Congestion Pricing: A Primer on Institutional Issues

Priced Roadway Lane projects have succeeded where there was clearly defined leadership and often a visible project champion. Here are some examples:

San Diego I-15 – The HOT lane project had a strong project champion, the City of Poway Mayor Jan Goldsmith. The mayor worked with other regional leaders to build support to convert the existing underutilized HOV lane on I-15 into a HOT lane. A key selling point was the ability to use some of the revenues to fund the operation of transit service in the corridor.

Atlanta – Leadership on the I-85 HOT lane project came from a strong relationship among three state and regional agencies who originally proposed on the UPA grant together (GDOT, the Georgia State Road and Tollway Authority, and the Georgia Regional Transportation Authority). This experience provided early bonding and trust building among these agencies, all of whom have been actively involved in Project Development and implementation.

Los Angeles – The Los Angeles I-10/110 HOT lanes project had strong support of the sponsor, Los Angeles Metro, but was not very popular with the California Legislature. This was due to concerns about social equity, traffic impacts, and public acceptance. State Senator Mark Ridley-Thomas, along with other public officials, emerged as a political champion when he authored the legislation that enabled tolling authority to make the HOT lanes a reality. The legislation includes a requirement for an assessment on the impact to low income commuters, a joint performance report from Metro and Caltrans at the conclusion of the demonstration period, and a formal public outreach and communications plan.

Seattle – In the Puget Sound Region of Washington State, there are several congestion pricing champions in both the public and private sectors. The Secretary of Transportation has been steadfast in support of tolling of the SR 520 bridge (i.e. a fully tolled facility), priced managed lanes on SR 167, and forthcoming express toll lanes on I-405. Also important is the leadership provided by major businesses such as Boeing and Microsoft, whose employees commute along these roadways. The private sector leadership has helped bolster legislative support to continue the pricing program.

Champions Needed for Zone-Based Projects

The influence of a project champion, or lack thereof, was evident in many of the zone-based congestion pricing projects, as described below.

The successful implementation of a congestion charge in London was due to Ken Livingstone, who was Mayor of London and head of the Greater London Authority (GLA). He provided political credibility and demanded technical credibility. The GLA had overall control (single tier government) and coordinated among other local authorities. Mr. Livingstone had full control to set the price and control the revenue.

Three other zone-based programs were unsuccessful, in part due to leadership issues.

The proposed New York City program had a strong champion in Mayor Michael Bloomberg. It also was supported by both Governors who held office during this time. Strategically, Mr. Bloomberg acted in a similar manner to London’s Livingstone, but unlike Livingstone he didn’t have legal authority to implement a congestion pricing scheme. In this case, as project champion he could not overcome other political limitations outside of his control.

A proposed zone based program in Edinburgh, Scotland was hampered by a lack of strong local leadership. The decisions were dependent on Scottish government, which didn’t have a local vested interest. As a result, when neighboring authorities were opposed, there wasn’t a leader to help move the process along.

Finally, the project proposed in Manchester, UK had a good political structure to sponsor a zone-based congestion pricing scheme for the region. The region had one overarching agency (Transport for Greater Manchester- formerly the Greater Manchester Passenger Transport Authority) coordinating decisions for 2.5 million people combined with 10 elected authorities. However, the council chair was unable to convince the needed two-thirds of the member authorities to support the scheme amidst strong public opposition.

SFpark – An Example of Parking Pricing within a Defined Urban Center

The SFpark project in San Francisco is using parking pricing to manage congestion in the downtown. An advantage for San Francisco is that it is both a county and a city. While this can create some competing demands, decisionmaking is easier within this construct. The San Francisco Municipal Transportation Agency (SFMTA) plans and manages the transportation system for all non-auto modes. This includes control of on and off-street parking operations and enforcement. The SFMTA facilitated the roll-out of the SFpark program.

