Toll major crossings in Vancouver to reduce congestion- says professor

The Delta Optimist reports on the views of Robin Lindsey, professor in transportation and international logistics at the Sauder School of Business, University of British Columbia, on urban road pricing in Vancouver.

He supports the idea of Delta Municipal Council Mayor, Lois Jackson, for a C$1  (US$0.77) toll on all major crossings in greater Vancouver as a starting point, but advocates going further.   

He says congested crossings should have higher tolls and these should be time differentiated, effectively targeting congestion where and when it is most severe, and conversely having much lower tolls at off peak times or times when there are no tolls.  He also implies that 22 pinch points on the network (which goes beyond crossings) should be charged, with perhaps similar charges on each for equity and public acceptability reasons.

He wisely opposed a downtown cordon/area charge scheme akin to London or Stockholm, because of the absence of congestion at those times.  

Evidence of impacts of peak toll charges is mixed.  In Sydney, a peak charge was introduced for the harbour crossings (A$4 in peaks, A$3 inter peak and A$2.50 off peak), but that had only a 0.19% impact on peak volumes.  Not enough to relieve congestion.  In San Francisco, a peak charge on the Bay Bridge did have an impact  (PDF), with a 4% reduction in vehicle traffic in the morning peak, but that paralleled introducing a charge for HOVs, which previously travelled free.  Demand elasticities at peak times may be quite low, requiring quite high charges to make a large difference. 

However, both such cases involved vehicles that already were paying tolls.  Introducing tolls where previously there were none should have a more significant demand response.

Meanwhile, check out this rather good video from Canada's Ecofiscal Commission, called Stuck in Traffic with an Economist in Vancouver. It isn't a bad summary of the core urban congestion/road pricing issues:

Vancouver toll reform needs fundamental rethink

Vancouver has been talking about roadpricing in one form or another for over five years now.  It has been driven by revenue, as ambitions to upgrade and expand public transport aren't able to be met by revenue from users nor existing sources of taxes.  However, behind it is also the interest in using tolls or urban road pricing options to achieve behaviour change.   Both can be achieved simultaneously, but the fundamental problem is public acceptability.  Nowhere in the world have motorists warmly supported paying more to use roads to pay for expansion of public transport.  Stockholm's congestion tax gained support because it literally demonstrably reduced congestion.  Manchester held a referendum on implementing a congestion charge sold primarily on raising revenue to pay for improved public transport, and lost 3 to 1.  

July 2015 a plebiscite was held on establishing a sales tax to pay for improved public transport in greater Vancouver, but nearly 62% of the 52% who voted in the plebiscite.  It seems less likely that motorists will support them paying for other people to get improved public transport, but that doesn't mean that road pricing in Vancouver is fruitless.  Instead, a more complete strategy needs to be developed.

Vancitybuzz reports that the Surrey Board of Trade supports "regional road pricing" with 60% of surveyed respondents agreeing with tolls being introduced on existing roads to support new infrastructure construction.  The issue in Vancouver arises from there being tolls on two bridges on the Fraser River, but not others raising the issue of equity among road users who pay directly to use some crossings but not others.  The report notes that not only are revenues on the (tolled) Port Mann and Golden Ears bridges well below forecasts, but that the untolled crossings are facing higher levels of traffic as motorists avoid the tolls.  One bridge (Pattullo Bridge) needs replacing and the plan is for the replacement to be tolled and the George Massey Tunnel is in a similar position.   The case for a comprehensive strategy to toll all crossings to pay for all crossing improvements and maintenance is not unreasonable, but it will create a de-facto cordon charge towards the south of Vancouver.

In the map below, the black dots are the Port Mann and Golden Ears bridges (from left to right), the red dots are the George Massey Tunnel and Pattullo Bridge (left to right), with a question mark over the Alex Fraser bridge (the only untolled crossing west of the Golden Ears bridges that doesn't need replacement).

Vancouver Fraser River tolled and untolled crossings

However, The Now newspaper online reports that British Columbia Minister of Transportation thinks a solution to the "toll problem" could be years away because it only matters if a decision is made to replace the Pattullo and Massey crossings with tolled crossings.   Whereas Premier Christy Clark when asked about "mobility pricing" (one of the many terms for charging existing roads) she said it was "controversial" and she isn't in a position to take sides (which I think is code for thinking it is a good idea, but not being sure how to support it and not lose too many votes).  

It seems obvious that focusing on toll reform at these crossings is a positive step, as long as it is focused on recovering the capital and maintenance costs of all of the crossings, with tolls that are higher at peak times to reflect demand (and conversely lower off peak).   Raising revenue for wider plans, especially those not involving roads is going to be more controversial (this CBC report indicates two-thirds oppose any increases in taxes or charges to pay for public transport)  but raising revenue for the crossings, including their maintenance will reduce pressure on public finances more generally.  

A long term strategy

Tolls exist on two crossings now over the Fraser River.  Two further crossings need replacement, so the case for tolling them should be able to be made, which raises the question of two other crossings that do not need replacement for now, but will face unacceptable levels of congestion if left untolled.  The case for tolling those crossings needs to be made based on the users of those crossings benefiting from the tolled ones - because of the transfer of demand (and congestion), and for those crossings to be better maintained as a result.  The tolls should be used not just to pay for crossings, but their approach roads and other routes directly related to using the crossings.  

If successful, the obvious next step is to think about the Vancouver Harbour crossings, but also to more clearly investigate more strategic reforms into how roads and public transport are funded for the Vancouver metropolitan area.   That means looking at existing taxes (on vehicle registration and fuel) and whether these need reform or replacement with more usage based charges such as are being piloted in Oregon and soon California (although fuel tax in Vancouver is much higher than in Washington State).   However, it should also do a proper study into the merits of urban road pricing for the city, whether it be looking at cordon charging, area charging or distance charging.  

