Transcript IMPACT STUDY OF VALUE PRICING ON CALIFORNIA STATE …

A LOOK BACK:
CALIFORNIA
STATE ROUTE 91
Edward C. Sullivan,
California Polytechnic State
University, San Luis Obispo
Facility Features
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4 lane toll road in median of 8 lane freeway
16 km. in length
Express travel (no intermediate access)
Heavy vehicles not permitted
Electronic toll collection only (no cash)
Time-dependent tolls, reflecting demand
Originally constructed and operated by private
company under franchise agreement with the State
Project Location
History of the SR 91 Express Lanes
1989
CA Legislature passes enabling legislation AB 680
Dec. 95
Lanes open; project cost $135 million (mixed equity& debt)
Jan. 97
First general toll increase (about 10%)
Sept. 97
Second general toll increase & schedule refinement
Jan. 98
Tolls imposed on HOV-3+ users (@ 50% level)
April. 98
Third general toll increase & schedule refinement
Aug. 98
CPTC announces lanes reach financial "break even"
Oct. 98
Eastern Toll Road opens in competition
Jan. 99
Fourth general toll increase & schedule refinement
Jan. 99
"West leg” of Eastern Toll Road opens
Mar. 00
Fifth general toll increase
Jan. 01
Sixth general toll increase
Jan. 03
Franchise bought by OCTA for $207 million
Aug. 03
Seventh general toll increase
Typical PM Peak Operations
Genesis – Calif. AB 680 (1989)
• Goals of the legislation:
– Attract “alternate funding sources” to meet state
transportation needs
– Gain private sector efficiencies in developing
projects
– Reduce congestion in crowded corridors
– Provide alternate route selections
– Provide private partners a “reasonable” profit
Provisions of AB 680
• 4 demo projects w/ geographic distribution
• Provides up to 35 year lease of right-of-way and
airspace, which then reverts to the State (but may
remain a toll road)
• Projects become part of the state highway system
• Must meet all applicable laws, environmental
requirements, and be built to State standards
• Any State services fully compensated; state
powers (e.g. condemnation) made available
• “Excess” tolls either go to the State or used to
reduce project debt
SR 91 Performance Summary
The State Route 91 Impact
Assessment Study
• Objective: measure reactions to variable
toll pricing and the other innovative
features of the toll facility
• Impacts tracked from mid-1994 through
1999 (one year after opening day)
The State Route 91 Impact
Study – Focus Areas
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Traffic counts, occupancy counts and speeds
Effects on corridor bus, rail and park & ride
Effects on accidents and significant incidents
Traffic operations at entrances/exits
Origin-destination (revealed preference) surveys
Public opinion surveys
Emissions modeling
Calibration of choice models
Findings – Tolls & Time Savings
• Express lane use strongly reflects hourly
travel time savings
• Flattening of traffic peaks is weakly
responsive to tolls – more responsive in the
AM period
• Commuters typically overestimate time saved
by 5-30 minutes
• Some users cite driving comfort & safety to
justify paying tolls if time saving is minimal
• About 18% do not pay their own tolls
Findings – User Demographics
• Income correlates positively with use
frequency for all groups
• Middle-income groups seem relatively most
affected by toll increases
• Being female strongly correlates with using
the toll lanes
• Middle age groups use toll lanes more than the
youngest and oldest age categories
• More education also correlates with toll lane
use
Lessons Learned About User
Demographics
• Results from CA Route 91 show a moderate
income effect in travelers’ use of the toll lanes
• Nevertheless many frequent users are low income,
and many high income commuters are infrequent
or non-users
• Having said all this, the choice to use the optional
toll lanes seems more related to current travel
conditions and needs than to user demographics
Findings – Ridesharing & Transit
• Toll incentives were accompanied by long-term
increase in 3+ ridesharing
• HOV users have been more likely to use X-lanes
• Flexible work schedules seem unrelated to X-lane
use
• No significant impacts on corridor transit use
(public transit is about 1% of total corridor travel)
Findings – Collision Experience
• Accident rates in the corridor have
generally varied with congestion –
there appear to be no particular effects
related to the special operating
characteristics of the toll lanes
Findings – Public Opinion
• 91X lanes’ image suffered in 98-99 from
disputes about ownership & congestion
• Approval of variable tolls fell but overall
approval of toll financing remains high
• Toll payers express higher approval of
variable tolls than non-payers
• Approval declined for private operation
• Approval of HOT lane concept is high
SR 91 Benefit-Cost Summary
Alt. 1
Express
Lanes
NPV
($million)
Alt. 2
Dual-HOV
Lanes
NPV
($million)
Travel Time Savings
Inc. Cost of Emissions
$605.90
-$3.54
$602.36
$336.70
-$2.03
$334.67
Incremental Initial Investment
Operating Costs
$32.80
$79.44
$112.24
$26.45
$4.80
$31.24
Benefit Cost Summary
Benefits:
Sum of Benefits
Costs:
Sum of Costs
Net Present Worth
$490
$303
Benefit-Cost Ratios Compared to Base Case
5.4
10.7
Compared to Alt. 2
3.3
Note: Net Present Values (NPV) are discounted to 1996 at a 3.1% discount rate.
