projects, we had true collaboration across agencies as well as across types of modes. Generally it's very difficult to get that type of collaboration. Each agency generally tries to implement a project by itself. If you are going to do pricing you have to have alternative modes. To make the UPA projects the success that they are, the transit agencies had the get together with the highway agencies, which is not a very easy task. However, thanks to the funding we provided through to the UPA process, about $250 million that each project got, that was sufficient to encourage those agencies to collaborate. Now, you know, we can point to other non-UPA projects that only talk about pricing the highway itself. There is no integration of transit because of the lack of money. A lot of projects being built for example and because they are new construction, toll revenue is not sufficient to pay for that new construction so they have to dip in to tax dollars rather than having some tax funding for alternative modes. The crop of projects we appear to be seeing down the line aren't necessarily doing a very good job of integrating transit because of the lack of revenue. That issue, unless it is addressed and it can be addressed and I hope we will be able to talk about this in our upcoming webinars. How do you get the revenue you need to integrate transit in to your pricing project? Without which it is not going to be multi-model and not going to address all of your regional goals. Finally, since you are talking about a very new idea that the public isn't used to and may have no knowledge of, public involvement and outreach is key. The webinar will talk a little bit about how the various projects went about explaining congestion pricing to their elected officials and the public. Do sign up if you are interested in these issues.
The equity issue is almost knee jerk, the moment you talk about HOT lanes or priced lanes, the equity issue inevitably comes up. It's important to understand that our various types of equity issues, the first is income based. That is will the low income people be able to afford the charges on a HOT lane and if they are not able to afford it is it unfair to them because you are giving richer people an advantage. That's an issue. Another issue is modal equity. If you are making things better for the auto driver, is it fair to those taking transit? You know if their life is not being made any better, especially if you are putting tax dollars into the project. As we said, no new priced lanes can be financially feasible on their own. What are you doing for transit? How you introduce modal equity is going to be important consideration. Geographic equity is an issue and I think somebody alluded to it, better to price one facility or the whole metropolitan area, and I think that person hit the nail on the head because if you try to price one area, let's say put a toll on one bridge, in one part of the metropolitan area, while the rest of the metropolitan area is free, people who have to use that bridge are going to complain. Unless they see the big picture as to where the funding gaps are and why they are to pay and they are part of a phased plan, which Seattle has done very well in their long range planning process. Unless you do that, they are not going to accept the toll that for example, on the 520 bridge in Seattle. Folks are accepting that because they see the big picture. Finally, if you are going to put in new tolls, people need to feel that they are getting benefits sufficient or proportional to the amount of new money they are shelling out. That's sort of equity issue that is called fairness. We will be talking about, all of these issues and how to address them at the May 26th webinar that is about a month from now.
Technology issues are also very important. A big issue is the cost of the new technology that you need for toll collection as well as for enforcement. You might have heard in London, for example, constantly the issue is raised that the cost of operating that cordoned pricing scheme is almost half of what the total revenue that is brought in. So that's an issue you need to be ready to deal with. Why it is still a good idea to spend that money to collect new revenue and the answer really is that there are lots of benefits that go with that extra cost for toll collection which are lower than the cost that you would have to incur for example if you were to widen the freeway as I showed you in the earlier slides. There are other issues relating to operations that we will cover in that June 23rd webinar. You might have heard of open road tolling. We no longer require toll booths with electronic technology. You can drive under the freeway as you do now without even stopping or having to go through any specific type of access. All electronic payment means you may not actually need a transponder, you could be charged, for example, by someone taking a picture of your license plate and sending you a bill. We will talk about that. There are inter-operability issues if you are moving let's say from one part of the country to the other, will your transponder work or what needs to be done to address that issue? Active traffic management is almost, as Wayne pointed out in Seattle and Minneapolis, it's almost an essential part of the pricing project and so we will talk about that in that technology webinar. Traveler information is important so you know what the prices are, what the alternative modes exists that you can take, where to catch them, etc. All of this will be covered in the June 23rd webinar.
