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Planning Guide: Developing Road Pricing Plans and Programs 35 system where road pricing has strong potential applicability. Other planning criteria where road pricing may help achieve goals include improving accessibility and mobility; improving economic vitality; and maintaining the environment, energy, and quality of life. In addition to these eight planning criteria, the MPO planning framework addresses several other planning requirements: MPOs in transportation management areas--metropolitan areas with a population over 200,000--must develop a Congestion Management Process (CMP). MPOs in air quality non-attainment or maintenance areas must demonstrate conformity of the plan with the State Implementation Plan (SIP) for air quality. MPOs must develop a fiscally constrained plan--that is, the plan must be based on reasonable estimates of revenues that will be available to fund projects; the MTP is not intended to be a wish list of projects, but is implementable based on existing and projected funding sources. MPOs must develop an effective participation plan involving affected parties and stakeholders. 2.2.2 Bringing Road Pricing into the Transportation Planning Process Plans for road pricing projects should be considered in conjunction with: Steps 1 through 3 leading to Step 4 in Exhibit 15, when the long-range plan is finally adopted Requirements in Exhibit 16 specifically, the CMP, air quality conformity through transporta- tion strategies, participation plan, and fiscal constraint Specifically, the following subsections indicate where in the formal planning process road pric- ing can and should fit and contain examples of how it has been done. 2.2.2.1 Regional Vision and Goals Road pricing fits with several major goals common to state and regional plans including reduc- ing single occupancy vehicle travel during peak periods (e.g., by encouraging shifts to carpools, transit, and other HOV options), providing reliable travel options (e.g., by providing a congestion- free priced option), and reducing emissions (e.g., by reducing traffic delay and sluggish traffic flows). More specifically, depending on the pricing concept selected and the program structure, road pricing can support the following typical goals in formal regional and state plans: Timely development of improved and new transportation capacity. Compared to normal devel- opment and improvements to capacity, road pricing offers more timely development compared to reliance on traditional transportation finance methods. Management and reduction of congestion. Especially where congestion is severe and persistent, road pricing offers prospects for effective and lasting relief and management, improving speeds and reliability for autos, transit, and goods delivery. Also, because there are several types of pric- ing strategies available (areawide, corridor, parking), the strategy can be tailored to an array of congestion problems. Development of a sustainable and environmental friendly transportation system. Because of revenue-generating capacity, road pricing has the potential to aid in the finance of the trans- portation system, especially as expanded into sizeable regional or state projects. Also, because road pricing can support and help finance multimodal auto alternatives as it tames congestion, it can aid in meeting long-standing and newly emerging greenhouse gas emission conformity requirements. There are a host of other typical goals found in regional and state plans [and arrayed in the cen- ter of Exhibit 16 (as planning factors)] where road pricing can be supportive. Depending on the specific pricing project or projects being considered for inclusion in formal plans and the particu- lars of the supporting studies and projections, road pricing can: Support economic vitality--improve transportation system reliability, which is valued by the freight and business communities

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36 Road Pricing: Public Perceptions and Program Development Increase safety--reduce congestion and associated accidents and delays Enhance livability and quality of life--encourage more walkable and transit-oriented centers by reducing auto use; by improving bus speeds and deliveries to businesses; and, for parking pricing, by reducing cruising for parking and the volume of parking demand Enhance system connectivity--reduce congestion areawide or in corridors and corridor networks and support transit expansion depending on net revenue allocation plans Emphasize preservation of the existing transportation system--optimize existing road capac- ity rather than build new capacity 2.2.2.2 Performance Measures An important part of establishing broad goals in the first step of the process provided in Exhibit 15 is developing associated specific objectives and performance measures around the goals. As parts of recent guidance documents, FHWA and FTA are promoting use of an objectives-driven, performance-based approach in the metropolitan transportation planning process. The approach defines specific, measurable, agreed-upon objectives for system performance tracked at the regional level and used to inform investment decisions. Formal regional and state plans must incorporate specific performance measures as they are developed. Planners involved in these processes should be aware of several specific performance measures appropriate to the assessment of road pricing both for the assessment of specific pro- posed project plans and for the ongoing evaluation of projects as they move toward implementa- tion and operations. Exhibit 17 provides some example measures. Other performance measures applicable to pricing relate to: