Value Pricing Pilot Program: Lessons Learned Final Report August 2008 prepared for U.S. Department of Transportation, Federal Highway Administration prepared by K.T. Analytics, Inc. 6304 Haviland Drive Bethesda, Maryland 20817 Cambridge Systematics, Inc. 100 Cambridge Park Drive, Suite 400 Cambridge, Massachusetts 02140 KTA & CSI: VPPP Lessons Learned Final Report (August 2008) (Blank Page) KTA & CSI: VPPP Lessons Learned Final Report (August 2008) Value Pricing Pilot Program: Lessons Learned Final Report August 2008 Prepared by K.T. Analytics, Inc. Cambridge Systematics, Inc. Kiran Bhatt Thomas Higgins John T. Berg Lead Authors Jeffrey Buxbaum Evan Enarson-Hering Contributing Authors Prepared for Federal Highway Administration U.S. Department of Transportation KTA & CSI: VPPP Lessons Learned Final Report (August 2008) Value Pricing Pilot Program: Lessons Learned Expert Panel Kenneth Buckeye, MNDOT, St. Paul, MN Mark Burris, Texas A & M University, College Station, TX David Forte, WSDOT, Seattle, WA Randall Guensler, Georgia Institute of Technology, Atlanta, GA Greg Hulsizer, South Bay Expressway, San Diego, CA Todd Litman, Victoria Transportation Policy Institute, Victoria, BC, Canada MATTHEW MACGregor, TXDOT, Dallas, TX Lee W. Munnich, Jr., Humphrey Institute of Public Affairs, UMN, Minneapolis, MN Robert Poole, Reason Foundation, Plantation, FL Mark F. Muriello, The Port Authority of New York and New Jersey, New York, NY Michael Replogle, Environmental Defense fund, Washington DC Edward Regan, Wilbur Smith Associates, New Haven, CT William T. Roach, Seattle, WA WM R. Stockton, Texas Transportation Institute, College Station, TX Chris R. Swenson, CRSPE, Inc., Cape Coral, FL Derek Toups, San Diego Association of Governments, San Diego, CA David Ungemah, Texas Transportation Institute, Austin, TX KTA & CSI: VPPP Lessons Learned Final Report (August 2008) Foreword Notice This document is disseminated under the sponsorship of the U.S. Department of Transportation in the interest of information exchange. The U.S. Government assumes no liability for the use of the information contained in this document. This report does not constitute a standard, specification, or regulation. The U.S. Government does not endorse products or manufacturers. Trademarks or manufacturers’ names may appear in this report only because they are considered essential to the objective of the document. Quality Assurance Statement The Federal Highway Administration (FHWA) provides high-quality information to serve Government, industry, and the public in a manner that promotes public understanding. Standards and policies are used to ensure and maximize the quality, objectivity, utility, and integrity of its information. FHWA periodically reviews quality issues and adjusts its programs and processes to ensure continuous quality improvement. TABLETABLE OF OFCONTENTS CONTENTS Acknowledgments EXECUTIVE SUMMARY…………………………….……….….… i 1. INTRODUCTION...............................................................................1-1 Background........................................................................................................1-1 Purpose and Overview.......................................................................................1-3 2. SUMMARY OF VPPP PROJECTS AND FINDINGS ...................2-1 Pricing Project Category 1: HOT Lane Conversions With Pricing...................2-1 Pricing Project Category 2: Variable Pricing of New Express Lanes ............. 2-11 Pricing Project Category 3: Variable Pricing on Existing Toll Facilities .......2-16 Pricing Project Category 4: Regionwide Pricing Initiatives............................2-23 Pricing Project Category 5: Making Driver Costs Variable............................ 2-26 Pricing Project Category 6: Other Selected Pricing Projects ..........................2-30 3. CONCLUSIONS AND IMPLICATIONS ........................................3-1 Effects of Pricing...............................................................................................3-1 Feasibility and Implementation of Pricing ........................................................3-5 Evaluation of Pricing Projects...........................................................................3-8 Implications For Federal, State and Local Planners..........................................3-9 4. LOOKING FORWARD.....................................................................4-1 Potential of Value Pricing .................................................................................4-1 Planning For The Future....................................................................................4-3 5. APPENDIX A: REFERENCES AND RESOURCES .....................5-1 6. APPENDIX B: VPPP CASE STUDY PROJECT SUMMARIES .6-1 