In San Francisco, SFpark leadership came through the city's political process and partnerships forged with nontraditional agencies and organizations, along with contacts between the city and private operators. The SFMTA Chief Financial Officer has been a vigorous supporter of the UPA program, under whose auspices the SFpark project was funded.

495 Express Lanes – Bringing in the Private Sector

The advent of Public-Private Partnership (P3) projects brings in the private sector. Public and private sectors often come into a project with very different perspectives and goals, and they negotiate differently. The agency must establish a strong relationship with the private concessionaire (and vice versa).

The Virginia I-495 Capital Beltway Express Lanes project was unique in that the HOT lane proposal from the private sector was unsolicited. As a result, there initially was no project champion from the public agency or political sectors. Once the design with HOV/HOT lanes and transit provisions was clarified, the Virginia Secretary of Transportation was in support. When a later Secretary created the Office of Transportation Public Private Partnerships (OTP3) in 2010, there was clear leadership on the overall P3 program.

Priced Managed Lane Legislative Experiences

With the growth in HOV to HOT lane conversions around the country, often the HOT lane planning process moved ahead of the legislative process. Different projects dealt with the enabling legislation a bit differently, with the end result being clear authorization to proceed with the HOT lane projects. A few examples:

Miami – As a recipient of a UPA grant, the Miami I-95 project took advantage of the fact that this was a discretionary grant with a short time frame required for completion. Therefore, some immediate legislative decisions were needed and the enabling process was expedited.

San Diego – The I-15 HOT lane conversion program originally had State representative support to gain approval in the legislature. San Diego Association of Governments (SANDAG) undertook extensive public outreach that helped lead to a political consensus to move ahead. Some legislative concern over the perceived "Lexus lane" syndrome was offset by committing funds to increased transit. During the legislative process, Caltrans was concerned with the fact that the project was originally a "demonstration" and pushed to set specific time frames for project implementation. This proved not to be a big issue and the project was approved.

Minnesota – Minnesota's initiation to priced managed lanes initially started with TRANSMART (a P3 process), which invited the private sector to propose and ultimately develop toll facilities. The State promised to provide substantial resources to match private sector funds to get the process started. Through this process, one project, State Highway 212, was advanced to a development agreement, but was ultimately vetoed under a legislative provision that allowed local communities through which a proposed toll facility passed to veto a project unconditionally. Despite the setback, the State commissioner of transportation at the time wanted to continue to pursue HOT lanes. The 1997 legislature finally authorized an HOV to HOT conversion of I-394 and, while exempting the project from the local veto authority in tolling legislation, did require a public hearing on the concept. This generated negative reactions from the public and politicians on perceived "equity issues" and the project was deferred. The Minnesota DOT's response was to form an external advisory task force guiding consideration and development of future projects. After a couple of years the task force supported the HOT lane concept and the legislature ultimately approved the I-394 project. By this time, a new Governor was also on board and became a champion for the project.

Los Angeles – The I-10/110 project was also a recipient of Congestion Reduction Demonstration program grant, which required the team to obtain enabling legislation in six months. The grant amount was so high that State elected officials had a hard time not passing legislation, however there was consternation with the short time-frame and the fact that not much planning had been done by that time. Some Congressional members also became involved, due to their concerns about tolling equity, diversion, HOV occupancy limits, and performance metrics. The project leaders did have to go back to legislature twice to revise the legislation, but both attempts were smoother because the team clearly defined the project design, demonstrated the expected benefits, and showed confidence in implementing the HOT lanes on time.

Washington State – The WSDOT initially received legislative authorization for tolling of the Tacoma Narrows Bridge. Subsequent authority was sought and received for the SR 167 HOV to HOT lane conversion and the SR 520 Bridge Replacement Project, which was part of the UPA grant program. SR 520 charges variable tolls on all lanes of the existing floating bridge. A strong public process has helped to build support for roadway pricing. A tolling implementation committee was established in 2010 to gauge and build public support and to provide guidance to the legislature. An initiative passed in 2010 requires the legislature to set toll rates. This additional requirement created challenges but was achieved. Currently all proposed tolling projects must be specifically approved by the legislature.