Revenue generation and net revenues Equity, as measured by demographic categories of facility users overall and by frequency of use Air pollutant emissions 2.2.2.3 Alternatives Analysis An important part of the transportation planning process is analyzing alternatives. Offered here are checkpoints for analysis of pricing with a focus on its benefits, thereby enhancing prospects of adopting worthwhile projects and supporting policies. The points are in line with both interview findings and literature on developing acceptable and successful plans and projects. Road pricing proposals should include options for the use of revenues and potential for speed- ing transportation capacity enhancements and supporting transit services. The analysis of road pricing as a solution should involve a package of investments and specific policies for planned rev- Exhibit 17. Examples of performance measures related to road pricing. Type of Measure Examples of Performance Measures Traffic Congestion Lane miles congested (defined based on volume/capacity ratio of speed during peak periods) Average hours of congestion per day Travel time index Lost time due to travel delay Wasted fuel due to travel delay Average speeds by corridor Reliability Buffer time index Planning time index Multimodal Choices Percentage of travel by transit or carpooling Availability of alternatives to congestion

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Planning Guide: Developing Road Pricing Plans and Programs 37 enue allocation. An example is pending legislation in the San Francisco Bay Area specifying that network HOT lane revenues will be returned to corridor developments in proportion to the rev- enue generation from specific corridors. Specific studies of road pricing will be needed to identify the potential impacts on traffic on the priced facility and adjoining roadways, transit ridership, air quality, and revenue generation, which is especially critical to pricing projects relying on bond market finance. The credibility of model projection also may be an issue in such analysis. Ways to handle these challenges include the use of an add-on microsimulation traffic assignment tool, or the HERS economic benefitcost analysis model, which produces a revenue estimate associated with road pricing. These and other such models are available from specialized consultants or government or university sources. Another helpful approach is the use of model peer review groups to enhance credibility during planning (e.g., as used by the PSRC). Alternatives involving road pricing should also be analyzed for legal compliance on federally aided facilities because tolling may not be permitted on such facilities, e.g., on Interstate highways. However, states approved for the Federal Value Pricing or Urban Partnership programs (a limited number) are not held to the federally aided restriction. Under these programs, federal aid may be available to support road pricing options for enhanced analysis and implementation. To date, sup- port has spanned HOT lanes, pricing on existing facilities, areawide pricing, VMT fees geared to congested locations, and parking pricing (such support may or may not continue under forth- coming reauthorization of federal transportation programs). 2.2.2.4 Fiscal Constraint The metropolitan long-range transportation plan must be fiscally constrained and include a financial plan that estimates how much funding will be needed to implement recommended improvements, as well as operate and maintain the system as a whole, over the life of the plan. This plan includes information on how the MPO reasonably expects to fund the projects included in the plan, including anticipated revenues from FHWA and FTA, state government, regional or local sources, the private sector, and user charges. Road pricing offers potential as a funding source for highway infrastructure improvements asso- ciated with the project (e.g., to help pay for additional lanes) and for ongoing highway maintenance and operations, transit services, or other related investments. Depending on the area, road pricing projects evaluated as part of formal regional and state plans may not be so extensive as to help meet fiscal constraint requirements. However, road pricing can help where multiple projects or networks of priced facilities are planned or emerging, as in the San Francisco Bay Area, Washington D.C. area, and Puget Sound, or in Texas where private investment in the Dallas managed lanes helps reduce public sector costs in the overall plan. An example for planners to consider on how road pricing can be applicable in transportation finance planning is the PSRC in the Seattle, Washington, region. PSRC has included road pricing as a key element of its Draft Transportation 2040 Plan. This financing plan suggests a long-term shift in how transportation improvements are funded, with more reliance on road pricing as a means to pay for transportation improvements, while also contributing to other goals, such as reducing contribution to climate change and air pollution. Similarly, recognizing that potential shortfalls in the gas tax will lead to limited funding in future years, planners in Dallas have been including managed lanes in its regional plans since the 1990s when the fiscal constraint require- ment was first introduced. Exhibit 18 shows how NCTCOG expects to meet the DallasFort Worth region's transportation funding needs through "innovative" finance sources, including revenues from managed lanes proposed on multiple facilities in the region. These priced facilities have been adopted in the current regional plan and are expected to fund about 30% of NCTCOG's 2030 Metropolitan Transportation Plan costs for the roadway system.