Introduction .......................................................................................................6-1 Project Summary Tables....................................................................................6-1 KTA & CSI: VPPP Lessons Learned Final Report (August 2008) Acknowledgments The research reported herein was performed by K.T. Analytics, Inc. under a subcontract with Cambridge Systematics, Inc. Dr. William Perez of Cambridge Systematics, Inc. was the project manager. Dr. Kiran Bhatt, K.T. Analytics, Inc., served as the principal investigator. Other key staff involved included: Thomas Higgins (K.T. Analytics, Inc.), John T. Berg (Consultant), and Jeffrey Buxbaum and Evan Enarson-Hering (Cambridge Systematics, Inc.). The authors are grateful to members of the “Expert Panel”, set up by the Federal Highway Administration, for invaluable comments and suggestions they provided for the interim and final reports. Thanks also go to the tolling and pricing and congestion pricing special projects team members at the Office of Operations in the Federal Highway Administration (USDOT) who provided overall guidance, made available Value Pricing Pilot Program (VPPP) documents and related data at short notice, and reviewed and commented on numerous drafts of the report. Needless to say, the authors alone are responsible for the accuracy of information presented and opinions expressed in the report. KTA & CSI: VPPP Lessons Learned Final Report (August 2008) EXECUTIVE SUMMARY Overview The purpose of this “Lessons Learned Report” is to summarize projects sponsored by FHWA’s Congestion and Value Pricing Pilot Programs from 1991 through 2006, synthesizing project experience, drawing implications for federal and project level roles and looking forward to future roles for pricing strategies. The 24 projects selected for review have been grouped into the following six categories of pricing strategies: • HOT lane conversions with pricing • Variable pricing of new express lanes • Variable pricing on existing toll facilities • Regionwide variable pricing initiatives • Making driver costs variable • Other pricing projects Background The Value Pricing Pilot Program (VPPP) has been a key component of the Department of Transportation’s (DOT’s) coordinated program to assist state and local governments in their efforts to stem the tide of escalating congestion costs. Since its inception in 1991, Federal pricing pilot programs have sponsored over 50 pricing projects and studies in 14 states. Projects and evaluations span a diverse group represented by the six broad concept categories described earlier. Of these, over twenty projects became operational. These projects and studies have generated invaluable lessons pertaining to the design, assessment, acceptability, implementation, administration and evaluation of pricing concepts. More than a dozen pricing projects implemented in the U.S. during the past 15 years have demonstrated that pricing can be politically and publicly acceptable. Most of the projects have met their objectives without any significant controversy. By influencing travel behavior, pricing projects have prevented congestion from occurring on priced lanes, reduced congestion on toll facilities, and improved utilization of highway capacity. Yet, issues remain with regard to public attitudes toward pricing; equity concerns; and acceptance. Technical problems have also stalled or delayed several projects. This report summarizes the promises and challenges of value pricing, and describes how these challenges are being addressed. KTA & CSI: VPPP Lessons Learned Final Report (August 2008) Findings For each project category, this section describes: • Impacts (congestion reduction and performance, cost/revenues, energy and environment, equity) • Implementation and operation details (planning and policy, outreach and stakeholder involvement, acceptability and politics, institutional issues, administration and enforcement); and evaluation • Lessons and implications for planners and managers Travel and Traffic Impacts With few exceptions, variable pricing strategies across categories have met their principal travel and traffic objectives. Pricing programs have demonstrated that pricing can have a number of effects on driver behavior and traffic volumes, including: changes in times trips are made, routes, or modes of travel; willingness to pay for faster travel times by traveling on toll lanes; reductions in peak-period traffic volumes and more efficient use of highway capacity. In particular: • HOT Lane conversions have gained better use of underutilized HOV lanes, kept lanes congestion free and not slowed or dissuaded HOV users. Also, there is some, albeit non-conclusive, evidence HOT lane conversions have brought relief