Presented to the 2012 Symposium on Mileage-Based
User Fees and Transportation Finance Summit
Presented By Michael Lawrence
April 29, 2012
Jack Faucett Associates
and
ECONorthwest
• The overall cost of congestion (based on wasted fuel
and lost productivity) reached $101 billion in 2010
• Approximately $713 for every U.S. traveler.
• The total amount of wasted fuel in congestion topped
1.9 billion gallons
• A week’s worth of fuel for the average U.S. driver.
• The amount of wasted time totaled 4.8 billion hours
• Nearly one full work week (or vacation week) for every traveler.
*Source: Texas Transportation Institute’s 2011 Urban Mobility Report
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• Public Sector Uses Benefit Cost Analysis to
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Reduce Societal Loses
Seek Efficiency in Government Facility Operations
Achieve Equity for All Users
Prepare for Emergency Responses
Provide Safe Systems
• Private Sector Uses Cash Flow and Profitability Analysis to
• Seek Infrastructure Investments
• Seek Investments with Low Risk of Default
• Seek Returns on Investment
• Today’s Talk Is About Public Sector Decision Making
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• Extent of Congestion Relief
• Time Savings
• Emissions
• Energy
• Level of Fee Required
• Cost of User Fee Collection Systems
• Time and Cost Related to Transition from Current Revenue
System to Future Revenue System
• Modal Capacity Required
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• Achieving Many Public Sector Goals
• Reduce congestion
• Improve travel times
• Encourage transit use
• Reduce vehicle emissions
• Reduce energy consumption
• Fund transportation programs and projects
• Promote regional economic development
• Pricing Mechanisms Available
• Fuel Tax
• Mileage-Based User Fees
• Roadway Tolling
• Managed Lane Pricing (Value Pricing)
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• Use Benefit/Cost Analysis (BCA)
• Determine the Benefits and Costs of individual project financing
alternatives
• Justify roadway pricing mechanisms
• Provide transparency and accountability for investment decisions
• Evaluate alternatives using existing methods and data
• A BCA quantifies the benefits and costs of a particular project
structure to determine whether an investment is justifiable
• BCA must express all benefits and costs in monetary terms
• The benefit/cost ratio is the net present value of benefits
divided by the net present value of costs
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Establish Objectives
Define Alternatives
Forecast Performance
Estimate Benefits and Costs
Analyze Risks
Rank Alternatives and Make Recommendations
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• BCA.Net
• Evaluates the benefits and costs of resource allocation and investment
decisions through the analysis of alternative strategies for highway
management and improvement
• STEAM
• Assesses the efficiency of multimodal transportation alternatives and
demand management strategies on a corridor or regional level
• NBIAS
• Evaluates the economic impacts of the condition and performance of
bridges on highway users and agencies
• HERS-ST
• Evaluates the economic impacts of the condition and performance of
highways on highway users and agencies
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• Three common options under consideration by
transportation planners
1. Construct new, variably-tolled Express Lanes
2. Convert existing HOV lanes to variably-tolled Express
Lanes
3. Convert all lanes of a conventionally-priced toll road to
variable pricing
• Three optimization alternatives in HOT-BCA
1. Maximize Revenue
2. Maximize Throughput
3. Maintain Level of Service
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• Challenges
• Few Candidate Facilities (~10 domestically)
• Poorly maintained data on volume and composition
• Projects differ on many dimensions
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Corridor Volumes
Demographic Conditions
Carpool Policies
Traffic Composition
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Tolling Objectives
Facility Geometry
Pricing Methodology and Limits
Hours of Operation
• Limited available data on site, though calls to some regional
DOT and facility operators proved fruitful
• Sufficient data was only available for less than half of the
surveyed facilities
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• Toll Optimization Model
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Equilibrium lane volumes
Toll levels
Revenues
Associated travel times for tolled highway facilities
• Smaller Optimization Kernel
• Reduced form of the Toll Optimization Model includes modified:
• Variations in segment characteristics
• Traffic characteristics and composition
• Toll policies
• Operating constraints
• HOT-BCA: The Final Product
• A Reduced Form Excel-based Tool that has the relationships that have
been revealed through this analysis
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• The following elements are required for to use the HOT-BCA
tool:
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Project years for which to analyze the project lifecycle (base case and project case)
Tolling objective for each project year
Five time periods (such as: AM peak, Midday, PM peak, Evening, Night)
Time period start and end times
Tolling methods for each time period (Dynamic, Static, or None)
Vehicle class names (SOV, HOV2, HOV3, COM, MTK, HTK)
Passenger car equivalents (PCE) for each vehicle class
Value of time (VOT) for each vehicle class, in $/hr
Managed lane access rules for each vehicle class (base case, versus project case)
Free flow speed
Capacity for general purpose (GP) and managed lanes
Minimum level of service for managed lanes
Number of segments for the managed lane facility
Segment length and direction
Number of GP and HOT lanes per segment, per time period, for base case and
project case
• Volumes for each vehicle class, per segment, per time period
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• The following are calculated by HOT-BCA and converted to
dollars (where identified):
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Travel time savings, in dollars
Vehicle miles traveled
Vehicle hours traveled
Disbenefits from tolls, in dollars
Revenues from tolls, in dollars
Energy savings from fuel consumption reduction, in dollars
Criteria Pollutants and Greenhouse Gases
• The tool user provides the following items used in the
benefit/cost calculations:
• (Benefit) Annual safety benefits in the base year and project year
• (Cost) Construction cost of the project
• (Cost) Annual operating cost of the facility
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• Problem:
• One of the highest cost for implementing MBUF is the transition from fuel
tax revenue to mileage-based revenue systems as envisioned by MBUF
• High transition costs are a political challenge
• Solution:
• Allowing users to choose payment systems minimizes transition costs
• Green Charging provides incentives for users to choose value priced
systems for travel
• Hot Lanes
• Priority Parking
• Ride Sharing
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• Problem:
• Electric Vehicles (EVs) don’t buy gas or pay fuel taxes
• EVs cannot continue to be exempt from user fees
• Solution
• Develop an EV user fee payment system
• Link the EV payment system with a green charging transition process.
• Utilize the EV’s GPS technology to incorporate mileage-based user fees
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• Jack Faucett Associates (www.jfaucett.com)
• Michael Lawrence, Principal Investigator (lawrence@jfaucett.com)
• Jon Skolnik, Senior Economist
• Devon Cartwright-Smith, Economist
• ECONorthwest (http://econw.com/)
• Randall Pozdena, Ph.D, Co-Principal Investigator
• Carl Batten, Senior Economist
• Sean Wallace, Senior Analyst
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Michael F. Lawrence
JFA President
4550 Montgomery Avenue
Suite 300N
Bethesda, MD 20814
Phone: (301) 961-8835
Fax: (301) 469-3001
lawrence@jfaucett.com
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