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26 I N T E R N AT I O N A L P E R S P E C T I V E S O N R O A D P R I C I N G allow for affordability so the Xpress lanes can be "Tau- want to pursue mileage-based leasing at the time, pri- rus lanes" rather than "Lexus lanes." The decision to marily because of concerns over cannibalization of exist- pursue value pricing was prompted by the recognition ing lease markets and perceived customer acceptance that future traffic demand in Orlando will be so great issues. that general use lanes would fail even with the four- The new work plan will take two tracks. The first lane widening project. In contrast, value-priced Xpress will build on the work done in the focus groups and lanes can guarantee LOS C by treating variable tolls as involve a comprehensive market research effort to a congestion management tool. understand who would voluntarily opt for mileage- The turnpike is simultaneously conducting a feder- based leasing or insurance. The goal is to understand ally funded value pricing study for another project: the the opportunities and constraints for real leasing or Sawgrass Expressway in South Florida. Of special note insurance products that might be offered by the private is that the Sawgrass project will involve a first-time con- sector. version of an existing toll facility to open road tolling. In the second track, the team will recruit a small sam- The turnpike also recently completed a value pricing ple of people who are willing to participate in a real- study on the Homestead extension of Florida's turnpike; world experiment. They will simulate buying out the this study concluded that the public's reaction to value focus group participants' leases and insurance, convert- pricing can be favorable if the proposed facility provides ing their payments to a fixed component and a variable new capacity, as is the case with the Xpress lanes. component, setting up a "budget" that participants can As we look at the full range of activities under way at draw down, and paying them the difference between Florida's Turnpike Enterprise, it is evident that value budgeted miles and actual miles. pricing holds significant promise as a congestion man- Participants in the field experiment will be tracked agement tool suited to relieve some of the state's busiest for 10 months. Part of that time will be treated as a con- highways. trol period, during which the participants will receive no feedback on miles driven. An experimental period will follow, during which participants will be provided MILEAGE-BASED APPLICATIONS: price signals on a semimonthly basis. The experimental MINNEAPOLIS, MINNESOTA period will test participants' responses to several vari- ables, including total number of household vehicles, the Jeff Buxbaum number of vehicles included in the experiment, and vari- able pricing by time of day. Participants will be surveyed The objective of this current research project in Min- at various intervals in the project to identify shifts in neapolis is to investigate whether the way we acquire their attitudes toward mileage-based pricing concepts. access to a car can influence our driving behavior. Cur- This study design will serve two purposes. First, we rently, people either own or lease cars and make other will be able to compare the behavior of each partici- significant fixed payments, which encourage them to pant's own control period with that participant's exper- drive more to get the most from their investment. This imental period. Second, the control participants also project simulates the replacement of some of the fixed will serve as a separate control group to those that are costs of ownership/leasing and operation with fees or in the experiment period in order to identify any general charges based on mileage and perhaps time-of-day changes in regional driving behavior that occur during travel, to determine whether this influences their driving the experimental phase. behavior. The project is scheduled to end in September 2005. The consultant team and the Minnesota Department of Transportation investigated the attitudes of the pub- lic toward mileage-based leasing products through focus NEW LANE APPLICATIONS: groups. The focus groups indicated a segment of the CALIFORNIA STATE ROUTE 91 population that would be interested in mileage-based leases. However, many people had a poor understand- Ellen Burton ing of the cost to them of having and driving a car. Some people also had "big brother" concerns, although many The Riverside State Route (SR) 91 freeway is considered others had no problem with that. a land bridge between Orange County and the "Inland The original scope of work called for a hands-on test Empire" counties to the east. It is the only primary case under which a private business partner might be eastwest corridor linking Orange County with the willing to test a new vehicle leasing product that included Inland Empire. The freeway carries more than 250,000 a mileage component. Ultimately, this approach was not average daily vehicles, and during peak hours general- feasible. The targeted partner decided that it did not purpose lanes are highly congested. The current situa-
