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Charging & Tolling A toolbox within a toolbox A diversity of tolling business models offers a wider toolbox of finance options, as the IBTTA’s Patrick Jones explains.

he business models for America’s tolled high- The design of the reflected the philosophy of the time, with ways have gone through several different evo- President Dwight D. Eisenhower leading the charge for an integrated lutions over the last 75 years, reflecting a suc- highway network that would facilitate the flow of goods and people, cession of shifts in transportation policy and serving as the backbone for a stronger economy. politics, financing and funding models, urban “The ceaseless flow of information throughout the Republic is T patterns, customer needs, and technology. matched by individual and commercial movement over a vast system And with more and more decision-makers of interconnected highways crisscrossing the country,” Eisenhower expressing renewed interest in tolling, it’s that said in February 1955. “Together, the united forces of our communi- very diversity that makes it so easy for the industry to present itself as cation and transportation systems are dynamic elements in the very a practical solution to the transportation infrastructure funding crisis. name we bear — . Without them, we would be a mere User financing is often described as alliance of many separate parts.” one important part of the wider toolbox Consistent with this grand vision, agen- of highway funding options. But a closer cies received monopoly authority to build big look reveals that tolling is actually a toolbox routes and big institutions, with a large work within a toolbox, offering at least four dis- force to collect tolls and maintain the . tinct models that developed in response to It was an all-important milestone. But different local or regional circumstances. the original toll roads bore little resemblance “A rural road in Pennsylvania, a com- to the business models that followed. muter highway in , and a freight gateway in New York all have different Following the demographics characteristics, challenges, and needs, and From the 1970s through 2000, metropoli- it would make no sense to try to impose a tan areas saw the need to build circumferen- one-size-fits-all solution on such a diverse tial, urban arterial roads to serve a growing transportation system,” says Rob Horr, population. The Orlando-Orange County president of the International , Tun- Expressway Authority, the -Dade nel and Turnpike Association (IBTTA) and Expressway Authority, the North executive director of the Thousand Islands Tollway Authority, and the E-470 Bridge Authority. in were among the special-purpose “The good news is that each of those authorities set up by local entities to relieve roads can look to the tolling industry for a specific pressure points across the system. different business model that might be right E-470 is a partial ring road around Den- for them, which means the decision on ver, and an interesting example of a consor- whether and how to toll in the United States tium formed by five suburban counties — not is best left to local and state governments, the , and not the state. Today, the E-470 with a blessing, but not a mandate, from the connects with the Northwest , a federal government.” Patrick Jones, 75-mile-per-hour toll road concession that executive director serves two adjacent counties. This county- Where it all began and CEO of the based model has become more common The golden age of tolling in the US dates International Bridge, over the last two decades where local and and Turnpike back more than three-quarters of a century. Association (IBTTA) regional authorities have proven very suc- The 1930s to 1950s were the era of the cessful in building local public support. cross-state toll roads like the Pennsylvania This experience reflects the axiom that Turnpike, the Turnpike, the , the Maine Turn- all tolling, like all politics, is ultimately local — that the need to toll pike, the New York State Thruway, and the Turnpike. depends on local circumstances, and the ability to introduce a toll These rural, Interstate-type highways were built by toll authorities road depends on local assent. Toll authorities can earn wide public under state charters and funded by bond issues. Opened in 1940, support and understanding when customers can see that the tolls that the was the first “modern” toll road, and sev- they pay fund improvements to the roads they drive. eral other roads predate the establishment of the Interstate highway That connection is most obvious when an agency has a focused system in 1956. mandate in a limited geographic area. But larger agencies like the

44 ITS International March/April 2013 www.itsinternational.com - updated content every working day Charging & Tolling

New Jersey Turnpike Authority and the Illinois Tollway have earned strong public support for toll increases by linking the “The decision on measures to individual roads and specific local conditions. whether and how to toll in the United Congestion relief A more recent trend is to increase capac- States is best left ity by introducing “priced” managed . Interstate 25 in Denver, Interstate 394 in to local and state Minnesota, and in all governments, with feature high-occupancy vehicle (HOV) lanes that have been converted to high-occupancy a blessing, but toll (HOT) lanes that allow single-occupant vehicles to use the lanes for a fee, while not a mandate, still offering free or reduced-price access for HOVs. from the federal Consultant Larry Yermack, president of government” Wendover Consult, sees this uptick in state department of transportation involvement Rob Horr as the most significant new trend in tolling. “The state DOTs are interested in toll- ing because they don’t have any money,” he wrote. “It’s been nothing but reductions in transportation funding, and nothing on the horizon to suggest that streamlined its management, eventually rebuilt it, then used that asset we will ever return to the previous levels of funding,” so the stage is as an anchor for further development. set for creative solutions. “Either the money comes from somewhere The vision is less grand, more metropolitan than Eisenhower’s or the states reduce the size of their programs, which isn’t a very original plan for the Interstate system, but in its time and context, it good idea. So they’re going to want to make up the revenue. There’s works. In a recent news article in the Austin American-Statesman, clear interest in tolling at many levels of government.” the agency earned praise for running a lean, efficient, stable opera- The state agencies don’t necessarily think of managed lanes as tion. toll roads, but all-electronic tolling (AET) is the gateway that enables ’s State Road and Tollway Authority (SRTA) was estab- them to manage congestion through dynamic or time-of-day pricing. lished to operate a few miles of urban highway, but legislators eventu- A shining example in this generation of regional tolling agency, ally expanded its charter to cover the entire state. SRTA’s history the Central Texas Regional Mobility Authority (CTRMA), celebrates and focus make it much more amenable to coordinating or even its tenth anniversary this fall, with two toll roads open and nearly $1 underwriting public transit, an expectation that doesn’t always sit well billion in assets. In contrast to more established agencies that formed with more traditional agencies with a fixed focus on the construction around large, iconic highways, CTRMA took over an existing road, and operation of a roadway, bridge, or tunnel.

