Tuesday 20 November 2012

HOT lanes open in LA and Virginia

In the world of road pricing, HOT lanes are a peculiarly US answer to the problem of poor pricing of highways.  With the exception of Israel, you wont find HOT lanes anywhere else, largely because the case for HOT lanes is usually based on getting better utilisation of existing HOV lanes by tolling single occupancy vehicles.  Rare is the case that it is economically efficient or financially viable to charge for new lanes, because outside peak times few people will use them, and so the assets remain barely used and not generating much net revenue.  As a result, they tend to be cross-subsidised to reflect the fact that new HOT lanes benefit the users of untolled lanes, by merely shifting demand over to those lanes.  The LA pilot that has been launched is funded by a $210 million federal transportation grant and $80 million from LA Metropolitan Transportation Authority.  

HOT lanes are appealing to politicians because they retain a measure of choice, motorists can pay to bypass congestion or can remain in congestion.  The retention of the poorly targeted HOV component (whereby vehicle occupancy is somehow seen as a blunt measure of better use of road space) is a political sop that does little besides reward families, couples and the handful of people who may work together and live in sufficient proximity to make it worthwhile.  In all those cases I take the view that if 2 or more people value an uncongested trip, they can split the cost of the toll.

Los Angeles

I've written before about the Los Angeles project, with a description here as it comprises two sets of dedicated lanes on major corridors to the south and east of downtown LA.  It is essentially a piloting of HOT lanes for the city, launched whilst the city region is on the cusp of selecting a contractor to undertake a study for a far more extensive network of "express lanes" (Peter Samuel describes why the term Express Lanes is a misnomer).

The key dimensions are:
- Two lanes each way acting as express lanes with specified access and egress points;
- All users, whether HOV or single occupancy vehicles must have a DSRC transponder, and declare how many people are in the vehicle.  Transponders require a $40 deposit, which becomes a credit to toll accounts;
- Tolls are dynamic, with prices rising and falling according to real time conditions on the HOT lanes.  Users pay the price declared at variable messaging signs located at access points.
- Prices are based on per mile usage of the HOT lanes, with a cap of $1.40 per mile being the maximum charged.  If the toll is at that price and the lanes operate at below 45 mph average for longer than 10 minutes, the lanes will be closed to new single occupancy tolled customers.  HOV users will retain free access;
- A low income assistance programme is included, offering transponders for free for selected users, but offering no discount on the toll (as use of the lanes remains optional);
- It is a one year pilot only.  What happens after one year is unclear, but presumably if it generates surplus revenue after operating costs, it may continue.

There have been extensive reports about the LA HOT lanes, which claim it will be a "culture shock" in a city that has had no tolled routes at all until now.

According to NBC Los Angeles, the Los Angeles County Metropolitan Transportation Authority is hoping the HOT lanes encourage commuters to think about their trips:

"We hope it changes commuter behavior in terms of getting people to really plan their trip before they start out," said Rick Jager, a spokesman for the Los Angeles County Metropolitan Transportation Authority.

Jager said the agency is encouraged that more than 30,000 drivers have already ordered transponders needed to enter the lanes, but he acknowledged that some motorists are resistant to the project.

The NBC report describes how motorists can open an account, it's worth noting that even HOV users must have a transponder, even though they need not pay.  They must simply flick a switch in the unit to "declare" it is a high occupancy vehicle, this is one way to deter casual usage:

Solo drivers may use the lanes but will have to pay a toll – from 25 cents to $1.40 per mile, with motorists paying more when traffic is heavier.

Carpoolers and motorcyclists can use the lanes for free, but all drivers must get a new switchable FasTrak transponder, ..., to use the lanes.

When traffic speeds fall below 45 mph for more than 10 minutes in the ExpressLanes, overhead signs will state "HOV Only," alerting solo drivers not to enter the restricted lanes, according Metro's The Source blog.

To obtain a transponder, drivers have to pay a $40 deposit that will go toward future tolls. They'll be billed a $3 monthly fee plus the cost of their tolls. Lower-income drivers can qualify for an "equity plan" that requires a $15 deposit and waives monthly fees.

There are several ways to open an account:

  •  call 511 and say "ExpressLanes";
  • go online at Metro's ExpressLanes website;
  • go to Metro's storefront at 500 W. 190th Street in Gardena;
  • go to Metro's customer service center at the new El Monte Station, 3501 Santa Anita Ave. in El Monte.
Violators who are caught in lanes wihtout a transponder by the California Highway Patrol could be issued a $341 ticket, Jager said. Cameras will take pictures of vehicle license plates for cars that don't have transponders, and the owner will be sent a bill, which could result in fines if not paid.

The transponder can be switched to signify one, two, or three or more occupants in the vehicle. It transmits a signal to an antenna above lanes, and the car is then tracked. Accounts are billed for miles driven.