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A C L O S E R L O O K : P R I C I N G A C R O S S T H E S TAT E S 27 tion reflects a limited availability of affordable housing decided to pursue the acquisition of the 91 Express in Orange County but a strong job market. Orange Lanes franchise to eliminate the noncompete provision. County attracts daily work trips. Projections about In January 2003 OCTA bought the 91 Express Lanes future housing growth in the Inland Empire, coupled franchise for $207.5 million. The transaction included with a continued robust job market in Orange County, the assumption of $135 million in taxable debt and the indicate that the existing jobshousing imbalance and advancement of $72.5 million from internal borrowing. resulting transportation patterns will continue into the The first public policy change was to allow carpools with future. three or more persons (HOV3+) to ride free during all In 1989, at a time when there was a scarcity of Cali- but "super peak" hours, Monday through Friday, 4 to 6 fornia highway construction, Assembly Bill 680 (AB680) p.m. eastbound. During these times, HOV3+ riders pay authorized four publicprivate toll road partnerships. 50% of the posted toll. Since the implementation of this The 91 Express Lanes franchise was initially granted to policy in May 2003, HOV3+ use has grown 40% over the California Private Transportation Company (CPTC), the same period last year. Peak average vehicle occu- and it became the first AB680 project built. The fran- pancy has also increased from 1.38 before the policy to chise extended from the Los AngelesOrange County 1.48 in August 2003. However, HOV3+ revenue is down line on the west to Interstate 15 on the east. The fran- an average of $27,000 per week, and it is estimated that chise agreement included a noncompete provision, which the policy will result in a decline of $1.4 million to $1.6 was designed to protect bondholders. The provision con- million in toll revenues annually. strained the construction of parallel roadway capacity OCTA next sought to refinance its taxable debt. To for the 30-year life of the franchise agreement. In 1995, do so, OCTA needed to adopt a toll policy. Working CPTC opened the 91 Express Lanes in the center median with its legislatively created advisory committee, which of the SR-91 freeway. Since that time, traffic has contin- is made up of public officials from both Orange County ued to grow in the express lanes and on the mainline and the Inland Empire, a toll policy based on the con- freeway. cept of congestion pricing was developed. The policy The 91 Express Lanes, which drivers may use for a used trigger points to manage peak-hour congestion to fee, are separated from the general lanes by channeliz- keep lanes operating at free-flow speeds. The goals were ers. The facility uses electronic tolling and has no inter- to optimize throughput while ensuring the financial via- mediate access points. The purpose is to offer customers bility of the facility. Tolls now are adjusted automati- a choice for a safe, reliable, free-flowing trip. The facil- cally on the basis of volume in the lanes. Since July ity uses variable pricing, which is set by direction, day of 2003, tolls in four super peak hours have increased from week, and hour. The 91 Express Lanes extend 10 miles $4.75 to $5.50 (eastbound Thrusdays and Fridays from from SR-55 on the west and the OrangeRiverside 4 to 6 p.m.). Overall, year-to-date revenue has declined County line on the east. from about $2.70 per trip in Fiscal Year 20022003 to The Orange County Transportation Authority $2.40 per trip in Fiscal Year 20032004 because of the (OCTA), as a county transportation commission, is impact of the HOV3+ policy change. responsible for planning and funding highway, street, In November 2003 OCTA refinanced its taxable debt and road projects, as well as delivering bus and rail tran- and reduced the interest rate from 7.63% to 4.43%. This sit services. In 2001 OCTA identified intercounty travel is expected to result in a present value savings of about as one of the most pressing issues. One of the major cor- $24 million over the life of the obligation. This is impor- ridors needing attention was SR-91; however, the non- tant because under state legislation passed at the time of compete provision that attached to the facility's OCTA's purchase of the 91 Express Lanes franchise, any financing was a significant limitation on any plans to excess revenues after debt service, operating costs, and increase capacity. OCTA's board of directors thus capital costs are to be used on SR-91 improvements.