Yet it also reminds me of how Australia is treating heavy vehicle road reform, (summarised here PDF) which is to reform how roads are funded and managed before introducing direct road user charges.  Going back to first principles may help increase efficiencies and make transparent why and how public funding of land transport infrastructure (and public transport services) is justified.  Having a funding and governance framework that is more widely accepted will make it easier to justify new or higher charges and proposals on spending.

Without this, Vancouver and BC will remain stuck between ambitions for spending that neither users nor taxpayers are willing to pay for, and infrastructure problems of both congestion and aging capital that need addressing.  Can the local authorities and province go to first principles and develop a long term strategy that can get wider support?

UPDATE:  Toronto Metro reports that Vancouver is likely to get capital funding from the Federal Government for at least some of its public transport initiatives, but still faces problems finding the funds to support operating subsidies, with road pricing still on the agenda.  Whereas the Toronto Star editorial from Sunday supports the use of tolls being introduced on two major highways in the Toronto area to fund repairs and upgrades of them, not only because those who pay will benefit from the improvements but because tolling can help reduce congestion (implying the use of peak time tolls to manage demand).  Although a separate type of project, this editorial from one of the largest newspapers in Toronto is a positive sign (although the editorial notes the political reticence over tolling).

Vancouver telephone debate indicates introducing sales tax would be unpopular

The Surrey Leader reports on a telephone town hall on the referendum for a proposed regional sales tax to pay for public transport improvements.  It reported on opposition to paying more, although a dial in poll indicated an almost even divide between confirmed opposition, and confirmed or indicative support for the sales tax.  However, one comment took my interest was the claim by Vancouver Board of Trade CEO Iain Black who is reported as saying that road pricing is proposed for the region and could reform the toll structure but said it isn't likely to come for 10 to 15 years.

Let's be clear, Vancouver could have road pricing in three years if it wanted to do so.  It could charge by a combination of distance, time and geography, with a back up of day passes for entry, if it wanted to.  It could combine this with reforming tolls on the Port Mann Bridge.   The issue is that the politics are seen to be too complicated.  It should be clear that the option of road pricing in Vancouver remains, but is not proceeding for political reasons, not technical reasons.  After all, Jakarta, Indonesia can roll out a pilot system in less than three years, Vancouver could certainly do the same.

News shorts: Vancouver, Washington State

Vancouver debates a sales tax to pay for transport

Although evidence and professional opinions would suggest that road pricing is the best way forward for Vancouver, it is instead going to hold a referendum on a sales tax that will be hypothecated to pay (primarily) for more public transport.  The tax will be 0.5% on all sales.  The North Shore news reports  that the tax will raise C$250m (US$201m) per annum, at a cost of between C$125 and C$250 per household, depending on which side of the argument you believe.  Of course that includes households that wont use any of the proposed transport projects and those who will use it everyday.  Equity and economic efficiency are thrown out of the door in the quest to raise tax revenue.

Hypothecated general taxes for transport are no more intelligent than such a tax for health or for subsidising farms.  However, it is a question of what can be done politically and legislatively, versus economic rationale.

A better approach would be at least some increase in taxes on owning and operating vehicles, a more rational appraisal of where benefits lie with some of the projects (and then charging accordingly) and looking at expanding tolling.  It is always unclear quite why everyone should pay regardless of their use of the transport network or the benefits they obtain (whether they be users, property owners or businesses).

Ballots will be sent out March 16, and votes must be in by May 29, 2015.  It's none of my business, but I'm hoping for a no.  Sales taxes are very poor ways of raising money for specific purposes, and it is telling that advocates of it clearly don't think they could convince the users of the new infrastructure to contribute much of the capital cost.

Washington state consulting on higher HOV thresholds for HOT lanes

According to the Bothell/Kenmore Reporter, the Washington State Transportation Commission in consulting on tightening up the eligibility for vehicles to use the I-405 HOT lanes that are currently under construction.  The idea being that high-occupancy vehicles (HOVs) will need three occupants to use the new lanes untolled.  This is inconsistent with the current approach to such lanes in the state, whereby two occupants are sufficient. 

I wrote about these lanes before, questioning their financial viability, but now it seems like this move is designed to partially address this.  However, the report indicates that having a three occupant HOV threshold is needed to cover operating costs, re-emphasising my point that new capacity HOT lanes invariably are a form of subsidised new capacity.  Those paying to use the lanes are not paying the capital costs of the capacity, but paying as a market mechanism to manage demand.  That's positive in terms of ensuring a high quality of service (and bearing in mind that users of parallel untolled lanes benefit from the transfer of traffic onto the new lanes), but it is not a solution for funding new capacity.  It appears that the key goal is meet the federal and state guidelines of maintaining a 45mph average speed, and it is more fair to target the HOV users, rather than hiking the tolls.

In terms of pricing the report says:

The recommended average toll for the express lanes will be between 75 cents and $4 at the start of the tolling system. More congested days would fall between $4 and $10, the latter being the maximum and expected only 10 percent of travel days. Seventy-seven percent of trips are expected to be below $1, according to the WSDOT.

As I've said before, I see value in converting underutilised HOV lanes to HOT lanes, and even in considering whether new lanes should be toll lanes.  However, as HOT lanes you leave some users benefiting whilst paying nothing more for vastly improved levels of service.  It is more equitable and financially prudent to simply build them as toll lanes.