Now, one of the key issues is how do you analyze and evaluate alternatives? How do you know if a HOT lane beneficial is for example? How do you convince elected officials about the benefits of HOT lanes or fully priced lanes? You need to be able to have some tools to estimate the congestion reduction benefits to estimate environmental impacts, and also financial feasibility. The elected officials are concerned about where the much is going to come from. You need to demonstrate financial feasibility or your package of pricing strategies. This is not just pricing, but also the alternative modes you are going to be putting in place. FHWA is developing tools to do that. There is a model called STEAM, we had that for a while but it's been updated and you can contact us if you are interested in piloting the new and improved version for beta testing. We also are developing a sketch planning model, called TRUCE; a tool for rush hour user cost evaluation. Microsimulation model called Dynasmart-P which will help you get better estimates of revenue and operations for pricing projects.
What I wanted to show you is how one metropolitan area has done all of these analysis in an exemplary fashion and tried to provide to the decision-makers a comparison of the various types of pricing projects that Wayne Berman talked about. This is the Puget Sound Regional Council who looked at five region wide alternatives. They used these to develop their long range transportation plan for 2040. They looked at simply converting existing HOV lanes to HOT lanes, which is alternative one. Alternative two was augmenting that system with some new HOT lanes where feasible. Alternative three was to forget about HOT lanes, let's toll the entire freeway, primarily for revenue, not with variable pricing as we just discussed. Then alternative four was doing the tolling of the freeway system in an intelligent fashion that is having higher tolls during peak periods. Finally alternative five was ubiquitous tolling, not just the freeway system but the entire metropolitan network. What we see, first, revenue versus cost, very important as I said for decision makers, just doing the HOT conversion alternative one, what you see below the line is the capital cost and above the line is operating revenue. Costs are far above revenues, so from just from a revenue stand point, this is not self-financing. New HOT lanes, the picture is worse. You have almost the same amount of revenue but your capital costs are much more because now you have to build the new lanes. Alternative three, you actually have less cost for new capacity because now you don't have to build all the access ramps that you need for HOT lane, special ramps from freeway to freeway for example or barriers or buffers between lanes, because you are tolling the entire facility. The costs actually come down and revenues shoot up. Pricing that is simply doing the same thing but having higher tolls during peak periods provides you a little more revenue costs are about the same. VMT fees bring in the most revenue and costs are again about the same.
That's the revenue versus cost but what we want to know is: are these alternatives beneficial to society or to the Puget Sound Region? What we find here is the costs are now again below the line in orange. The benefits are above the line in blue. Comparisons of the costs versus benefits, HOT conversion, benefits far exceed cost. For new HOT lanes, you actually have benefits that are lower than costs. That dark line that goes across the net present value which shows you have negative net present value when you have a new HOT lane system as an alternative two. Tolling the entire freeway system, you have lower costs, higher benefits. Freeway pricing is about the same costs but higher benefits because of managing demand and VMT fees about the same. Guess can which alternative the Puget Sound decision-makers chose to adopt for their long range transportation plan? As you can see from it, four and five are about equal and they those four because VMT fees you don't have the technology yet. If you provide the right information to decision makers, they will make the right decisions. We hope the tools that we are providing to the practicing community will help do the kind of analysis that Seattle did so you can educate your decision-makers. Finally, emissions are very important nowadays. What we are showing here again from the Seattle study, is emission reduction. If you are below the line, you are increasing emissions of all of these different pollutants. Freeway tolls, freeway pricing reduce emissions, VMT fees has the most reduction and again as you can see, provides very good information for those who are concerned about the environment, which I know Puget Sound is very concerned about environmental issues.
It's not easy. That's why we have this series of webinars. The previous graphic showed you effectiveness is high for facility pricing. On the X-axis, I show public acceptance and it's at the lower level. Partial pricing that is on only a single lane is more acceptable. How do we do something that is both effective as well as publicly acceptable? For that you need to do a lot of education, a lot of analysis like Puget Sound did. It's not going to be easy. So we actually have a webinar on how to do all of this. How do you address the public issues and educate the public which is going to be important if you are going to move to intelligent pricing strategy. Here is a listing of all of the issues you are going to confront. Availability of travel alternatives is one of the key issues, multimodalism. If you are going to actually provide alternatives, you need to make sure you have the revenue and where are you going to get the revenue? This day and age with taxes being reduced or not raised at all, a lot of fear about raising taxes, how are you going to get the revenue? Tolling can provide some of that revenue as we saw. How do you do that in a way that the public will accept it? Stay tuned at the July 28th webinar, we will talk about integrating transit with congestion pricing and financing and funding transit in order to increase congestion pricing acceptance.
