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:
- Served more than 855,000 customers, representing drivers from all 50 states;
- Saw 47,303 trips on its busiest day in September 2013;
- Saw toll prices range from $0.25 to $9.75 to travel the full length (approximately 14 miles), with an average toll price of $1.63;
- Saw toll revenues nearly double from $2.48 million in the quarter ending in March 2013 to $4.76 million in the quarter ending in September 2013.
- Saw average workday trips increase over 40 percent over the same time period, with an average of 26,294 trips in the March 2013 quarter, rising to 37,574 trips in the September 2013 quarter.
- Saw High Occupancy Vehicles (HOV 3+) and toll-exempt vehicles (e.g., vanpools, public transit buses, emergency vehicles, etc.) account for approximately 9 percent of customers.
- Saw an increase in speed limit from 55 to 65 miles per hour in June 2013, making the lanes a more attractive option for customers relative to the often-congested main I-495 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:
- 68% of customers used the lanes because they needed to reach a destination on time, while 46% cited congestion on the regular Beltway lanes. This is consistent with other managed lanes projects nationally, where most users report that they do not use the lanes every day, but rather use them occasionally when they need to make an appointment, get home on time, etc.
- 60% of Express Lanes users are under 45, and a majority (58% ) are female.
- 59% of users live in the Northern Virginia suburbs, with another 29% from Maryland and 12% from Washington D.C.
- 80% of customers surveyed said that they planned to use the Express Lanes again, indicating a high degree of satisfaction with their experience.
- The benefits cited by local Express Lane users include fewer slow-downs (90%), exits/entrances that circumvent surface-road traffic (85%), predictable travel times (84%) and dedicated safety crews (83%).
- Far from what critics have panned as “Lexus Lanes,” the top four makes of vehicles on the Express Lanes are Toyota (17%), Honda (15%), Ford (8%) and Nissan (5%).
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 Stateline.org 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.