Road pricing discussed in Vancouver - for revenue or for demand management?

Vancouver's problem is financial.  It wants more money, but it is also considering how best to sustainably improve the future of its transport networks.

Simon Fraser University's Moving in Metro page has a good collection of articles and presentations about the debate in Vancouver.

However, it appears the debate is moving towards proposals for a referendum on how to pay for public transport.  An option that appears to have a range of options, excluding one - that users might be asked to pay.

The Globe and Mail reports that there is now debate about whether to include road pricing and bridge tolls (a blunt option) to raise revenue for public transport.   The Provincial Government is apparently opposed to inclusion of "regional tolls" and "road pricing".

The report gives a good summary of the key issue:

The exchange is just the latest in what has been a five-year tussle between Lower Mainland mayors and the province in trying to figure out a way to pay for major transit improvements.

The two big projects on the horizon are a $3-billion subway line in Vancouver, from Commercial Drive to the University of B.C., and a $2-billion light-rail system in Surrey that would connect its city centre with three other important nodes.

Right now, TransLink, the regional agency that oversees transit, along with some roads and bridges in the region, pays for everything mainly through fares, property taxes and gas taxes.

That doesn’t provide the money to take on any more big construction projects, since the agency is already making payments for its hefty share of the recently built Canada Line and the Evergreen Line, currently under construction....

But the province has blown hot and cold on various suggestions, including tolls, road pricing, a vehicle levy, a regional sales tax and carbon-tax revenue.

The big mistake that could be made is that a solution is developed based on raising revenue rather than the impact on transport use and economic benefits.

It is clear that there could be reforms of taxation and funding of transport in Vancouver and the Province as a whole, and that there will be new pressures as Washington State progresses towards supplementing or replacing fuel taxation with road user charging based on distance.

However, the debate hasn't really gone far enough into focusing on how to treat road pricing.

Vancouver road pricing debate continued right up to the election

I wrote last year a couple of times about debate in Vancouver about road pricing.

Given it is the British Columbia Provincial Elections on 14 May, I thought I should outline some of the latest developments in debate over the past six months.

The NowNewspaper reports on how Surrey Mayor Dianne Watts thinks road pricing would be a fair and equitable way to raise revenue for public transport in Vancouver.  She suggests to radio station CKNW that it could replace property tax and reduce fuel tax.

Delta Mayor Lois Jackson also says it might be fairer than property taxes, but it hasn't been researched enough.  The Delta Optimist reports that she is less than impressed by proposals for more property taxes to pay for Vancouver public transport.

The Globe and Mail reports that Richard Walton, the chairman of the TransLink mayors’ council, says that road pricing has to be a new way of funding, not an additional tax.  

The Vancouver Sun reported on how the Mayors of Vancouver's boroughs rejected a property tax increase to pay for public transport.

I will report shortly about the outcome and what lies ahead for British Columbia in road pricing.

News Briefs - Australia, Canada, Ireland, South Africa, USA

Australia – Survey says distance based congestion charge would change behaviour

According to AAP, reported by Perth Now, a survey from the University of Sydney has indicated that a distance based congestion charge of A$0.05/km (US$0.08 mile) at peak times could see 22% of peak commuters driving at different times (assuming a charge between 0700-0930 and 1630-1830) and 13% to shift to public transport.

The survey comprised 1000 adults. 66% said they had no flexibility to change travel times for commuting, but the other 34% said they did.

Obviously a survey isn’t a wholly reliable measure of behaviour, but what I find telling is the potential for time shift. Far too many think congestion pricing is about mode shift, when there is as much (if not more) to gain from changing time of travel to periods when there remains spare road capacity, which means getting optimal use of the network.

Canada - British Columbia debates road pricing

According to Straight.com, British Columbian Green Party leader, Jane Sterk, has come out in favour of "pay-as-you-drive" road pricing for Vancouver, to reduce congestion and raise revenue to pay for public transport.  The same article notes that the current Minister of Transportation and Infrastructure for the province, Mary Polak (Liberal), says the issue is up to the cities to come up with a proposal and convince the provincial government that it has public support, whilst the Opposition spokesman Harry Bains prefers to consider other measures first.  The general election for British Columbia is on 14 May.

Meanwhile, the Delta Optimist has published an opinion piece by Ted Murphy who says that road pricing is likely to be the best option:

It stands to reason those who put the greatest strain on the system, and those who are most likely to benefit from any improvements, should be the ones that pay the largest share of the tab.

Conversely, it doesn't make much sense for homeowners, who are an easy mark but don't necessarily tax the transportation network, to continually be gouged every time TransLink is in need of more cash.

There's much to be worked out when it comes to road pricing, and there will undoubtedly be resistance to the idea of paying to traverse roads that up to now have been free, but at the end of the day I suspect it will be the favoured option.

It's not a question of if, but how, they're going to extract more money from us, so they might as well do it in the fairest way possible.

It isn't clear as to whether British Columbia voters think the same way.

Ireland - manual toll booths add costs to trucking firms

The Independent in Ireland reports that toll booth barriers cost them on average an extra (Euro) 0.99c each time (US$1.30) in wasted fuel.  This is with DSRC toll tags that enable automatic payment, but require trucks to slow down to a crawl to trigger the lift of the barrier.

This is crazy of course. The M50 toll road in Ireland was converted to electronic free flow a few years ago, largely because of congestion (it being the ring road for Dublin).  There ought to be a transition towards at least a mix of free flow lanes and barrier lanes.