Virginia – The State already had P3 authority with the PPPTA Act of 1995. In 2002 the act was amended relative to design-build provisions. The original 1995 Act had good intentions to have the legislature make the up-front policy decisions, and then let the engineers and planners take over. In practice, the legislature was reluctant to relinquish control over the P3 projects (e.g. Hampton Roads Midtown Tunnel). By 2004, when the I-495 unsolicited project proposal was made, the State appointed an independent review panel, which ended up voting in favor of the private consortium proposal.

Obtaining Authority for Zone-based Congestion Pricing Schemes

Zone-based pricing schemes have evolved from a variety of legislative beginnings. In London there was strong national support and enabling legislation. In London the Greater London Authority Act 1999 established the authority of the mayor. This was followed by the 2000 Transport Act, which expanded pricing authority to the rest of the country except for Scotland. This legislation paved the way for implementing the London pricing program.

In New York City, the possibility of a UPA grant encouraged City Hall to propose congestion pricing in April 2007, and UPA deadlines accelerated its consideration. Once the Mayor announced his plan, work proceeded quickly with the City leading a multiagency staff group, and then through a Commission set up by the legislature. While the regional groups proceeded well with the planning effort, City Council approved the plan and the State Senate was likely to do so as well, but the plan failed to gain support in the State Assembly. The primary legislative concern was the perceived lack of benefits to drivers (e.g., reduced congestion) relative to the cost of the charge. This experience pointed out the difficulty of achieving statewide support for a specific regional transportation program.

In Sweden, congestion charging was considered in both Stockholm and Gothenburg. The Stockholm plan was first initiated in the early 2000s. Initially there was no legislative authority—but local agencies pressed the national legislature to get involved. The Stockholm pricing scheme was approved as a ‘trial’ for 7 months during a 3-year period. Social Democrats took away some of the political heat by holding a referendum after the 7-month trial. Stockholm still needed national legislation (termed a “national tax” under Swedish law) to fully authorize the pricing scheme. Local agencies needed to ask for this authority, so the city of Stockholm proceeded to make the request, even though the leader of the city was not supportive. The referendum passed in 2007, providing funds to pay to construct a new ring road plus a small amount allocated to transit. The city came on board after the trial period ended.

Gothenburg Initiated planning for a cordon pricing scheme in 2009. The city’s goal was to help fund needed infrastructure, including for transit. They used a similar planning process as Stockholm but had new national legislation that delegated the congestion pricing decisions to a regional authority. The Swedish National Road Administration was supportive of the scheme along with the City of Gothenburg. This support overcame the initial resistance to the idea by the Swedish Department of Growth. The pricing scheme opened on January 1, 2013.

Parking Pricing Decisionmaking

Parking pricing decisionmaking tends to be more localized within a city or other municipal agency. Parking has always been a very visible, contentious and political issue within cities, given the localized relationship between parking, local businesses, and municipal funding. The advent of parking pay stations and potential for variable on-street meter parking rates creates a new institutional dynamic—cities now have more control over the hourly parking rates charged in different areas within a city. The complication is that cities control most on-street and some off-street parking, but most off-street parking is privately owned and operated. In the SFpark project, the San Francisco Metropolitan Transit Authority was able to obtain legislative approval early in the process through the city council rather than obtaining state approvals.

The FHWA primer Contemporary Approaches to Parking Pricing (2012) provides additional insights into the complexities of implementing parking pricing programs, including examples from San Francisco, Seattle, New York City, Chicago, Los Angeles, Washington, DC, Ventura, CA and Aspen, CO. The primer is available at https://ops.fhwa.dot.gov/publications/fhwahop12026/index.htm.

