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Reason Foundation

Privatization & Government Reform Newsletter

Reviewing the First Year of the I-495 Express Lanes

Recent report provides interesting snapshot of the lanes' first year in operation

Leonard Gilroy
December 3, 2013

In recent years, managed lane projects—projects involving the tolling of highway lanes where prices vary throughout the day depending on the amount of traffic in the lanes (e.g., the higher the traffic, the higher the toll) to maintain free-flow conditions—have been proliferating in various metro areas, as has the private financing of public highway infrastructure projects through public-private partnerships.

One project that combines both in a 75-year long-term concession is the 495 Express Lanes project on the Northern Virginia portion of Interstate 495 (the Capital Beltway), which recently celebrated its first anniversary. As Reason’s director of transportation studies Robert Poole described the project in November 2012:

On November 17th [2012], the I-495 Express Lanes open to traffic on northern Virginia’s chronically congested Capital Beltway. This project […] resulted from an unsolicited proposal, originally by Fluor, to build express toll lanes for about a billion dollars instead of the unpopular and unaffordable Virginia DOT plan to spend $3 billion adding HOV lanes to the Beltway. Since the company’s innovative design required very few property takes compared with the HOV plan, and would be largely self-funding from toll revenue, Virginia DOT saw it as a better alternative. By the time details had been worked out over several years, the price tag climbed to $1.9 billion due to the addition of many new ramps and reconstruction of bridges over the wider Beltway, so VDOT agreed to put in about $400 million. Fluor teamed up with experienced toll road developer/operator Transurban and the team financed the project during the depths of the global capital crunch.

A recent report released by the project’s operator Transurban provides an interesting snapshot of the first year in operation. Overall, in their first year the 495 Express Lanes:

In his August 2013 newsletter, Poole notes that because of the impacts of the Great Recession, the lanes’ utilization is “still far below the 2007 (pre-recession) forecast of 66,000 for the first year, but the growth rate is encouraging, as congestion returns to the Beltway's [general purpose] lanes.” A recent Washington Times article discusses this further and quotes Poole and Reason colleague Baruch Feigenbaum on traffic ramp-up trends associated with startup managed lane projects.

The Transurban report also includes some interesting data from customer surveys regarding the profile of the lanes’ users and their various reasons for using them. Among the findings:

It will be interesting to see how the project matures in year two, and moreover, it will be interesting to see how it influences the discussions of managed lane projects in metro areas like Phoenix, Minneapolis/St. Paul, San Francisco and Seattle, which are among the many metros in which managed lane projects and/or networks are in various stages of planning.

At a broader level, a recent article discussed states' increasing use of tolling to address their transportation funding gaps, and it cites data from the National Conference of State Legislatures showing that 42 states and the District of Columbia either have toll facilities in operation already, or at least have tolling authority. The Wall Street Journal recently reported that some toll facilities financed through public-private partnerships (mostly before 2008, prior to the Great Recession) have experienced financial pressures, and Bloomberg reports that these pressures have prompted some states to pursue financing arrangements that shift more of the toll project revenue risks to the states to decrease the financial risks to private toll road operators. Poole will examine these issues in more detail in the next edition of his Surface Transportation Innovations monthly e-newsletter (available here and well worth a subscription).

For more information on managed lanes and transportation public-private partnerships, visit Reason’s transportation research archive.

Leonard Gilroy is director of government reform at Reason Foundation and is the editor of the Privatization & Government Reform Newsletter, available here.

Leonard Gilroy is Director of Government Reform

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