South Africa - 24 years to repay debts for Gauteng Freeway Improvement Project

Eyewitness News reports that the South African National Roads Authority Ltd has said that it will take 24 years of toll revenues to repay the debts incurred to build the Gauteng Freeway Improvement Project. This is based on the (R)30c/km (US$0.05 per mile) rate agreed by the Government.  The maximum monthly that can be charged is R550 (around US$61).

USA - Maryland - Intercounty Connector exceeds forecasts

At a time when there are more than a few examples of toll roads that have demand well below forecasts, it is perhaps good news to report on the InterCounty Connector in Maryland (Maryland Route 200), a fully electronic toll road that opened in 2011.  According to the Washington Examiner, estimates of 30,000 daily users by June 2012 have been exceeded on the western end of the road by September 2012 (to 35,000) and not far behind on the eastern end (26,000).  The road raised US$19.7 in the year ended June 2012 compared to projections of US$18.7 million.

Debate continues in Vancouver about road pricing

I wrote a few weeks ago about how Vancouver is now having an active debate about the future role of tolling and road pricing in raising revenue and managing traffic in the city.  Unlike some other cities, where discussions appears to involve a large vocal and dismissive opposition to any form of tolls, it appears the debate here is more measured.  Those raising concerns are doing so whilst making some useful points, around equity and what money should be spent on.

Most recently , Frank Bucholtz editor of the Langley Times but writing for Peace Arch News says that

Surrey Mayor Dianne Watts advocates a distance based charge. Apparently, she anticipates that such a system would allow for a reduction in gas taxes, and if drivers see that those who drive the most actually pay the most, many of then will likely support such a system. 

This is the key point.  Talking openly about reducing other taxes changes the terms of the debate, which all too often will face opposition for simply charging more.  Bucholtz also notes proposals for distance based charging in Washington State (USA), which could provide a model on the doorstep of British Columbia.  Key to his article is noting that whilst many know of the London congestion charge, it is very important for the public and officials to be aware of many other options.

In the Vancouver Sun, Gordon Price, director of the City Program at Simon Fraser University, argues for a more comprehensive road pricing strategy than tolling the bridges (the obvious easy option). He says the reasons are: 

- The need for revenue to maintain the transport network the city needs. 

- Tolling bridges alone is inequitable. 

He advocates that Vancouver should look at the pilot trial to distance based charging being considered in Oregon. He says it allows charging by place, time and distance, although that misconstrues what is happening there – as it is just about a distance based tax for electric, hybrid and plug-in hybrid vehicles to supplement the fuel tax. However, in the context of Vancouver, having distance based charging would and should allow for differentiation by route and time of day.  This is exactly what is being considered in Singapore at present, and I have long held the view that this is the path towards the least distorting, and most economically efficient form of pricing.   Charging individual routes or cordons alone are very much second best options for many cities.

The big question is how to get to that point, as I believe it will need to involve a pilot, and incentivising people from paying fuel tax to paying by distance.  

Meanwhile, Vancouver does need to think about how it spends any money collected.  A letter to the editor of Tri-city News suggests that road pricing is about propping up the subsidised SkyTrain.  This suggests how important it is for those advocating road pricing to get support for what they are going to spend the revenue on.  It is, after all, the inevitable and inescapable question that gets asked of those advocating road pricing.

Calgary considers road pricing or a fuel tax rise

The Calgary Sun reports that the City of Calgary is having to consider how it bridges a funding shortfall due to declining real revenues from provincial government.  The options being floated include either raising fuel taxes or what it describes as "tolling", which apparently is more a case of more widespread road pricing.

Mac Logan, the city’s general manager of Transportation says there is a C$200 million (US$200.6 million) shortfall between 2013 and 2022.

The report continues to say that Logan would prefer an increase in the federal fuel tax, which is C$0.10/l.  Alberta also has a C$0.09/l provincial fuel tax.  However, there is a concern that such an increase would not see Calgary getting the revenue it seeks.  Tolling becomes more attractive, although he makes it clear this is not about funding discreet highway projects, but about raising revenue for the entire transportation budget.

What that implies is everything from congestion charging to a full network pricing initiative.

The newspaper report includes the predictable kneejerk reactions from politicians:

- Alderman Shane Keating said "A toll road system would be impractical for Calgary’s roadways — there’s just not enough room for such a system and the tolling booths could be easily circumvented her" and "All in all, toll systems are very inefficient in design".  What's a bet he thinks of manual toll booths as being tolling, and he thinks of tolling being individual points rather than a distance based charging system?

- Alderman Ray Jones said "people could simply drive through other neighbourhoods to get around it". Again, an area charge, zonal charge or distance based charge would avoid all of this.

It would be good for Calgary to at least explore options, and consider that the long term sustainability of fuel tax is questionable given vehicle efficiency and alternative fuels.  However, I'd suggest that if this is about revenue, the solution needs to be at the provincial level.  If Calgary wants to manage congestion, it could certainly consider options that deliver such benefits and generate revenue.

Conclusion

To determine the right solution, the problem needs to be well defined.  In short, Calgary should present, in a transparent way, exactly what will happen if it has a growing funding gap.  It needs to consider options for greater efficiencies, fare increases for public transport, fuel tax increases, parking and road pricing alternatives.  Then it can start to see how to match revenues to more efficient pricing overall.  Considering a source of revenue independent from its impact on behaviour and the distributive impact of that source of revenue is not likely to provide the best solution.

Vancouver Mayors hear views on road pricing

According to the Vancouver Sun, pricing existing roads in Vancouver has moved up the agenda a little, as a panel of experts (including well known figures such as Ed Regan and Jack Opiola) was invited to talk to Metro Vancouver mayors about options for road pricing.

