Executive Summary

The U.S. Congress established the Congestion Pricing Pilot Program in 1991. It was subsequently renamed the Value Pricing Pilot Program (VPPP) under Section 1216 (a) of the Transportation Equity Act for the 21st Century in 1998, and continued through Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users. The Moving Ahead for Progress in the 21st Century Act (MAP-21_did not authorize additional funds after FY 2012 for the discretionary grant component of the VPPP.

The purpose of the VPPP is to demonstrate whether, and to what extent, roadway congestion may be reduced through the application of congestion pricing strategies. The program seeks to measure the magnitude of the impact of such strategies on driver behavior, traffic volumes, transit ridership, air quality and availability of funds for transportation programs. Fiscal Year (FY) 2012 was the final year in which funding was available to solicit projects. Although MAP-21 did not authorize additional funds after FY 2012 for the discretionary grant component of the VPPP, the Federal Highway Administration (FHWA) may still enter into cooperative agreements for projects that require tolling authority under this program for their implementation. While the program no longer actively solicits projects, staff continues to provide technical assistance in project development, execution and evaluation, including implementation and pre-implementation. Staff also oversees the development and distribution of quarterly reports detailing how the objectives of the Value Pricing Pilot Program have been achieved.

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

Key Findings

Projects and studies conducted as part of the VPPP have provided many valuable lessons, but six key findings demonstrate the significant progress made in the past few years toward successful deployment of comprehensive congestion pricing strategies and programs:

• The success of pilot-scale implementation of stand–alone managed lane facilities has led the industry to develop extensive managed lane networks in several major metro areas.
• Pricing of existing roadway facilities is being explored with careful planning and public involvement.
• Parking pricing and management strategies help balance parking supply and demand.
• Priced vehicle sharing and dynamic ridesharing strategies are helping to reduce auto ownership and usage.
• Distance-based pricing projects are encouraging drivers to be more efficient in trip making and reducing driving at congested times and places.
• States and regions are making pricing increasingly central to their long-range planning processes.

The success of pilot-scale implementation of stand–alone managed lane facilities has led the industry to develop extensive managed lane networks in several major metro areas.

The expansion of managed lanes from single facilities and corridors to networks, including new finance mechanisms to support network development is an important industry trend. It promises not only expansion of efficient pricing strategies for managing congestion but new revenue sources to supplant or supplement traditional sources that many States and regions are finding to be inadequate for meeting current and future transportation needs.

Managed Lane systems linking multiple facilities, some with hundreds of miles in the network, are in various stages of planning and development including:

• Miami/Fort Lauderdale
• Atlanta metro area
• Washington D.C. area, including Virginia and Maryland
• San Francisco Bay area
• Los Angeles metro area, including Riverside, Orange, San Bernardino, and Los Angeles Counties
• Dallas/Fort Worth region
• Houston metro area
• San Diego metro area
• Seattle/Puget Sound region

Accompanying several projects are innovative finance mechanisms. Three mechanisms are being used to procure and develop projects: (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 and revenue risk with the concession company assuming operations and maintenance cost risks).

Pricing of existing roadway facilities is being explored with careful planning and public involvement.

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.

New pricing on existing non-tolled facilities coupled with major improvements or rehabilitation has potential to help with these funding shortfalls. One early example of successfully applying this strategy is tolling of the SR 520 floating bridge in the Puget Sound region coupled with widening and replacing the facility. The Connecticut Department of Transportation may follow suit in the future, and 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 off-peak tolls. The following are examples of past projects supported by the VPPP: 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.

Parking pricing and management strategies help balance parking supply and demand.

Extensive analyses of parking data, coupled with recent technological advances have allowed cities to apply market driven prices for on and off-street parking assets. As a result, they have succeeded in reducing urban traffic congestion caused by vehicles circling the block to find parking. Several examples of programs applying varying strategies are underway:

• 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 supplies, coupled with smartphone information on real time demand to help parkers find available parking. (Berkeley is beginning a similar program.)
• King County WA 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.