Organizational Strategies for Priced Roadways

Roadway pricing projects often pass through multiple jurisdictions and require close coordination among State, regional, and local agencies.

In Miami, the I-95 project involved two Florida Department of Transportation (FDOT) districts, the Florida Turnpike Authority, two Counties, and two Metropolitan Planning Organizations (MPOs). There was no formal "agreement" between FDOT and the Turnpike Authority, but staff were given specific authority during project planning, construction and operation. The agencies are working together well without official agreements.

In Atlanta, the primary agencies designated "lead" responsibilities split by topic: Design, Procurement, Project Management, Policy, and Finances.

In Minnesota, the Minnesota Department of Transportation (MNDOT) was the project lead, but the State also created a project management team consisting of a local consultant, a national consultant, and the Humphrey Institute. This management team became the "independent" face of the project and helped to dispel the perception that MNDOT was forcing tolling onto the public. In essence, this team held MNDOT at arm's length on the project so the agency did not appear to be primary champion. This proved to be a very effective approach.

In Los Angeles, the Los Angeles Metro Chief Executive Officer held a weekly staff meeting and included an agenda item at every other meeting to discuss how the senior staff were coordinating on the project. This organization set forth a culture that promoted full integration of the program team rather than just cooperation for a single project. In turn, the leadership style broke down internal organizational silos, which can hinder implementing pricing strategies. One challenge was to develop a cooperative agreement defining roles and responsibilities between LA Metro and Caltrans, but this agreement was achieved.

In Seattle, the SR 520 Bridge tolling project has been a joint effort between WSDOT, King County Metro (i.e. transit service provider), and the Puget Sound Regional Council. These agencies collaborated on the Urban Partnership proposal and have remained active partners during implementation of the pricing project. WSDOT is the overall lead for the project, which requires coordination between the Toll Division and the Northwest Region, which is constructing the new floating bridge and connecting freeway segments.

Integrating Public and Private Sector Organizations

The Virginia 495 Express Lanes created a new organizational structure within the Virginia Department of Transportation (VDOT). Both the public and private sector partners needed to be integrated into a team, so, to accomplish this, VDOT set up an internal structure to manage the I-495 project. A 2002 VDOT reorganization created two divisions: the Innovative Project Delivery Division, and the Innovative Finance Division. This structure worked reasonably well, but the two divisions were still somewhat independent. In December 2010, the Secretary created the Office of Transportation Public Private Partnerships (OTP3), which then oversaw the two innovative divisions.

Organizationally, VDOT hired a General Engineering Consultant, which was responsible for interacting with all of the affected parties. VDOT and the consulting team shared many responsibilities for design, but VDOT retained approval authority for monetary expenditures and task order changes. Given the newness of the P3 process, the various divisions within VDOT had different understandings of what was included in the contract. In hindsight, staff indicated that it would have been very helpful to make sure that all VDOT staff clearly understood the contract with the private concessionaire. This could have prevented some misunderstandings and avoided some change orders. Complicating the issue was the fact that the concessionaire initially did not know much about the Northern Virginia planning process. To resolve this, VDOT hired a seasoned professional from Fairfax County to manage the overall planning process.

Some VDOT divisions and personnel were less willing to give up design and implementation control to the concessionaire. There was a perception that the State would ultimately be responsible for the project, so relinquishing control was difficult. In the early months, moving beyond the normal processes the VDOT was used to was problematic, even though the senior department managers embraced the overall project. Some of the challenges were also organizational: at the start of the project, VDOT handled the P3 as part of its "normal operations," which meant that the few people involved made the project a priority. Subsequently, VDOT put one person in charge and set up a separate office for P3. More streamlined procedures and processes followed, the level of trust strengthened between the parties, and clear expectations were articulated on both sides.

Organizational Challenges with Zone-based Pricing

For zone-based pricing schemes, having regional political autonomy facilitates making decisions. London is the prime example of having a central government that controlled the planning, design, and implementation of the congestion pricing scheme.