Previously I have written:

- The C.D Howe Institute proposed converting HOV lanes in the city to HOT lanes which would raise C$81 million per annum, and offer a new congestion bypassing option on certain routes;

- Vancouver City Council is seeking more powers to raise revenue including options to toll existing bridges and roads;

- North Vancouver District Mayor Richard Walton suggests tolling bridges and highway on and off ramps;

- New Port Mann Bridge to introduce free flow electronic tolls and provokes talk of more road pricing.

Now it seems the mayors of the local authorities are open minded about how to move forward.  The article says that a number of points were made:

- Large scale options include zonal fees or distance based charging;

- All road pricing options mean a shift from general taxpayers to users (notable given the Mayors are to consider shortly whether to increase a long standing property tax to fund some transport projects);

- Jack Opiola suggested Vancouver had similarities to Stockholm, but might choose to introduce a system similar to Siena in Italy, which has multiple zones.  He also said that people perceive driving should be free regardless of the cost to maintain the infrastructure and that the city needs to define the costs it wants to recover to help the public understand;

- Ed Regan suggested that whatever is done needs to generate value for those paying elsewhere, such as reducing fuel tax given that fuel tax revenues are declining due to vehicle efficiency.  He also suggested that the broader the charge, the fairer it will seem to be.

Mayors seem open to looking at options. Radio station CKNW reports that Langley city mayor Peter Fassbender said that

"...... we're not just tolling bridges, we're looking at pricing throughout the region. User pay."

Meanwhile,  "BC Chamber of Commerce President John Winter says they and the Vancouver Board of Trade want mayors to approve the temporary property tax increase" although they admit it is a stopgap approach to funding transport.

Of course the real tradeoff is that to get the most revenue and greatest equity, you need the longest time and cost to implement the most radical option (time, distance, location based charging), in the meantime options such as charging only bridges, are feasible, but create distortions.

Vancouver has a reputation among public transport enthusiasts for being a city that has adopted sustainable solutions for urban mobility.  Whether or not that is true, the introduction of road pricing could have a profound effect not just on traffic, but on urban transport more generally and the urban form of the city.

I can only hope that Vancouver continues to get expert advice and has a sober look at options, and does so with an open mind to not just transplant what has been done elsewhere.

News briefs - Australia, China, Indonesia, North Carolina, Ontario, South Africa

Australia - Chair of Australian Competition and Consumer Commission advocates congestion tax

According to the Herald Sun, chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, says that congestion charging, carefully managed, with some money used to support public transport, would make a meaningful impact on congestion and help provide funding to support infrastructure development.  He was making this point at a speech at the John Curtin Institute of Public Policy in Western Australia.

The ACCC is Australia's competition and consumer law enforcement body.  Although it has no specific role in its area, to have a highly placed officer of this body, responsible for consumer advocacy, raising this point adds to the growing number of views expressed in Australia supporting congestion pricing.

China - government declares certain public holidays to be toll free

China's introduction of toll free public holidays has had a mixed response according to state newspaper Global Times.

The report said:

The State Council approved a plan on August 3 to lift toll fees on passenger cars with no more than seven seats during four national holidays of Spring Festival, Tomb-sweeping Day, Labor Day and National Day.

This year's National Day holiday coincidently comes the day after Mid-Autumn Festival, which is governed by the lunar calendar, creating an eight-day national holiday. The State Council has ordered that passenger cars be allowed to travel free on the country's toll roads from September 30 to October 7.

Given China's toll roads are mostly privately owned, the issue has been whether the law has been consistently followed by the private road owners.  People were sceptical that the toll free period would come into effect, and the key reason it was introduced appears to be populism.

The toll free period started at midnight, resulting in large volumes of traffic travelling after that time.  It is not entirely clear from the reports, but it appears that few measures were adopted for traffic management at toll plazas, as the tolls still applied to vehicles with more than 7 occupants.  So vehicles would queue at toll plazas to be quickly flagged on.  One wonders why it would not have been easier to make all vehicles exempt and to have confined the traffic lanes at plazas to a number that avoided the use of plazas to cascade and then merge traffic flows.

Indonesian Government to create new toll road concession company

The Jakarta Globe reports that Indonesia's State Enterprises Minister, Dahlan Iskan, wants state construction company, Hutama Kurya, to become a toll concessionaire.

This would duplicate Jasa Marga, Indonesia's existing state-owned concessionaire, which reportedly has welcomed the move (presumably because it isn't about competition, but about capacity) and will help the company enter the sector.  The report claims that Hutama Kurya will be pursuing new toll roads in Sumatra

Meanwhile, another report notes that Jakarta TollRoad Development, a consortium that includes Hutama Kurya, has raised additional capital from PT Jaya Real Property (JRPT) and PT Jaya Konstruksi Manggala Pratama (JKON), which are part of the Pembangunan Jaya Group, the operator of Ancol Dreamland amusement park in North Jakarta.

JTD is a consortium of PT Hutama Karya, PT Pembangunan Perumahan (PP), PT Wijaya Karya (WIKA), PT Adhi Karya (ADHI) and PT Citra Marga Nusaphala Persada (CMNP).

One project that the firm plans to bid on is a 67-kilometer-long toll road that will connect all five of Jakarta’s municipalities. Based on previous reports, the project will require a total investment of Rp 40 trillion (US$4.19 billion).

North Carolina looking beyond fuel taxes

Business Journal reports that North Carolina Secretary of Transportation Gene Conti has said that the future of highway funding for the state is likely to be tolls and vehicle mileage tax, rather than fuel tax.  A key reason appears to be that the state has one of the highest fuel taxes in the US.  