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38 Road Pricing: Public Perceptions and Program Development Exhibit 18. Use of innovative finance sources to fund the regional transportation system in the DallasFort Worth region. Source: "A Guide to Understanding Current Transportation Funding", a funding presentation by NCTCOG at the request of Texas State Senator John Corona, August 12, 2008; available at htpp://www.nctcog.org/trans/presentations/TransportationFundingPrimerIrving8-13-08.pdf 2.2.2.5 Public and Stakeholder Participation Formal regional and state plans must be developed with public involvement. Usually, regional and state planning agencies maintain standing technical, policy, and advisory groups for develop- ing and adopting plan updates. Because road pricing is still a new and potentially controversial con- cept, planners need to augment the usual established process for public involvement in developing regional plan updates. Experience with road pricing suggests the importance of involving orga- nized affected parties, stakeholders, and decision makers specific to pricing proposals rather than relying on standing committees with more general interests and charges. A significant engagement effort will be necessary following the recommended nine pointers in Section 2.1. State DOTs are important actors in the engagement process, as the document review and inter- views suggest, because they either directly control potential priced facilities or are vital to the development of necessary enabling policies and legislation for pricing in regions. They also have strong interests in uniform, safe operations and enforcement of new priced facilities such as HOT lanes. Regional planning agencies involved in areawide or corridor pricing plans must engage state DOT planners, especially around needed state legislation, enforcement and operations on state roads, and financial issues of toll revenue allocation and use of multiple revenue sources for proj- ect development. As part of effective engagement, communications particular to pricing must be continuous, responsive, and tailored to issues of specific resonance to affected parties in a region or state. Stan- dard agency newsletters and websites devoted to general regional or state plan development may not be adequate to communicate and engage on pricing proposals. Nor will generic descriptions of pricing benefits make for effective messaging, such as general references to congestion relief, environmental benefits, and a new revenue source. Messages must be tailored to specific audi- ences depending on their perceptions of the issues road pricing can address, and communications must be structured as two-way to ensure that parties feel they can influence plan development. Model involvement and engagement processes involving specialized organized groups focusing

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Planning Guide: Developing Road Pricing Plans and Programs 39 on pricing are found in the PSRC region, Minnesota, and Oregon, where planners have engaged task forces and commissions and developed successful plans in the process. Beyond paying heed to the recommended planning, engagement, and communication pointers in Section 2.1, regional and state planners are encouraged to review Part 2 for sample message con- tent used for public and stakeholder outreach, which includes links to websites at the above- referenced sites. Finally, "success considerations" in the exhibits within Section 2.3 for each of the six pricing concepts give points important to acceptance and adoption once planners are ready to focus on one or more specific pricing concepts. 2.2.2.6 Congestion Management In the Congestion Management Process (CMP), a region must define what it means to have unacceptable congestion and include specific congestion management objectives and performance measures, along with methods to monitor and evaluate the performance of the multimodal trans- portation system. It also must identify strategies to manage congestion, evaluate the anticipated performance of these strategies, and assess the effectiveness of implemented strategies. An important step in the CMP is establishing congestion management objectives and principles. As noted previously in the discussion of goals, objectives, and associated performance measures, road pricing supports several congestion-related objectives and associated performance measures. Depending on varying congestion management objectives, strategies to be considered can include stand-alone road pricing projects or areawide pricing approaches or incorporate elements of pric- ing into the existing system. Some metropolitan areas have congestion management principles that prioritize demand management and operational strategies before infrastructure development. Road pricing can support these objectives and focus more attention to optimizing system per- formance and providing options to avoid congestion. In transportation management areas (TMAs) that have air quality issues, the CMP takes on a higher level of importance and should focus attention on road pricing especially for consideration of all new highway capacity projects. According to federal regulations, in a TMA designated as non- attainment for ozone or carbon monoxide (CO), federal funds may not be programmed for any project that results in a significant increase in single-occupancy vehicle (SOV) capacity unless the progress is monitored through the CMP. Road pricing offers the promise of managing SOV demand "safely and effectively" and is therefore a "reasonable travel demand reduction strategy," in the language of federal regulations. In particular, regulation for non-attainment areas states, "the congestion management process shall provide an appropriate analysis of reasonable (including multi- modal) travel demand reduction and operational management strategies for the corridor in which a proj- ect that will result in a significant increase in capacity for SOVs . . . is proposed to be advanced with Federal funds. If the analysis demonstrates that . . . additional SOV capacity is warranted, then the congestion man- agement process shall identify all reasonable strategies to manage the SOV facility safely and effectively (or to facilitate its management in the future)." (23 USC 450.320) Consequently, in these regions, road pricing should be considered as part of any capacity expansion project included in the metropolitan transportation plan. 2.2.2.7 Air Quality Conformity In air quality non-attainment and maintenance areas, the MTP must demonstrate "conformity" with the State Implementation Plan (SIP) for air quality. That is, a regional emissions analysis must be conducted to demonstrate that the emissions associated with implementation of the MTP do not exceed the emissions budget for the region's on-road mobile sources. (In certain circum- stances, emissions tests, such as buildno build test, are used. For a more complete discussion of conformity, see FHWA, "Transportation Conformity Reference Guide." Available at http://www. fhwa.dot.gov/environment/conformity/con_bas.htm.)