New York City had similar aspirations, but the greater institutional complexity made it complicated to gain public and political support. While the city led a strong multiagency working group including city, State and transit agencies, the Metropolitan Transportation Authority (MTA) would have spent the money. Despite a “lockbox” provision in the proposed authorizing legislation, many questioned whether the revenues would be spent as intended, undercutting support for the plan.

Parking Pricing Organization

Parking pricing has many of the same institutional issues associated with multiple agency involvement, but parking also has some unique challenges. Institutional issues follow who controls the parking and who pays the parking. A city controls only a certain amount of the available parking; most of the parking in key congestion areas is privately owned and operated. This reality requires close coordination between the agency and the private sector. The use of in-pavement parking sensors and potential inclusion of private parking operators introduces complexities for negotiation of a parking pricing scheme, although this usually would not change the overall program organization.

Another complication is the competing needs for curb space on city streets. Within an urban area, the curb space accommodates parking and many other uses—commercial vehicle loading, taxis, bikes, food trucks, etc. As a result, parking is highly visible and political, leading to local officials making parking decisions based on qualitative factors that don’t necessarily benefit the city's overall parking program.

SFpark in San Francisco is the first parking management project to set parking rates in a very transparent fashion using quantitative, real-time parking demand information. SFMTA controls on-street parking as well as several off-street public parking garages. This gives the program flexibility to price both the on- and off-street parking to achieve the project goals.

Before the SFpark project, it cost more to park in a garage than a meter, with a result that garages were underutilized. The SFpark shifted 14 of the 20 SFMTA public parking garages back to their original purpose – short term parking rather than commuter parking. SFpark lowered most hourly rates (at the vast majority of garages and times) but increased the cost of commute (early bird/daily/monthly) parking. This action affected some commuters who were used to all of the "early bird" parking specials, and seems to have influenced the market price or pricing structure at surrounding privately owned/operated garages.

Zone-Based Pricing Objectives

There are several examples of how the definition of objectives influenced the design and success of zone-based congestion pricing schemes:

London – The overall focus of the London scheme was to reduce delay for all travelers within central London. This goal led to these objectives:

• Create less delay for remaining traffic
• Reallocate road space to environment
• Improve crossing times for pedestrians
• Provide modal choices for people

Within this context, most people perceived that they would see some benefits from the pricing scheme.

• Reduce Vehicle Miles Traveled in downtown by 6.7%
• Reduce traffic delays

• Improve the environment (air quality, Co2)
• Improve traffic flow entering the city center
• Raise transportation funds

This cohesive set of objectives provided a stronger basis for public support and its implementation.

Manchester (UK) – The Manchester plan did not specify clear objectives and benefits, which may have contributed to its lack of public and political support

Planning for Roadway Pricing

Roadway pricing projects share a need for setting an understandable planning process with clear objectives. As an example, the Atlanta I-85 project team asked the following question at the start of and during the project development: "What are the project fundamentals?" "What is the purpose of this project?" "What must be accomplished?" Answering these questions led to a definition of key objectives and the identification of which team members would be responsible for each action.

In San Diego, the I-15 project had a specific focus on lane management and maintaining Level of Service C. These clear objectives helped to frame inter-agency expectations.

The Los Angeles I-10/110 team laid out specific project objectives, but during the planning stage team members developed some competing expectations around the treatment of HOV 2+ vs. 3+ users in the priced lanes. An original objective included allowing HOV 3+ vehicles into the HOT lanes for free, while HOV 2 vehicles would pay the toll. This objective generated debate around the local public policy that promotes carpooling at all levels.

In Seattle the HOV eligibility issue also arose as a policy debate relative to proposed express toll lanes on I-405 and for tolling on the SR 520 bridge. On I-405, an existing HOV-2 lane would be converted to dual HOT lanes, with HOV 3+ vehicles paying no toll. This planning decision affected both revenue estimates and carpool promotion within the region. The SR 520 corridor already had an HOV 3+ rule on the managed lane approaching the bridge. In this case, the planning decision to charge tolls to all HOVs (vanpools and buses are free) was relatively uncontroversial.