Ontario to help build toll road for access to mining region

In some countries, developers ask the government to pay for and build the roads to gain access to land they want to develop.  In Ontario, the provincial government has said it will help do that, but will charge all road users to use it according to Wawatay News Online.  The project is intended to be a 300km new road to access an area called the "Ring of Fire" which is rich in mineral deposits.  It is not intended to be a public road, but a road purely for shifting cargo and for access to the mining developments, but is intended to be fully self funding by providing access to all of the adjacent mining claims.

South Africa - Cape Town and SANRAL disagree on tolls for new road proposal

IOL news reports on how a proposed new road in Cape Town, the R300, is showing up the split in policy on tolling in the country.  On the one hand, the City is promoting the road, but not as a tolled route. The City of Cape Town is against tolling on principle and is seeking a "new model" for funding major road plans.  However, national highways company, SANRAL is proposing that it be a toll road.  In any case, there isn't funding for the project at present.

Vancouver's new toll bridge incentivises early registration and provokes debate on road pricing

The province of British Columbia is replacing one of Vancouver's key bridges, the Port Mann Bridge, which carries the Trans-Canada Highway over the Fraser River.  The existing five lane bridge (two lanes each way with a HOV lane) is inadequate for the volumes of traffic over it, and the new bridge will have four lanes each way plus one HOV lane each way, and a cycleway.  The new bridge is to cost C$2.46 billion (US$2.52 billion).  It is being commissioned by the province and will be the world's widest long span bridge.  It is expected to save up to an hour a day in travel time for commuters, suggesting existing queues are significant.

Port Mann Bridge, Vancouver

The current bridge is untolled, but the new one will be, with toll rates capped to rise no more than 2.5% per annum or inflation.  Tolling will be entirely electronic free flow based, using a sticker based transponder (which is supplied free of charge for those who register) and automatic number plate recognition (ANPR) cameras.  Enforcement will include as a last resort, denial of vehicle insurance renewal, and US violators will be pursued through a contractor for debt collection in that country.

The Aldergrove Star reports that the British Columbia government is incentivising early opening of accounts.  The bridge opens in December 2012, and for the first three months the toll will be "half price" at C$1.50 (US$1.54) per trip (for cars), but for those registering accounts over that period they will be guaranteed that price for a whole year.  It is hard to imagine regular users not wanting such a saving, since after the first three months the price will be C$3 (US$3.12) for those who have not registered.  

Light trucks and cars with trailers will pay C$4.50 (US$4.61) for the first three months, then C$6 (US$6.14) if not registered.

Motorcycles will pay C$1 (US$1.02) in the first three months, then C$1.50 (US$1.54) if not registered.

Heavy trucks will not have this discount pay C$9 (US$9.22), but will only pay half price between 9pm and 5am.  

Furthermore, registering an account by 30 November 2012 (before the bridge opens) will mean a C$30 (US$30.72) credit in their accounts (20 free crossings).

Another interesting dimension is that HOV lanes will not be free at peak times, but will have a 25% discount for multiple occupancy vehicles.  It makes sense to not offer such vehicles free access, but unclear why there needs to be a discount at all.

The argument for the discount is that not all lanes will be open on day one, but it makes a great deal of sense to incentivise the creation of accounts, because it will significantly reduce transaction costs for the toll system.   The more users are paying more or less automatically, the less it costs to operate.  The goals is to get 80% of users registered.

Those who do not register and do not have an account can either prepay, or postpay within seven days. After that time they face a C$2.30 fee (US$2.36).

Finally, there is an option to buy an unlimited access pass for motorcycles, cars and light trucks (C$50, C$75 and C$225 respectively).

All of this is positive, and shows a degree of commercial nous in encouraging users to adopt the most cost effective (and convenient) options for them.  However, what else is interesting is that it has provoked wider discussion about tolls and road pricing in Vancouver.

The same article notes that Langley City Mayor Peter Fassbender says there needs to be a look at road pricing in Vancouver.  Surrey Mayor Dianne Watts talked of tolls not be imposed on some roads as a lost opportunity.  

Finally Canadian Taxpayers' Federation B.C. director Jordan Bateman said the Port Mann toll discounts make sense to reduce administration costs but he'd also prefer a look at tolling reform.

"We wouldn't be averse to seeing the province head towards a road pricing system," he said. 

"Provided it was fair and equitable across the region and only if it's tied to a corresponding decrease in the gas tax."

That in itself, is a big step forward for a taxpayers' lobby group to support road pricing, on condition that it was reducing fuel tax.  Surely this gives some scope for British Columbia to think a bit more boldly on road pricing?

News briefs - Australia, Canada, Indonesia, Jamaica

Does fuel tax reduce congestion?

The answer to that question is yes, but not very well. Andrew Coyne from the Nanaimo Daily News (Canada) writes a good summary article about why full network congestion pricing is the best single tool for addressing traffic congestion, compared to building more roads, adding more public transport and simple cordon pricing. I'd counter his claim that London and Stockholm congestion charging haven't work so well because of induced demand within the cordons, because this simply isn't true. In London, road space was reallocated to pedestrians, cyclists and buses. Nevertheless, whilst he doesn't address the real concerns people have about privacy (which I believe can be overcome, but cannot be ignored), it isn't a bad article as to why road pricing needs to be comprehensive to properly address congestion. So far, nobody has dared try it.  Singapore may be the first to do so?

South Australia not going to have toll roads

According to Australian public broadcaster, ABC, "Chief executive of the Department of Planning, Transport and Infrastructure, Rod Hook, told 891 Breakfast this morning that Adelaide's road future could come at a toll". His view was quite simply that tolls would be needed as a source of revenue perhaps in order to get continued Federal funding for South Australia's highways. The Labor, Liberal and Family First parties in the state of South Australia all oppose the introduction of tolls, even though tolls are widespread in use on highways in Victoria, New South Wales and Queensland.

