Toll Roads Becoming ’HOT’ Funding Topic

Mon May 16, 2005 - National Edition
Pete Sigmund

The Bush Administration and the U.S. Department of Transportation (USDOT) strongly support big changes in highway operation to alleviate horrific congestion and save billions of dollars.

The changes, important to the construction industry, include using more toll roads, HOT (High-Occupancy Traffic) lanes, and public-private partnerships.

Tolling would be allowed on interstate highways where it has previously been prohibited.

More HOV (High-Occupancy Vehicle) lanes, now free for vehicles with two or more passengers, would be converted into HOT lanes, which could also be used by cars with only one occupant. Drivers would be charged depending on the amount of congestion.

A new focus on privatization and innovative financing would cut the cost of constructing highways by as much as 40 percent, according to a USDOT report to Congress this past December. Approximately two-dozen states have passed legislation allowing toll systems and often allowing private companies to build and operate these roads.

These aggressive (and sometimes controversial) moves would combat congestion that is almost overwhelming drivers. The Texas Transportation Institute (TTI) said in its “2005 Urban Mobility Report,” released May 9, that traffic congestion costs Americans $63.1 billion a year, with an annual delay of 47 hours for each rush-hour traveler.

New Toll Highways

The Administration’s “SAFETEA” proposal for a six-year reauthorization of the nation’s transportation system makes no bones about tolls. It recommends establishing “a variable-toll pricing program that would permit tolling on any highway, bridge or tunnel, including the interstate system … and allow states to permit single-occupancy vehicles on HOV lanes as long as time-of-day variable charges are assessed.”

Nancy Singer, a spokesperson of USDOT in Washington, D.C., said that tolling and HOT lanes had previously been allowed on interstates through the Value Pricing Pilot Program but would now be allowed without this pilot requirement.

“Essentially, it allows all states to do this [tolling] across the board, so you don’t just have a limited number of pilot program applicants,” she told Construction Equipment Guide (CEG). “Basically it gives more flexibility to the states and allows states to do tolling, including interstates, as a way of managing congestion, improving air quality and meeting other parameters. The Administration wants to give state and local governments more flexibility to pursue market-based solutions.”

A USDOT background sheet said, “The congestion we experience on our roads today and its impacts on our economy and the quality of life are more reasons to bring into question whether the current funding system is the right one for our transportation needs today. Tolling is a congestion solution. Americans also favor tolling over an increase in the gas tax as a means to improve transportation.”

Matt Jeanneret, a spokesperson of the American Road & Transportation Builders Association in Washington, responded, “ARTBA supports the use of tolling, if the money is invested back into system maintenance and improvement. However, we view tolling as an additive to, not replacement of, the gasoline tax. For the foreseeable future, the gasoline tax will continue to be the main source of financing transportation improvements.”

Many of the earliest major roadways in the United States were private toll roads, with private turnpike companies. The 1991 ISTEA Transportation Act permitted tolls to a greater extent on federal-aid highways, including federal aid for non-interstate toll highways.

The TEA-21 Act six years later permitted pilot toll demonstration projects on interstates.

HOT Lanes

A HOT lane is a conversion of an existing HOV lane to also carry solo drivers. Such lanes usually employ variable pricing, which goes up or down according to congestion conditions. A toll lane, on the other hand, is an additional lane that charges all drivers regardless of whether there are single or multiple occupants.

Singer said the Administration is discussing tolling mostly in the context of HOT lanes.

“Essentially we’re looking at HOT lanes,” she told CEG.

Meanwhile, many states, besieged by funding problems while their economies lose millions of dollars every day through nightmarish congestion, are indeed studying, planning or actually implementing such new HOT lane or toll facilities — usually through electronic systems that are automatically tabulated from a transponder attached to the car’s rear-view mirror, and then charged to a credit card.

The New York Times (April 28, 2005) said allowing states to charge user fees for virtually any section of an interstate “is shaping up as one of the biggest philosophical changes in transportation policy since the toll-free interstate highway system was created under President Dwight D. Eisenhower in 1956.”

States Get Moving

Virginia plans to add two HOT lanes in each direction on a 14-mi. segment of the Capital Beltway (I-495) at a cost of approximately $900 million. It hopes to begin constructing the lanes in late 2006 or early 2007.

Revenues from the four lanes would pay for most of the construction. All vehicles except carpoolers, buses and emergency vehicles would pay a variable toll.

The project also would include Phase 8 of the Springfield Interchange, which would add a carpool connection to the Beltway from I-95/I-395.

On May 16, the Minnesota DOT opened its first HOT lanes on a 10-mi. section of I-394 from the western suburbs into Minneapolis. Single-occupant vehicles are now allowed on the entire section, which previously had been mostly HOV. It’s an important test case for Minnesota’s future, which may include a lot more lanes like this.

“It’s a test case of an innovative way of doing business,” said Alvina Peterson, administrative assistant to the deputy commissioner of transportation in St. Paul, MN.

“We’re anxious to see how it works. We had a designated HOV lane with a lot of unused capacity and wanted single-occupant cars to use it. By using the HOT lane and paying for that privilege, a single driver can get from point A to point B faster than sitting in traffic.”

Minnesota, like many other states, varies charges on HOT lanes. As volumes of traffic increase on the I-394 lanes, the toll increases, with the maximum now set at $8. So far, at least 3,000 motorists have purchased electronic tags for using the system.