Injecting Private-Sector Initiatives into the Planning Process

In Northern Virginia, a complex planning process was already underway for the Capital Beltway (I-495) expansion when the unsolicited HOT lane proposal arrived from the concessionaire. At that time, the I-495 alternatives being considered would result in substantial right of way takes and high capital cost. The concessionaire proposal promised a smaller project footprint with a much lower price tag. It also brought HOV/HOT lanes and transit benefits into the corridor. After substantial review, this design concept was added as a new alternative and the EIS process was restarted and completed. Having the EIS process already underway streamlined the approvals and was likely seen as a positive factor by the private applicant.

Setting the Pricing Area Creates Equity Issues

Zone-based congestion pricing schemes deal with a broad range of equity issues. This is because an artificial boundary is established, creating different classes of travelers—those who pay and those who don't. Issues surrounding vertical equity (also called income equity) certainly exist, since all travelers must pay. Setting the boundary location and size can therefore affect equity.

In London, income equity was not seen as a huge issue since transit is strong and bus riders would benefit the most by the increased transit service. Rather, the primary inequalities were seen as being spatial, with primary effects falling on businesses inside/outside of the boundary and near the boundary.

In the New York City situation, the proposed pricing scheme boundaries encompassed the Manhattan business district (initially, from 86 Street to the Battery, and later from 60th Street to the Battery). However, the plan also credited tolls paid against the congestion fee, with the result that far more drivers crossing from New Jersey would partially or completely escape the congestion fee, as compared with drivers entering from Queens, Brooklyn or northern Manhattan/the Bronx. This perceived spatial inequality was a major point of contention about the plan.

Roadway Pricing Outreach Tips

Roadway pricing evokes strong initial public reactions, typically negative. Each of the operating HOT lane projects included extensive public outreach focused on telling the public what HOT lanes are, how they operate, and what would be the potential impacts or benefits.

Some of the tips from these outreach efforts include:

• Use messaging that emphasizes potential benefits to users, such as using the term "value pricing" and giving people a "choice." San Diego emphasized that "these are managed lanes that are not static and can be adapted over time."
• Emphasize a regional strategy that diffuses the question "Why us? Why can't you do it somewhere else?" In Los Angeles, they branded the effort as a "program," not a "project."
• Distinguish between "customer" and "driver." Roadway pricing creates new "customers" for the agency, while the term "driver" implies an impersonal and generic perspective.
• Keep the outreach going after the project is open. In Minneapolis, there was initial skepticism of the I-394 HOT lanes by some communities that didn't see the potential benefits coming to them. Legislators and community leaders persuaded the public to give the project a chance. Once the I-394 project was in operation for a few months, people quickly saw the direct benefits to them as travelers and didn’t witness any substantial negative effects. The outreach campaign used this information and positive opinion polls to further build public support.
• Deal directly with community concerns. In Los Angeles, most of the negative reactions to the proposed I-10/110 HOT lanes were from legislative and elected officials' pushback. Anti-pricing elected officials had a negative perception of how the HOT lanes would affect equity within their communities. In reality, most of the low-income communities were less concerned about the HOT lanes and more concerned about using HOT lane revenues to improve transit service along the HOT lanes.

SFpark Public Outreach

SFpark conducted a 3-year outreach effort to educate the public, the private parking operators, and local businesses. The program has not been very controversial, since it was portrayed as a win-win solution, including making parking easier to find and promising fewer parking tickets.

The city emphasized that the program would focus on demand management rather than revenue generation. The "revenue neutral" objective was an important marketing message. The project team specifically avoided the use of obscure jargon such as "congestion pricing" or "traffic management."

What about Holding a Public Referendum?