So finally I guess what we tried to show you in this webinar is that congestion pricing has many benefits. While in theory its bringing supply and demand in to balance as a result of doing that you create cost efficiencies and create multimodal systems and you create new revenue that you can use to maintain and preserve your existing freeway systems and entire transportation systems. We showed you that there are some parts of the world where real congestion pricing, that is pricing all lanes, pricing existing lanes, have been successful. How we replicate those successes here is going to be key. If you stay tuned and attend the future webinars, we will talk about ways that we can transplant some of the worldwide ideas to the United States. Obviously very innovative projects are implemented such as the ones under the UPA program that Wayne talked about that integrated transit and pricing. The question is how do we replicate that in the future when there are no huge UPA grants from the federal government. We don't expect there to be the type of UPA program that we were lucky to have just for one year because Congress had a continuing resolution and didn't earmark all of funds. So that isn't going to happen again. Equity and public acceptance issues need to be addressed. We will give you some pointers. Of course transit does help address equity, but there are other issues we will talk about them and how you might address equity issues as well as public acceptance. We will have a variety of speakers from projects where all of these issues have been addressed and where they have been successful in getting the public on board. So with that, I conclude my presentation. Turn it over to you Jocelyn.
Jocelyn Bauer
Thanks Patrick. Now we are going to go through and answer as many questions as we can that we had for both you and Wayne for the next seven or eight minutes until the end of the webinar. We have had several questions. On State Route 91, has the price ever gone to the $10 per mile? Is this a price cap as set by the contractual agreement between the state and the road agency?
Patrick Decorla-Souza
There is no cap. It's very interesting that the agency that oversees and owns the Orange County Transportation Commission has allowed that the price can go to whatever level is required in order to maintain free flow of traffic. The price actually has gone above $10, maybe $10.25. It has gone down because of the recession and lack of demand in the last year or so. There is no cap and to be clear, SR91 is the prescheduled variable toll so they change it every three months or so based on traffic over the prior three months. It's not dynamic, but it is prescheduled based on historic data.
Jocelyn Bauer
Now I think this question maybe for Wayne. For type of congestion pricing called pricing not involving tolls, aren't there other types such as registration fees, annual allocation for road usage, limits on the number of vehicles by type that are registered. Finally, how do you categorize gas tax which does have a demand management component as it increases the cost of driving?
Wayne Berman
I think we pretty much take a broad view of non-tolling projects and the kinds of things you mentioned. Certainly we would consider it to be in that non-toll congestion pricing arena. I think the key piece is that how it affects demand and the variability it. With regards to mileage based. We took the view in the last round of the value pricing project solicitation, is to be inclusive of that as kind of a separate part of the program but still in the non-tolling category. We looked at those projects differently. There is a whole other history and relevance to VMT taxes. I think we looked at it still as the non-tolling piece of the program. Patrick or Angela, do you have anything to add to that?
Patrick Decorla-Souza
One of the things mentioned was registration fees. I wouldn't consider that to be congestion pricing. In other words you would have to convert that registration fee in to a per mile fee so that it varies based on number of miles. Any action you take to convert existing annual fees for example in to fees that people are more likely to perceive and therefore reduce their driving, we would consider congestion pricing. For example, mileage based insurance where you currently pay either an annual or semi-annual fee and if that is converted to a mileage based insurance, we would consider that congestion pricing. We do take a broad approach as Wayne said, but it has to be an impact on demand.
Jocelyn Bauer
Another question from a customer point of view is there a guarantee of noticeable reduction in delay after the implementation of variable tolls. The person mentions that there is no point if level of congestion reduction is minimal.