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40 Road Pricing: Public Perceptions and Program Development To include road pricing projects in the MTP therefore requires that such projects be analyzed as part of the regional emissions analysis. Consequently, travel modeling and emissions analysis tools are needed to examine the impacts of road pricing projects on emissions. In many cases, as previ- ously discussed, traditional transportation models may require supplemental model analysis to assess travel and associated emission impacts for such pricing projects as conversions of HOV lanes to HOT lanes. Where planned or programmed road pricing projects are few and relatively small in a region or state, pricing impacts on emissions may not be significant in the conformity analysis. However, where several corridors or an entire network is anticipated, as with planned HOT lane networks in some regions, there will be important consequences for conformity analysis. For instance, an emissions analysis for the San Francisco Bay Area HOT lane network showed reduced emissions compared to the existing HOV network; this type of analysis was necessary for inclusion of road pricing into the transportation plan (see Exhibit 19). In some cases, road pricing may function as an emissions reduction measure. Whether the proj- ect reduces emissions will depend on many factors, including the type of pricing strategy employed (e.g., peak period pricing, round-the-clock pricing, corridor, network, areawide, or VMT-based pricing), the availability and inclusion of driving alternatives as part of the project (e.g., new or more efficient transit services), and the extent to which travelers shift to alternative modes or other routes. Certain types of road pricing--such as parking pricing--may be considered a transporta- tion control measure (TCM) and appear as such in Environmental Protection Agency (EPA) guid- ance documents. Justifying inclusion of such measures as a direct emission control strategy and analyzing their emission reduction potential will be aided by EPA guidance. Air quality analysis related to road pricing is not only a function of conformity analysis. Projects developing in regions and states, whether derived from formal planning processes or arising in a more ad hoc fashion, may require an environmental review under the NEPA. The exact extent of the review is variable depending on the nature of the pricing strategy, application to new or exist- ing facilities and the extent of the project. Large projects involving significant new capacity proba- bly will require a full Environmental Impact Statement (EIS). Small projects and those applying to existing facilities may not require the same treatment. Exemption or a less demanding environ- mental assessment without detailed analysis might be possible for pricing projects on existing facil- ities stressing vehicle trip reduction and support of transit. Parking pricing projects explicitly defined as TCMs may be exempt. Finally, major environmental analyses will involve not only air quality analysis but also analyses of indirect and cumulative impacts, economic impacts, and social Exhibit 19. Emissions associated with San Francisco Bay Area HOT network compared to HOV network in year 2030[1] Carbon Dioxide Reactive Organic Nitrogen Oxides Particulate Matter (CO2) Gases (ROG) (NOx) (PM10) (thousands of (tons) (tons) (tons)[2] tons) AM Peak Period Emissions--Two peak hours from 7 to 9 AM HOV network 2.10 2.18 0.20 4.65 HOT network 2.06 2.11 0.18 4.32 Percentage change 2% 3% 10% 7% [1] Figures are for emissions on freeways with HOV or HOT lanes only and reflect results of analysis assuming existing HOV occupancy requirements for HOV and HOT lanes. [2] PM10 emissions reflect exhaust only and do not include tire and brake wear emissions. Source: Bay Area High Occupancy Toll (HOT) Network Study, December 2008 Update, Metropolitan Transportation Commission, available at http://www.mtc.ca.gov/planning/hov/12-08/HOT_Network_Report_12-08.pdf