In Europe, leaders in charge of planning proposed zone-based pricing schemes grappled with the question of whether to ask the public its opinion of congestion pricing in the form of a referendum. Here are some observations:

• London – Mayor Livingstone said no vote was needed and moved ahead with the project. This points to the centralized decision-making for the London scheme.
• Edinburgh – The Scottish government gave approval for the pricing scheme contingent on gaining public support. It wasn't clear that the legislature required the city to go to referendum, but they did. The Pricing scheme lost by an 80/20 vote.
• Manchester – The city held a referendum, including residents of 10 local authorities. The process became very political. For example, local groups lobbied to support candidates if they committed to support the referendum. The vote also lost 80/20.
• Stockholm – The city implemented the pricing scheme first, and then held a referendum, which passed 53/47. Speculation was that implementing a "pilot" pricing scheme for several months helped to build public support.

Public referendums are always difficult to predict, especially dealing with an entirely new transportation and revenue concept that includes "tolls."

Examples of How Priced lane Projects Address the Revenue Issue

• Atlanta – During the I-85 project development, the planning team discussed future revenue allocation, but because the project was unlikely to have much excess revenue to deal with in the early years, the issue was successfully moved to the back burner. Each of the agencies did have a position on where the funds should go, so the topic will arise later as the project matures.
• Miami – The I-95 project team estimated that it would be 2031 before the HOT lanes are making a profit. The first priority for surplus revenue would go to operate the corridor. Subsequently, the legislature passed a law specifying that once the non-toll funding has been repaid, any remaining toll revenue would be used for the construction, maintenance, or improvement of any road on the State highway system within the county or counties in which the revenue-producing project is located.
• San Diego – The I-15 HOT lanes generate revenues in excess of operating expenses. SANDAG is required to cover its share of the Caltrans cost for operations of the express lanes based on the availability of revenue and the percentage of FasTrak traffic. Any excess revenue must be spent within the corridor and, although there is no specific revenue allocation requirement, historically, around 25 percent of net toll revenue has been spent on corridor transit investments. In 2012 this amounted to around $1 million annually. The funds are paid to transit from previous year revenues.
• Minnesota – The enabling legislation allowed the State to borrow from other capital program funds to implement a toll facility, but the project revenues must then be used pay back the fund from which the money was borrowed. In addition, the Law established that 50 percent of excess revenue (after capital recovery and operations) must to be used for transit enhancement and 50 percent must to be used for other corridor improvements. This provision added an incentive to support the HOV to HOT conversion.
• Virginia – With the private concessionaire involved in the I-495 project, negotiations about costs and revenue sharing became a focal point of the project agreement. After negotiations, VDOT agreed to share the costs as follows: VDOT would pay 30 percent, the concessionaire would pay 28 percent, and the remaining 42 percent would be borrowed with the private sector holding the risk. Over the years, if the project profits exceed a specified level, the agreement provides for a profit sharing split proportionally among the public and private funding partners.

Administrative Cost Issues with Zone-based Pricing Schemes

A big issue for zone-based congestion pricing schemes is management of administrative costs. Given the ongoing need to monitor traffic and process the revenues, administrative costs are typically in the range of 15-25 percent. The City of London wanted to make sure that its cordon pricing scheme worked well and focused extra attention on administration. As a result, the city was spending 40 percent of the pricing revenues on overhead costs. This percentage has been reduced as the program has matured and the cordon boundary was expanded.

Managing Parking Revenues

For parking pricing programs, a successful strategy has been to invest the parking revenue into neighborhoods where it's collected; this has been an objective in Washington, DC. Making this commitment builds agency credibility and gives the opportunity to show a direct link between increased prices and the service that's provided.

Parking revenue allocations in San Francisco are set by city charter to go to the SFMTA for funding of transit and related programs. Parking management rather than revenue generation was the primary objective of the SFpark program. As a result, allocation of revenues was not a big issue during the development of the program. The SFpark team did not promise revenue neutrality, but emphasized that some revenues would increase (meters) and others would decrease (citations/garages). During the test phase, they also publicized that the program would change parking prices as demand requires, thus affecting the overall revenue mix.

