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OCR for page 38
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-
OCR for page 39
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.
