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Planning Guide: Developing Road Pricing Plans and Programs 51 Exhibit 23. (Continued). Emerging Directions Increasing emphasis on improving air quality and reducing urban carbon emissions, particularly in large cities. Revenue constraints for transportation system investment. Promising Transponder, GPS, cell phone beacon, and license plate recognition Developments technologies applicable to areawide pricing and enforcement; also technologies offer improved traffic data collection and evaluation and possible enhanced crime security (e.g., London). Promising cost/revenue balance in experience to date, with support for new transit service, improved/higher speeds, and reduced delays to vehicle drivers; more safety and travel alternatives for non-drivers. Possible integration of pricing technology with payment for transit, parking, and existing tolls (e.g., use of EZ Pass in New York City). U.S. Examples: Proposed in the United States for the first time in New York City in 2007 and San Francisco in 2008. Success Considerations Auto options: Implement adequate transportation improvements as part of pricing program to improve transit capacity, frequency, and reliability; construct park-and-ride lots; provide express bus services in neighborhoods where majority of auto trips to charging zone originate; accommodate truck delivery considerations; improve conditions for pedestrians and cyclists; institute neighborhood preferential parking where spillover parking is a risk. Program design: Evaluate discounts and exemptions (e.g., residents, emergency vehicles, taxis, zero emission vehicles) for enhanced acceptability but balance against reduced effectiveness; tailor pricing to peaks (versus all day) with possible limits on the number of charges per zone crossing and reduced business or other taxes as offsets to pricing revenues; where air quality is a paramount objective, alternative fuel vehicles may be exempted, as in London. Politics: Identify/be cognizant of proportion of auto versus other mode users affected by pricing; accordingly, attend to key interest groups and tailor communications (resident associations, large and small businesses, auto drivers, transit riders, shoppers, media, environmental interest groups, and low-income advocacy groups); identify influential group positions and seek acceptable compromises; identify and nurture champions; run open, credible, responsive planning and outreach processes. Statelocal: State clearance very likely necessary, requiring interaction, clearance, and legislation. Goals: Identify appropriate multiple goals of interest to affected parties (e.g., reduced travel time, better transit, reliable deliveries, neighborhood protections); tailor strategy for different travel markets. Revenues: Develop explicit benefit plan for increased revenues dovetailing with goals and mitigation concerns (e.g., enhanced transit, spillover protections, better enforcement). Enforcement: Mount effective enforcement upon implementation of new pricing to ensure acceptability and long-term implementation; pay heed to privacy concerns in data collection and processing. Payment: Design convenient payment channels and options, e.g., easy-to- understand price structures. Examples: Extensive public outreach and stakeholder consultations in London began 18 months prior to start of congestion pricing; London mayor's leadership was a strong supporting factor; transit was expanded and improved in Stockholm, London, and Singapore before charging began. 2.3.5 Mileage Fees Road pricing where the charges paid are based on the number of vehicle-miles traveled has largely been applied to light-duty vehicles and/or trucks to date. A key goal of many VMT-based fee programs has been to preserve or increase transportation revenues, compared to declining gas tax revenues. However, traffic management also is a target of VMT fees where they vary by most congested times and places. Another potential goal is to vary the fee by vehicle emissions and/or

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52 Road Pricing: Public Perceptions and Program Development weight to reduce emissions and account for added road wear from heavier vehicles. Unlike some other pricing concepts, implementation of VMT-based fees has been discussed at all levels of government--national, state, and metropolitan. Regional trials for mileage or VMT fees have been conducted in Portland by ODOT, in the Seat- tle area by the PSRC, in the Twin Cities region by the MnDOT, in Atlanta by the Georgia Institute of Technology, and in multiple locations around the country by the University of Iowa. Abroad, distance-based pricing has been implemented for heavy trucks in Switzerland, Austria, Germany, and Eastern European countries including Hungary and Slovakia. Exhibit 24 focuses on VMT fees that vary based on location and time of day and thus have the same objectives as other road pricing strategies, as opposed to flat rate VMT fees as a potential replacement for the fuel tax. The matrix discusses VMT fees with variable rates to address prob- lems of peak-period congestion delays, pollutant emissions, and the need to capture costs and apportion revenues based on location, jurisdiction, or user group. The regional trials of VMT charges have evaluated driver responses in experimental groups rather than in developed, ongoing, fully operational programs. The following projects have exam- ined the effects of particular variable road use pricing strategies on travel behavior and seek insights Exhibit 24. Mileage fees. Planning Considerations Travel/Traffic Overall travel impact: 8% to 16% reduction in VMT has been recorded across trial programs, as a combined effect of mode shift and change in travel times or routes. Results from VMT fee trials: In Oregon, fees of 0.43 cents per mile in off-peak periods and up to 10 cents in peak periods in congested zones led to 11% to 16% reduction in VMT; in Puget Sound, peak tolls