Toronto 407 toll road continues to perform well

The Globe and Mail reports that the 407 ETR in Toronto has had a good year. Trips increased 1% year on year, but revenue increased 10.6%. This is due to an increase in tolls at peak times by between 5-10% indicating that users are still willing to pay to use the road at those times. Notable is that revenue in the latest quarter is 83% higher than the same quarter last year. Revenue per trip is around C$6.37 (US$6.28). “Unbilled trips” (those either not identified or not able to be pursued for enforcement) are now at 2.2%, which is attributed to improved technology (presumably better resolution of Automatic Number Plate Recognition images).

407 ETR is owned by the Canada Pension Plan Investment Board (40%) , Spanish infrastructure company Cintra Infraestructuras SA (43.23%) and Canadian engineering firm SNC-Lavalin (16.77%).

Total revenue was C$188.4 million (US$185.9 million) for the year till June 30 up from C$170.3 million (US$168 million).

Tolling pushes ahead in Indonesia but PPPs not yet a success says Minister

The Jakarta Post interviews the Public Works Minister of Indonesia who says that Public-Private Partnerships are not yet a success, but progress has been astonishing:

For instance, when constructing the Jagorawi toll road in 1978, the state set up a company called PT Jasa Marga that acted as a toll road operator. However, Jasa Marga also emerged as regulator because we did not open the service to the private sector. We revised the law on roads and established the Toll Road Authority Agency (BPJT) as regulator in 2004. This law puts Jasa Marga only as operator and it has to compete with other investors if it wants to construct toll roads. It really attracts the private sector to invest in toll roads.

The key problem apparently being that interest rates for borrowing for Indonesian projects are high, demanding a high rate of return from projects.
 

Meanwhile, the Jakarta Globe reports on lending having been approved for a new 34km toll highway southwest of Surabaya.

Decline in demand but increase in revenue on Jamaican toll road

According to Go Jamaica, the Toll Authority of Jamaica has reported a third consecutive annual decline in traffic volumes on its tolled highway. The report says there has been a 5% average decline in 2010/2011 compared to the previous year. However, revenues are up by over 4%, presumably due to higher tolls or longer trips taken by those vehicles on the road. I went to the Authority's website to learn more, but it is not kept up to date, with the latest news release being in November 2010, and there being no annual reports published on its website (or not easily found). Hardly a model of transparency, or maybe this isn't seen to be a key distribution channel to supply information.

It's not easy to find Jamaica Infrastructure Organisation's website, but it does have some more information. JIO is the name of the concessionaire company responsible for the three toll roads. It has up to date prices. Which even its regulator hasn't got. There is even a frequent user discount.

News briefs - Canada, Italy, Namibia, Spain, Uganda, USA (3 states)

Connecticut

Tri-State Transportation Campaign reports that Connecticut is engaging a US$1.4 million study of congestion pricing along the I-95 corridor between Greenwich and New Haven. An additional US$800,000 study will examine road pricing along I-84 in Hartford. Both studies, funded by the federal government, will take approximately 18 months to complete and will look at congestion pricing in the two corridors, which is expected to focus specifically on the feasibility of high-occupancy tolling (HOT) lanes.

The Milford-Orange Bulletin reports on some interesting background to tolling this stretch of highway:

Connecticut abolished its tolls in the 1980s, in part as a result of a horrific 1983 crash on I-95, in which a truck plowed into a line of cars at the Stratford toll station, killing seven people. The federal government also threatened to withhold transit money if the state did not remove the tolls.

Commuters who pass through the Interstates 91 and 95 interchange in New Haven experience a total of 5.7 million hours of delay per year, while commuters who pass through the Bridgeport-Stamford corridor suffer 16 million hours of delay per year, (Bureau of Policy and Planning Bureau Chief Thomas J.)Maziarz said.

The average length of the southbound I-95 traffic congestion at 8:30 a.m. on a weekday, which the DOT has identified as the peak time for traffic, is 20.3 miles, he said. Congestion is defined as an area where traffic moves at 30 mph or less. 

 

Just another Interstate highway which might get tolls introduced to provide a congestion free option, with additional revenue.

Italy

Dow Jones reports that toll road operators Atlantia has said that highway traffic on its Italian toll-road network declined 8.7% in the first three months of the year from the same period in 2011.

Namibia

The Namibian Economist reports that the Namibian government now has the facilities to collect road user charges at its national border crossings.   Why is this interesting?  Because Namibia has a VMT (vehicle mileage tax) system, or rather a weight-distance road user charge for all vehicles over 3.5 tonnes.  The rates are here.   Starting at N$0.07 per km (US$0.009) it appears to work by prepaying in 100km increments, correlated to odometers.  All of the revenue is dedicated to a roads fund which is required to prioritise spending on maintenance and renewals above everything else.

Nevada


The Las Vegas Sun reports that the state is considering options to allow toll lanes and roads. This includes "added lanes in Clark County on Interstate 15 from Sahara Avenue to Rancho Drive at an estimated cost of $400-$500 million".  These would be toll lanes, with existing lanes remaining untolled. Bill Hoffman, assistant director of engineers for the Nevada State Transportation Department said "allowing a private firm to do this project could cut the cost by $100 million, create 4,100 construction jobs and get the project completed more quickly. He said firms that design, build and maintain projects due a better job since they know they are on the hook for the maintenance costs."