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Public-Private Partnerships profile of a toll agency and to expand tolling The US has seen some private toll road into non-toll states.” development, although it has not been “There’s clear But Yermack said the ability of US public widespread. The 91 Express Lanes were interest in tolling agencies to borrow funds under tax-exempt developed by a private consortium, sold to debt drives public-private partnerships to- Cofiroute USA, a wholly-owned subsidiary at many levels ward the status of “niche business.” Private of Cofiroute, SA of France, and then sold concessionaires often make a convincing back to the local agency, the Orange of government” case that they can get the job done faster, County Transportation Authority. Segments better, and cheaper. But “they’re competing of the Trans-Texas Corridor were built by Larry Yermack with people who already have the authority Cintra US, a private developer/operator to do it themselves, so it’s a hard argument that joined the state in a 50-year strategic to win.” partnership under Comprehensive Develop- ment Agreement legislation. Abertis recently Competition inked a deal to reconstruct and operate the or interdependence? majority of Puerto Rico’s toll roads. At first glance, the new generation of nimble, Bob Poole, director of transportation focused, all-electronic toll operations might policy at the Reason Foundation, sees the appear to be a counterpoint to the more introduction of long-term toll concessions as established, state-wide business models. The the most important long-term tolling trend transition is often reflected in the organisa- in the last 15 years in the United States. For tion charts of the engineering and consulting both “brownfield” and “greenfield” sites, the firms that serve the tolling industry: while model involves private firms in toll road de- the tolling divisions emphasise roadway man- sign, finance, construction, operation, and agement and highway infrastructure, the ITS maintenance. teams focus on the gantries and sophisticated “Toll concessions bring much-needed technologies that support AET and dynamic additional capital investment into the pricing on specific roads and lanes. highway sector, along with innovations in But on the front lines, the reality is that pricing and design,” Poole wrote. “Rather the different business models for tolling are than being seen as a threat by established interdependent and mutually supportive. We toll authorities, they should be embraced use different models to accomplish different as expanding the toll sector overall, both things. A carpenter would never use a plane to take on projects that may not fit the risk to hammer nails or a screwdriver to carve

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46 ITS International March/April 2013 www.itsinternational.com - updated content every working day Charging & Tolling wood. That’s why the tolling industry is so cies formed around the idea that shorter, emphatic that tolling need not, and should urban toll roads were possible, more plau- not, be mandated for all uses. But it should “Toll concessions sible, and perhaps preferable to legislators be available as an option for state and lo- bring much- and customers. And in some jurisdictions, cal authorities that are searching for new, tolling supported a search for public-private effective funding and financing options for needed additional partnership models that would work well highway infrastructure. for all parties. When a jurisdiction opts for tolling, it capital investment” At every step, the driving force has been should have the flexibility to pick the option the need for safe, reliable mobility, and from within the tolling toolbox that best Bob Poole for the funding to keep America moving suits its business needs. There are vast dif- forward. As the nation’s highway infrastruc- ferences in function, volume, and funding ture deficit increases and gas tax revenues requirements between a rural highway with erode, the circumstances bring us back to a a high proportion of out-of-state traffic, a very familiar theme: Tolling is not the only downtown commuter with nearby rap- choice for highway funding and financing, id transit, or a major freight route between but it has to be an option for state and urban centres. So the decision to consider local authorities with major infrastructure tolling — in any or all of those scenarios projects to fund. — is just the first step in exploring a wide “The toll industry has significantly raised variety of business models. its profile over the past decade, and that is a very positive sign for its future growth, What’s old is new particularly given the need to phase out It’s been nearly 75 years since America’s fuel taxes and phase in mileage-based user first “modern” turnpike authority opened its fees (MBUF),” Poole wrote. “There will be roads, but the need to manage and spread considerable debate over whether MBUFs out the financial risk of major infrastructure should be seen as a new form of tolls (a development is still the guiding motivation dedicated user fee for specific facilities) or behind toll road development. In the first as a general transportation tax. The user- wave, quasi-governmental authorities were fee approach is far wiser, but it will take formed to issue bonds, fund them with tolls, a concerted effort by the toll industry and and develop the large highway systems that state DOTs to bring about this version of formed the backbone of the Interstate sys- MBUFs.” n tem. Over time, a new generation of agen- www.ibtta.org

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