Implementing a Parking Pricing Program

Parking pricing programs typically require an investment in parking sensor technology and data management. Often these technology changes create new relationships between a city and parking vendors. While the technology is important, there are many non-technical, often very simple, implementation issues that will need to be addressed, such as making sure that the parking spots are numbered so that a person knows which spot to pay for, perhaps with his/her cellphone.

The San Francisco SFpark program is taking advantage of new parking sensor technology and the city's expanded data management system to provide real-time information to travelers about available parking spaces and their prices. Regular interaction takes place between the SFMTA (lead), its meter shop and information technology departments, the private company that collects the meter funds, and various meter vendors. This is a case where the city is pushing the envelope on available technology but not getting too far ahead of the curve.

The SFpark program also allows the city to manage employee parking. Previously city vehicles were able to park for free at public parking facilities. Now, all city employees, except police, must pay. This change in policy, not directly tied to SFpark, reinforces the objective to have the pricing apply to everyone and is important for credibility, since the program is asking people to look at parking in a different way.

The parking sensors installed by SFpark have created a new level of maintenance requirements for the city, which hopes to move away from in-pavement technology within a few years. New York City is also testing sensor technology and also exploring complementary technology, such as cameras and license plate readers for parking availability.

Roadway Pricing Implementation Challenges

Each roadway pricing project faces the basic challenges of starting the project successfully and ensuring that the priced facility works smoothly over time. However, there are some unforeseen issues that can arise.

For example, the Miami I-95 project faced a couple of particular implementation challenges

• Develop Pre-opening Policy for HOVs and Exempt Vehicles – The I-95 project elected to develop and implement a carpool registration process, which was not in place prior to the HOT lane conversion. They also needed to establish a hierarchy for when certain vehicles are "bumped out" of the HOT lanes based on traffic conditions (for example: buses,3+ HOV, Hybrids, 2+ HOV)
• Develop agreements between transit agencies (across county lines) – Given the long length of the I-95 project, there are multiple transit agencies involved. Issues needing to be addressed during implementation included:
  1. What if a bus in one county breaks down in the other county?
  2. Can we unload from one bus to another bus (even though it's a different county's bus).
  3. How can we gain cooperation when one agency doesn’t want to work with the other agency's bus?

The project team was able to have the transit agencies agree to help with transferring passengers and setting up rules regarding fares.

The San Diego I-15 project went through various implementation stages. It started as a 2 year pilot project using a simple decal program. The agencies used this pilot to gauge success and then received broader legislative approval. Later on there were some concerns about the timing of the tolling to match the opening day of the express lane project. There were also many issues surrounding the customer accounts, such as payment of a monthly administrative fee. These were worked out over time. When the express lanes were extended from 8 to 20 miles, Caltrans needed to provide more access (initially just one access point, now 22). This major operational change led to higher operating and maintenance costs, including enforcement. Finally, with the I-15 express lanes extension having multiple access points, dynamic per-mile tolls were introduced to replace a single distance-based toll used on the original HOT lane project. These changes required more sophisticated design features but also provided the ability to process a multitude of tolls collected electronically at different points along the corridor.

The Minnesota I-394 project provides a good example of needing to set up and operate an efficient and credible toll collection system. MNDOT hired an internationally reputable toll operator, which was provided space at a State-owned customer service center. An initial public concern was that the toll authority would price the facility to maximize revenue collection and then use the revenue how they pleased. Apart from State legislation that specifies how the funds should be collected and accounted for, MNDOT established strict protocols. The operator collects the money for MNDOT and deposits the money directly into a State account, eliminating the possibility of fraud. The operator was hired under a professional technical services agreement, so there are no incentives regarding the amount of revenue collected.