of 40 to 50 cents per mile on freeways (10 to 15 cents off-peak) and 20 to 25 cents per mile on non-freeways (5 to 7.5 cents off-peak) led to about 10% reduction in VMT during peak periods and more on specific roadways. Results from truck tolling in Europe: Differential tolls by number of axles and emission standard for heavy vehicles (> 12 tons) on all major roads in Germany was followed by increased purchase of lower emission trucks; higher load factors have been observed in Switzerland under a similar pricing scheme. Revenue/Finance Construction: Preliminary cost estimates for a distance tolling system in the Puget Sound region include initialization costs of approximately $0.75 billion to $1.5 billion and operations could equal 5% to 10% of proceeds; includes costs for in-vehicle technology, supporting infrastructure, fee collection, and enforcement. Cost/revenues: A recent AASHTO study (June 2009) shows a revenue-neutral switch to a flat VMT fee of 1.1 cents per mile applicable to all vehicles would yield $35.7 billion of revenues in 2015--the same as would result from current fuel tax rates--but switching to VMT fees would result in about $7 billion to $9 billion of additional revenue by 2030--an increase of at least 20% compared to fuel tax revenues at current rates. Economic and finance issues: If implemented at a nationwide-scale with central billing, there is a possibility to apportion revenues more in line with travel volume within boundaries of states, counties, and regions. Equity Research shows that the distribution impacts across income groups of a flat mileage fee are not significant; however, geographic equity may be an issue as some rural residents drive longer distances than urban residents, which may be moderated by lower rural road fees; equity issues for congestion pricing component same as with other road pricing concepts--see exhibits in this section. Owners of fuel-efficient vehicles would be advantaged if charges vary by emissions as opposed to those driving typically less fuel-efficient farm and business vehicles.

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Planning Guide: Developing Road Pricing Plans and Programs 53 Exhibit 24. (Continued). Planning Considerations Environment Reduced trips and travel distance can reduce emissions following travel impacts noted above. Available results show that higher VMT fee rates for vehicles with higher emissions encourage adoption of less polluting vehicles; e.g., in Germany, a relatively high VMT fee of 12.4 Eurocent (20 US-cents) per vehicle-kilometer for trucks resulted in an increase in the number of new trucks with higher emissions standards. Policy/Institutional Authorizations: Enabling legislation, policy, and procedures needed to encourage adoption of tried and tested open, flexible and cost-effective technology interoperable across states; enabling legislation also needed to allow state/regional governments to levy congestion pricing element of distance-based pricing systems. Policy for apportioning revenues across jurisdictions and agencies established prior to implementation. Selection of technology and protocol (open versus closed) that allows interoperability across states/countries and allows states to opt in or opt out. Transition: Policies to allow motorist adoption of technology over time. Emerging Directions Motivators More stable and sustainable revenue source as compared to fuel tax supporting road development and maintenance costs. Potential to reduce congestion and emissions compared to "do nothing" scenario or regular highway expansion. Possible allies in state and regional governments struggling to meet revenue needs and traveling public, businesses concerned with aging roads and inadequate capacity, and road users who believe the strategy offers greater equity due to "user pays" principle. Promising Technologies: Oregon piloted mileage fees at vehicle refuels; the Puget Sound Developments pilot used in-vehicle meters charging by location (type of roadway) and time of travel; GPS units tested well in Oregon, although privacy concerns remain; relatively low-cost RFID technology allows equipping all vehicles with mileage- metering capabilities; use of cell phone and Bluetooth applications. Trial programs: Information on potential impacts and actual operations available from trials in Oregon, Puget Sound, Georgia Institute of Technology, and Minnesota, and nationwide trials by the University of Iowa. Increasing recognition during 2009 economic downturn that new sources of infrastructure finance must be explored. Oregon legislature expected to pass HB 2001A making the mileage-fee-based road pricing pilot program permanent, and authorizing a congestion pricing pilot in Portland. Success Communicate with public about how transportation is financed and the problem of Considerations declining gas tax revenues due to inflation; evaluate indexing of VMT fees with inflation. Gain legislative support early on; pilot project in Oregon would not have been possible without legislative support; engage all affected and influential parties including city and community representatives, auto owners associations, environmental groups and media; gain agreement on revenue allocation. For best chance at acceptance, consider starting with a voluntary approach. Use tried and tested, reliable, and familiar technology; address driver privacy concerns through technology or data storage mechanism (in Oregon, only mileage counts were transferred to billing system). Ensure that all vehicle types are accounted for in system planning, including potential future growth in electric vehicles. Design system with minimal burden on users for payment method, purchase of equipment, or regular inspections of odometers. Develop detailed program design including billing and collection technology, rate structure, enforcement, spillover guards, revenues and gas tax replacement strategy, and mitigation for perceived geographic inequity before communicating with public.