Patrick Decorla-Souza
The guarantee is there for example, in on SR91 as I mentioned. If you don't get the service, the promised level of service and I don't know if it is 50 miles per hour or what, some target level. You can ask for a refund. Of course it is not automatic, okay, so you actually have to call in. There is a lot of concern, I guess, when there are bonds floated for example, that depend on repayment based on revenues, bond holders are quite concerned with such guarantees. On the other hand, if you were implementing congestion pricing just for the sake of congestion pricing and not concerned about the revenues, as for example in Singapore where the revenues are simply returned to the vehicle owners in the form of tax rebates on their annual registration fees. So the important thing is true congestion pricing you would not actually be concerned about revenues because you wouldn't have to pay back some bonds.
Angela Jacobs
Just to add to that, if the person is paying and doesn't receive reliable trip, they won't return. It's like anything else that the service that we are offering is reliability and faster trip. If people don't feel they are getting that, I think it hurts the credibility of the facility, too.
Jocelyn Bauer
We will try and fit in a couple of more questions here. Has there been analysis of the economic impact of vehicle miles traveled fees that would discourage travel and dampen consumer spending?
Patrick Decorla-Souza
When energy prices rise, as we are seeing now, people have less money in their pockets. It all depends on if you making people spend more so they have less money left to spend on other things? Right now we are sending all our gas dollars to foreign oil exporters and so our consumers have less money left in their pockets. Yes, there will be an impact. If you raise taxes automatically there will be less money to spend on other things. If all you are doing is converting to a sensible form, people still have the same amount of money left in their pockets to spend and so they will continue to spend whatever they were spending before.
Jocelyn Bauer
Is there a known threshold of what the public is willing to pay for a toll before changing their travel behavior?
Patrick Decorla-Souza
Economists have what they call elasticities, in other words, how much of change you can get if let's say if you double the price of driving, let's say gasoline costs double, the elasticity is negative 0.1. This means that doubling of gasoline prices reduces demand by 10%. That means that if 10% of people stop driving, everybody else, the 90% continue to drive as before. The amount of change really depends on the level of increase in the price.
Jocelyn Bauer
Is Federal Highway considering criteria on congestion pricing to be included in the NEPA process?
Patrick Decorla-Souza
I don't understand criteria on congestion pricing. We encourage all alternatives to be explored.
Angela Jacobs
In our discussions with transportation reauthorization, we did talk about having congestion pricing be included in the congestion management process and actually requiring that congestion pricing be considered. Who knows where that is going to go, but I think that was part of the discussions that we have had internally here. We will see.
Patrick Decorla-Souza
Stay tuned, in a couple of weeks we will get our reauthorization proposals out.
Jocelyn Bauer
Good to know. Would you like to take one more question? We are running a few minutes over, already. I will give you one more question and we will close out. What special issues might arise with "two tiered tolling" a concept considered in Florida where existing flat tolled roads are congested and the plan is to provide a choice of variably priced lane with parallel lanes being flat priced. This is an interesting question which I was recently asked, she remarks, and I don't know of a similar case elsewhere in the country.
Patrick Decorla-Souza
There is no similar case anywhere in the country. I know Chicago is thinking about the same concept. Basically it's your HOT lane a priced lane concept. You do that currently, except the toll on the regular lanes is zero. It's a flat toll of zero dollars or zero cents. There is nothing very different from what we have currently on existing freeways with HOT lanes.
Jocelyn Bauer
I think those are all the questions we have time for right now. I know there are a couple of other questions we didn't get to. We will see if the presenters can address those in writing and send those back with follow up information on the webinar. So in closing, I would like to thank both of our presenters. The next webinar we have here on the congestion pricing webinar series is on Institutional Issues, on April 19th. To register, go to the URL on the slide. In addition here is a rundown of the webinar that are planned from May through December of this year. There are quite a few here as there is a lot of information to be shared and a lot of opportunities to learn more about this issue.
We recommend that you go to the Tolling and Pricing page here to sign up for those as they become open. They will open up one month before they are scheduled. Again, here are the webinars and I just wanted to thank Patrick and Wayne and would you like to say a couple of closing words?
Wayne Berman
Thank you for joining us today and stay tuned for our upcoming webinars.
Patrick Decorla-Souza
Yes, I concur. Thank you all for patiently listening to us.
Jocelyn Bauer
Have a great day everyone.