The Colorado Department of Transportation (CDOT) hopes to open two HOT lanes this December on an 8-mi. stretch of I-25, which had formerly been limited to HOV vehicles, from downtown Denver to U.S. 36. The toll, in this case, would vary by time of day, with the lowest being 50 cents and a maximum of $3.25. The lanes are reversible. Both run into downtown in the morning and out of the city in the afternoon.

The lanes would remain free of charge to carpoolers and buses. If usage reaches a point where the lanes become congested, solo drivers would be banned.

“We’re barely crawling and are still in our infancy in getting our state tolling enterprise off the ground,” said Stacey Stegman, public information director of CDOT. “This is the state’s first toll road since the 1960s, though we do have other toll roads under pseudo-governmental agencies called the E-470 Public Highway Authority and Northwest Parkway. As we implement tolling for other projects, tolls would truly vary by congestion, but, right now, we don’t have the technology for that and tolls vary only by time of day.”

In Texas, the $185-billion Trans-Texas corridor would be financed in large part by tolls if the project receives federal approval. A private consortium, Cintra-Zachry, would operate the highway as a toll facility for 50 years.

California established express lanes on SR-91, east of Los Angeles, in 1995. Tolls on these lanes vary according to traffic, which is constantly monitored.

Awaiting New Highway Bill

States are watching closely to see whether the next six-year highway and transit bill, which is now before Congress, includes authority for tolling interstates, where tolls have been prohibited.

“We received federal approval for our I-394 tolls through a current demonstration [project] authorization from the Federal Highway Administration [FHWA],” said Richard Stehr, director of engineering services of the Minnesota DOT. “The new bill will have to continue to allow FHWA to authorize these types of projects; otherwise, expanding in other projects might be difficult.”

MNDOT has a grand vision. It has conducted a systems study, with Cambridge Systematics as consultant, on deploying a system of toll lanes around the Twin Cities metropolitan area, with the corridors usually being existing interstates.

“We came up with a recommended system of these lanes, which would have the largest potential of contributing to the relief of congestion,” Stehr said. “The toll lanes would all be capacity additions to existing highways in the form of new construction of additional lanes rather than new alignments. We expect revenue from toll lanes to cover 25 percent to 50 percent of the capital costs of adding the lanes.”

One of the routes would be I-35W, which already has an HOV lane. In this case, the lane would become an HOT lane because it would now also allow solo drivers who would pay a fee.

“The governor’s long-range plan assumes a revenue stream from tolls,” Stehr said. “The assumption is that here will be toll roads in the future to help fund transportation projects.”

Billions for Infrastructure

“We will see how I-25 goes, but we certainly look forward to implementing the express lane concept on other highways to reduce congestion,” said CDOT’s Stegman. “We think a system of toll highways around Denver would get billions of dollars for infrastructure in the Denver metropolitan area with very little tax dollars. If there were other ways, or more of a willingness, perhaps we could fund in other ways but that hasn’t been the case, so states are exploring all their options right now. I don’t think tolling is the cure-all by any means. It’s just one of the tools for addressing the challenge of increasing mobility in our congested cities.”

Stegman said states have little choice.

“Definitely states are being forced into exploring these types of options because funding is so limited at the state and federal levels that we have to explore alternative sources in order to keep pace with needs,” she told CEG.

Help From the Private Sector

The private sector is playing a big part as a partner in some of the newest HOT or toll ventures.

Fluor Enterprises Inc., and Transurban (USA) Inc. signed a comprehensive agreement with the Virginia DOT for the Capital Beltway work.

“The agreement establishes a business relationship between VDOT and the private sector to move ahead on future project decisions, such as construction and operations,” said a release from the state, adding that the agreement “sets a new benchmark for public-private partnerships in Virginia because Transurban and Fluor are willing to invest their own money and resources to improve mobility in none of the most congested areas in the U.S.”

Transurban’s investment would be at least 15 percent of the cost.

The Trans-Texas Corridor would be financed by private investors who would be repaid by tolls. Cintra, a Spanish consortium, has been chosen to build the initial segment from Dallas to San Antonio.

MNDOT’s Richard Stehr also sees advantages in utilizing the private sector. “We’re a long ways from turning over public roads to private ownership or leasing,” he said, “but we’re asking the private sector to bring some money to the table and try to do some joint projects.”

Here’s what Federal Highway Administrator Mary Peters said at an ARTBA conference in Washington in December: “I want to be very clear on where the Bush Administration stands on public-private partnerships. We like them, we want to encourage them, and we support them … We have all benefited from private sector participation in telecommunications, pipelines, railroads, maritime and aviation. Why not highways, bridges and tunnels?”

She went on to support more private sector involvement, including private activity bonds, state infrastructure banks, more state flexibility for tolling, and a strengthened Transportation Infrastructure Finance and Innovation Act (TIFIA).

USDOT’s Singer told CEG that “unleashing the power of the private sector will bring capital, innovation and cost-savings to transportation projects, all of which helps deliver transportation improvements to the public faster and at less cost to taxpayers.”

A public-private partnership (PPI) is a contractual agreement that allows more private sector participation than is traditional. It usually involves a government agency contracting with a private company to renovate, construct, operate, maintain and/or manage a facility or system.

While the public sector usually retains ownership, the private party will be given additional decision rights in determining how the project or task will be completed.

The USDOT said two reports and numerous case studies have found that PPIs “can save six percent to 40 percent of the cost of construction and significantly limit the potential for cost overruns.”

“The reason for these savings,” it added, “is that the private sector often has more appropriate incentives to limit costs than the public sector … Significant time-saving through innovative financing can cut many years off project delivery.”

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