Benefits and costs are compared to the null alternative (construction of two
unmanaged lanes, assumed to open in December, 1995).
Comparisons include 10 years of costs and benefits (1996-2005).
Seeds of De-Privatization
• Traffic growth led to substantial renewed congestion
• Some partners changed business strategy and wanted out
• A 1999 buy-out offer from start-up non-profit (New-Trac)
for $260 million was widely perceived as sweetheart deal
contrary to public interest, with a major political outcry
• A 1999 CPTC lawsuit against Caltrans stopped planned
capacity improvements (Caltrans settled)
• A 2000 Riverside County lawsuit against CPTC and Caltrans
tried to void the franchise agreement
• At least two unsuccessful legislative bills (AB 1091, AB
1346) sought to void the non-compete clause and have the
public acquire the toll lanes by condemnation
• In 2001, CPTC successfully refinanced $135 million in debt
to pay loans from partners and cover remaining construction
debt at 7.63% rather than 9%
De-Privatization Arrives
• In spring 2002, the CPTC and the Orange County
Transportation Authority (OCTA) agreed to a sale
of the 91 franchise for $207.5 million
• In fall 2002, the governor signed AB 1010 which,
among other things, authorizes the transfer
• The sale became final in January, 2003
• CPTC metamorphosed into Cofiroute Global
Mobility, which now operates SR 91 for OCTA
Provisions of AB 1010 (2002)
• Authorizes OCTA to buy the CPTC franchise
• Calls for improving congestion by eliminating the noncompete clause
• Calls for reduced SR 91 tolls and a minimum toll period
• All projects become non-toll when franchises expire
• No more new franchises after January 1, 2003
• OCTA prohibited from transferring its franchise without
State approval
• Creates an SR 91 advisory committee with strong local
political control
A Good Deal for All
• CPTC receives $135 million to cover its (newly
refinanced) debt plus $72 million for the original partners
• OCTA can use a 30 year payback schedule of $13 million
per year
• An Ernst & Young study for OCTA predicts $40.5 revenue
by 2010 with daily traffic to grow from 25,500 in 2001 to
nearly 64,000 in 2030
• HOV-3+ again travel free (except during the worst of the
afternoon peak, where the 50% toll is maintained)
• In Nov., 2002, voters approved Measure A to provide
nearly $1/2 billion in road improvements elsewhere in the
91 corridor, which would have been blocked by the noncompete clause
In Retrospect
• Despite de-privatization, the SR 91 project was a
very successful project on many dimensions
• It was an innovative model that helped establish in
the U.S. an open mind toward market-based road
pricing
• It proved that public-private highway partnerships
can be financially successful
• The Achylles heal of this privatization project
turned out to be the non-compete clause in the
franchise agreement
More Final Observations
• Public-private infrastructure projects should be
eligible for tax-exempt bonds, even with a forprofit private partner (OCTA debt will be about
5.5%, compared to CPTC’s 7.6%)
• SR 91 showed the value in having the public
partner obtain prior environmental clearance, on a
reimbursement basis
• Given the resource limitations of most public
transportation authorities, the SR 91 non-compete
clause was probably neither needed nor desirable
The “Bottom Line”
• CA Route 91 has demonstrated that innovative road
pricing (premium service for a premium price) can be
economically attractive, win public approval, and
significantly influence travel behavior.
• Increasing traveler options is a subtle yet powerful
outcome from such value pricing projects.
• “One size fits all” in road pricing has clearly failed.
Increasing transportation choices through pricing has
succeeded in CA and deserves careful consideration
elsewhere.