More details on how it works can be obtained at the Metro Express Lanes website

That means that the transponder effectively means that in the longer term, the occupancy level may be raised to three, as one means of managing demand instead of simply raising tolls or in extreme cases banning non-HOV users.   In addition to the lanes, bus services on the corridors have been improved and all net revenues are to be invested in the corridors themselves by state law - although one would have thought the priority ought to be returning the money spend on the lanes in the first place.

Stephanie Wiggins, Metro's executive in charge of the program, said gross revenue from the 10 and 110 freeway toll lanes should total $18 million to $20 million a year. Program costs are not expected to exceed $10 million, and any extra revenue will be reinvested in transit or carpool improvements in the 110 and 10 freeway corridors.

Yet the costs are actually $290 million, which is being treated as a sunk cost of capital.  If HOT lanes are going to be promoted as a way of paying for new road capacity, not just a test of congestion pricing, then there needs to be some honesty about such costs.  It is, in fact, the primary reason such ideas get little traction outside the US.

The LA Times quotes Donald Shoup,  a professor of urban planning at UCLA, as saying that it is "about time", given the severity of congestion in LA.  The rest of the report tends to focus on existing users of the lanes who are upset they need to pay $40 deposit for a transponder to keep using them.   Yet it also reports opposition to the lanes for being "undemocratic", presumably the world would be more democratic if you didn't need to pay for what you use.

A New York Times article quotes Robert Poole of the Reason Foundation, who doesn't think it is a big deal:

"I'm not too optimistic about major, big results for the Los Angeles project... I hope I'm wrong. But I suspect that most of the users will be freebies. They won't collect very much revenue. And if only a small percentage of people are paying the charge, the impact on congestion is going to be small."

KCET TV has a TV news article describing the LA HOT lanes.

My view is that it is positive to expose users to pricing, particularly dynamic pricing based on maintaining minimum standards of service, but there needs to be a more hard-headed approach to wider implementation of such lanes.  The chief concerns of transport policy regarding highways in the US are lack of revenue to maintain and develop networks, and congestion.  This tool will help with the latter, but will not help with the former if it cannot generate net revenue over the capital costs of implementation.   In other words, there needs to be some business case honesty.  Hopefully the wider Los Angeles Express Value Choices study will deliver this.


The I-495 express lanes have opened in Virginia, with the Washington Times describing how this large project is a major public-private partnership:

The 495 Express Lanes project cost $1.9 billion. Virginia paid $409 million, according to Mr. Titunik. The two companies in partnership with the state, Transurban — a company that develops toll roads with offices in Australia and New York — and Fluor — a Texas-based engineering and construction company with an office in Arlington — funded $349 million in private equity and also backed $1.2 billion in loans and bonds.The state paid $260 million for the replacement of aging infrastructure, including more than 50 bridges and overpasses, pedestrian walkways, arterial roads, soundwalls and ramps.

The two private companies will get the revenues from the tolls, but if the lanes are successful, the state will receive a cut. Mr. Titunik said that the money will be invested in maintenance.

So in short, the state has part paid for the project, and TransUrban is providing significantly equity.  A contrast to the government funded LA project, which is admittedly much smaller in scale and only a pilot.

I-495 express lanes have a HOV threshold of three occupants, and comprise 14 miles of dual carriageway express lanes along the corridor.   Tolls have no cap so can be raised as high as is necessary to maintain a minimum level of service of average speeds of 45mph, hardly surprising when you have to convince private investors to risk money.  Prices are expected to range between $1 and $6 depending on traffic volumes.

However, the introduction has been reported as being rather bumpy, as some people entered the lanes accidentally then tried to reverse to avoid paying the toll.   What's astonishing is clearly how little attention people pay to road signs.

TollRoadsNews has an excellent article (with a map) about the project including the teething troubles, with Peter Samuel saying:

The 495 Express Lanes are a first not in the dynamic pricing as such, but for using such pricing in a very ambitious and complicated format with so many entries and exits. Nowhere else is there a tollway-within-a-freeway like the 495 Express Lanes equipped entirely with dedicated on- and off-ramps, and a lot of them catering to shorter trips as well as longer. Most others force users to enter and exit via the free lanes, weaving across the traffic. Or else they are long 'pipes' catering only to long trips, so shorter distance travelers can't make use of them. Many others, also are not much more than conversion and upgrade of existing HOV lanes. 

Not so the NoVA Beltway Lanes. Nearly a billion dollars of investors' money has been put into a complete rebuild of this section of the Beltway expanding it from eight lanes to twelve. And it has new direct entries and exits completely separate from the free Beltway lanes around Tysons Corner. 

It's going to be a boon to commuters in northern Virginia but it remains to be seen if they can make enough money to justify the investors' investment.

I wholeheartedly agree.

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