Priced vehicle sharing and dynamic ridesharing strategies are helping to reduce auto ownership and usage.

Priced vehicle sharing and dynamic ridesharing programs, in combination with other congestion pricing, transit/high occupancy vehicle (HOV), and parking pricing strategies, are helping reduce auto ownership and usage. Many programs are based upon fixed pricing; however, some are exploring introducing market-driven variable pricing. The FHWA has the opportunity to continue to assist these programs to innovate and find optimal strategies to reduce traffic congestion.

Carsharing has become commercially viable in many U.S. cities. 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, operating under a few different models including public agency operator, non-profit, and for-profit.

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. This can help to ease peak period usage of transit and roadways, delaying the need for the expense of major capacity improvements.

Distance-based pricing projects are encouraging drivers to be more efficient in trip making and reducing driving at congested times and places.

Distance-based insurance and leasing programs convert some of the fixed costs of owning and operating a vehicle to variable costs thereby altering vehicle use. In pilot projects, vehicle miles traveled programs have shown the potential to stabilize transportation revenue streams by charging by the mile instead of flat taxes and per gallon taxes. These programs are in line with national, State and local goals for reducing emissions and traffic congestion and respond to the growing interest in alternative transportation financing. Mileage fees are not only applicable locally or regionally, but have potential at the State and national levels.

The FHWA is supporting several distance-based pricing initiatives including:

• The Minnesota Department of Transportation has examined mileage-based user fees as an alternative to the fuel tax, including demonstration involving smart phone technology to collect fees.
• The Oregon Department of Transportation was the first State to evaluate pay as you drive insurance. Oregon is now considering making the mileage-based road user fee program into law in 2014.

States and regions are making pricing increasingly central to their long-range planning processes.

The road and non-tolling pricing strategies addressed in this document can combine to reduce single occupancy vehicle travel during peak periods (e.g., by encouraging shifts to carpools, transit, and other HOV options), provide reliable travel options (e.g., by offering a congestion-free priced option) and reduce emissions (e.g., by reducing traffic delay and sluggish traffic flows). As an integrated pricing program, the following positive impacts can occur in metropolitan areas:

• Optimize existing road capacity rather than needing to build new capacity.
• Improve transportation system reliability.
• Increase safety by reducing congestion and associated crashes and delays.
• Improve bus speeds.
• Reduce cruising for parking and volume of parking demand important for downtown business vitality and safety for pedestrians and cyclists.
• Support potential transit expansion (dependent upon net revenue allocation plans).

Some Metropolitan Planning Organizations (MPO) are incorporating comprehensive pricing plans into their Regional Transportation Plans, including road and network pricing coordinated with parking pricing, transit service and expansion, vehicle sharing and broad demand management strategies. This integration helps to optimize congestion management programs through the synergistic effects among these pricing strategies. Pricing can also be an important tool to aid MPOs in developing a fiscally constrained plan.

Moving Forward

While the VPPP no longer solicits proposals for funding, the program still serves an important role by offering tools to encourage 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 develops and promotes Webinars, conference sessions, peer exchanges, guidance documents and other outreach actions to draw attention to the strategy.

Conclusion

The VPPP has been critical for States and regions in exploring and initiating pricing projects to successfully manage congestion on State and regional facilities. These projects have played a central role in introducing transportation professionals, political leaders and citizens to pricing as a tool to address congestion problems and to manage the transportation system more effectively. The VPPP (along with the Urban Partnership Agreements and Congestion Reduction Demonstrations projects) has provided technical assistance, outreach, and research with respect to both tolling and non-tolling programs and projects. The FHWA will continue efforts such as the National Congestion Pricing Conference, development of primers, Webinars that describe lessons learned and successful practices in implementing congestion pricing projects, a comprehensive congestion pricing Web site, and other workshops and peer exchanges in order to ensure widespread awareness of pricing as a strategy to manage roadway congestion.