Orange County, California

The LA Times reports that operators of toll roads in Orange County are planning to convert to fully electronic free flow tolling in the next 16 months.  The plan is for all users to have accounts, either with tags or number plates, with occasional users having to pay within 48 hours of usage or face being fined.   The roads affected are route 73, 261, 241 and 133 toll roads.

Toll prices were increased on 1 July already, and the drive to eliminate manual tolls is intended to reduce operating costs, as well as improve flow by eliminating stopping at tolling points.

Spain

Spanish toll road operator Abertis is interested in new PPPs with the Spanish government as the latter seeks private sources of finance to kickstart new infrastructure projects due to a lack of public funding. An article from Reuters make a number of interesting points about the presence of Abertis in the tolling market:

- There appears to be low interest in refinancing debt stricken toll roads in Spain as “Chairman Salvador Alemany played down the possibility of extending its Spanish motorway concessions -- two of which expire in 2019 and 2021 -- in exchange for helping the government resolve highly indebted Spanish toll roads”;

- The US, Brazil and Mexico are key target markets for growth;

- Portuguese operator Brisa is no longer a strategic asset, but Abertis will “not sell at current market prices”.
It is undoubtedly a difficult time for any investor in toll roads in the south of Europe, but also an opportune time to diversify, as long as there are decent prospects for growth, a steady core business and a stable business environment.

Toronto

The Star reports that the Toronto City Council has voted to “develop a long-term funding strategy" that would outline “a diverse array of public and private revenue tools” to finance rapid transit expansion.” This includes the role of tolling including options to introduce road pricing on existing roads.

In parallel, “Metrolinx, the province’s regional transportation authority, is also working on a strategy to pay for a massive public transit expansion throughout the Greater Toronto Area and Hamilton… Metrolinx has until June next year to develop a funding framework. Options under study include road tolls and other forms of congestion pricing, a levy on commercial parking spaces, a regional fuel tax, express lane fees and a regional sales tax.”

Here is hoping that it takes a wide strategic view of how to proceed, because for people to accept any form of road pricing on existing roads, they tend to need to see that at least part of the money goes on roads or offsets other taxes.  However, it's clear that one big issue will be governance.  What happens if the city and Metrolinx want conflicting approaches?

Uganda

China Daily reports that the Chinese Government is providing a four year loan for a 37km highway (with a 13km spur) from Entebbe Airport to Kampala that is estimated to cost US$350 million to build. It is described as a “world class superhighway”, and will have manual tolling. One criticism has been the condition that construction contracts be granted exclusively to Chinese companies. The existing route is regularly congested.
Vancouver


According to North Shore Outlook North Vancouver District Mayor Richard Walton supports introducing road pricing as a sustainable source of future income to replace property taxes:

Tolling stations, Walton said, could be located every five kilometres — not just at bridges — or at highway onramps and offramps. And incentives can be built into such plan. For instance, trucks transporting goods over the Port Mann Bridge after 10 p.m. could be exempt from any charges, therefore making night travel more attractive and lessening traffic congestion during the day.

It would take, Walton admits, some time to implement a comprehensive road-pricing arrangement and motorists would need time to make any alternate plans.

But it could mean a move away from using property taxes as a way of funding transit shortfalls, a crutch mayors are clear they will not entertain any longer.

Of course it raises the wider political issue as to whether motorists are happy paying a charge which is used to subsidise alternatives. I would argue strongly that if it is about replacing existing taxes and also helping to fund at least maintenance of the roads concerned, then it will be far more acceptable.  

Indian toll road profitability declines and Ontario floats more tolls

India

A lot of new highways in India are invariably being toll funded, albeit with manual tolling systems. A recent report has noted that returns on such projects have been declining in recent years.

My Iris reports that Build Operate Transfer (BOT) projects (also known as BOOT) before 2009, could earn an average equity return of 22%. In most of the 23 projects surveyed, the reason for this is put down to the relatively low cost of bidding (related to the lack of bidders, an average of five) and higher than expected traffic growth boosting toll revenue (10-12% over two years). The lack of bidders was put down to property developers being unsure about land being available for construction on time, and contractual provisions that made it complicated for developers to sell their full equity stake in the project concessions. 

This environment appears to have changed, with land acquisition being accelerated by government offering an option for developers to exit, and more lucrative projects being pursued. As a result, the number of bidders is now averaging 25-30. Conversely, traffic forecasts are no longer being met by some projects. Fitch Ratings reports that actual traffic may be as low as 45% of the estimates for the first year. 

Optimism bias in such forecasts is driven by construction companies in consortia keen to capture the lucrative contracts for building the roads (and to be paid for them), which means they are keen to support forecasts that are more likely to mean their consortium wins the concession. In addition, poor reliability of traffic statistics (and lack of robust research into preferences of users) makes such forecasting particularly prone to error. 

The key point for investors is to have some decent expert scrutiny of the projects they are being asked to invest in, and base forecasts on a range of plausible scenarios. 

Ontario

Ontario Premier Dalton McGuinty has announced that the tolled Highway 407 will be extended, first from Pickering to Oshawa, with the province owning the 22-kilometre link but charging a fee to use it.  This has been described by theLF Press as crossing  “a Rubicon city and provincial politicians have been loathe to dip their toes into”.

Ontario's last civic toll road was scrapped in 1926, and of course the 407 toll road remains the only exception to date which is also privately owned.  Building the extension as a private road is also an option under consideration, which is likely to be controversial.   To privatise and allow tolls for a new link is an obvious option for administrations lacking finance and options to fund such improvements.  No doubt the debate in the province will be vigorous on this one, although given the success of the 407, I would have thought it should not be as controversial as it is made out to be.