Congestion pricing in various forms and the benefits of Public Private Partnerships.

1. Adrienne Heim
URBP 176/226
3 December 2008
Working with the Private Sector to implement Congestion Pricing Schemes
Thirty years ago Singapore was the first country to establish a congestion pricing
scheme for the sole purpose to manage the quantity and usage of personal vehicles1.
Unlike the city of Oslo, which intended to use the cordon revenue for road maintenance
projects; Singapore foresaw the increasing presence and intrusion of the automobile and
vowed to preserve its country’s landscape and natural environment. From this
implementation, Singapore became a pioneer and paved the way for many other
governmental bodies, most notably in London to take the lead towards implementing a
traffic management scheme that fit their congested metropolitan city. Great Britain and
Singapore have heightened awareness throughout the world that increasing use of the
automobile must be managed in order to maintain the existing network of roadways,
decrease the emission of Carbon Dioxide and all the while increasing the appeal of public
transit. This strategy can be accomplished with a specific congestion price scheme that is
appropriate for the city and most importantly with investment from the private sector who
can quickly take on an important aspect of the project in the most cost effective manner.
Politicians, urban economists and transportation planners understand that traffic
generated along a popular corridor creates negative externalities such as pollution,
degradation of roadways, excessive noise and potential automobile accidents. The Texas
Transportation Institute reported in 2003 that congestion in the top 85 US urban areas
caused 3.7 billion hours of travel delay and 2.3 billion gallons of fuel for a total cost of
1
Land Transport Authority, “Electronic Road Pricing”; available from
http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm; Internet; accessed 29 October, 2008.
1

2. $63 billion2. Overall, the average cost of traffic in developing countries is at 2-3% of
GDP3 . Therefore, it was only natural to incorporate economist Arthur Pigou’s self
named tax theory to manage traffic during peak travel period hours and along popular
corridors. Pigou determined that users of a public good will use the item to their benefit,
thereby decreasing the value of the good among additional users4. The only way for users
to not exploit the shared good would be to charge a usage fee which benefits all. The
Pigou tax was then incorporated as part of the traffic demand management strategy and
coined as a congestion toll or “value pricing” scheme. The scheme was defined by
charging a toll for driving along a highly congested corridor during peak and off peak
hours and the toll has the ability to change depending on vehicle class and the popularity
of the roadway5. Once this scheme is implemented drivers would then realize the full cost
of driving and have the option to modify their behavior by driving during off peak hours,
forming rideshares or simply switching to public transportation. This in turn enhances the
level of service for public transit and private delivery vehicles that use the once congested
routes, improves the air quality and increases capacity for more vehicles to travel at
optimum speed levels.
Tolls are not a new phenomenon in the United States or the rest of the world and
many recouped the toll revenue to be used to maintain public roads. Some historic
examples include Maysville Turnpike in Kentucky in 1830 and US 1 in South Carolina in
19216. When toll roads were created in European countries, Sweden was well engaged in
private partnerships to which they felt were the most cost beneficial. Sweden’s financing
2
US Department of Transportation, “Congestion Pricing: A Primer”; available from
http://www.ops.fhwa.dot.gov/publications/congestionpricing/congestionpricing.pdf; Internet; accessed 10
October, 2008.
3
Lee Schipper, Wei-Shiven Ng, “The Role of Market Based Instruments- Road Pricing, Parking Fees and
Congestion Pricing” (present., World Resources Institute, December 15, 2006), 4-5, in Online database
name, http://www.edf.org/documents/5845_Schipper_CongestionPricing.pdf ; accessed December 2, 2008.
4
Andrea Schage, “Traffic Congestion & Accidents.” University of Regensburg Working Papers in
Business, Economics and Management Information Systems, November 9, 2006; accessed October 15
2008.
5
Ibid, 4
6
Cesar Queiroz PHD, “Screening of PPP Projects for Financial Feasibility” (present., Ministry of Economy
of Poland and World Bank, 2008), in Online database name ;
http://209.85.173.132/search?q=cache:WZh_5JA2d2cJ:siteresources.worldbank.org/INTECAREGTOPTR
ANSPORT/Resources/Day2_Pres7_PLLessonsPPPfinancialscreeningCQueiroz.ppt+Screening+of+PPP+Pr
ojects+for+Financial+Feasibility&hl=en&ct=clnk&cd=1&gl=us; accessed 4 October 2008.
2

3. model was mainly used for low volume roads in which the government offered incentives
for private road owners to maintain their roads. This overall left the government with a
lower operating and capital cost then if they solely took over the responsibility7.
Currently, in the United States the gas tax cannot provide added funding as long as gas
prices continue to seesaw, while technological advances in automobile manufacturing
and alternative fuel sources persist. Most roads are maintained at a level of 20-50% of
what is necessary despite most of the road networks accounting for 10-50% of Gross
National Product8 . Realistically, very little funds are available to accommodate both
accumulated road projects and public transit needs. The first priced tolls that included flat
rate and variable congestion price schemes were High Occupancy Toll (HOT) Lanes,
High Occupancy Toll (HOV), Area wide, Cordon and Corridor pricing schemes9. In the
United States there are various systems in place that operate congestion pricing schemes.
The majority consists of HOV lanes in cities such as Minneapolis, MN I-394, Houston
TX I-10, SR-91 in Orange County, CA, I-15 in San Diego, CA and I-25 in Denver,
Colorado10.
By 1998, the Federal Highway Administration (FHWA) took a number of steps to
promote the advancement of Public-Private Partnerships by introducing their Special
Experiment Project 15 (SEP-15) to Congress. The project allows the FHWA to identify
new PPP approaches to project delivery such as: 1) contracting, 2) compliance with
environmental requirements, 3) right of way acquisition and 4) Project finance. Once the
report was fulfilled the FHWA believed that many local DOTs should be able to acquire
the resources needed when they felt a PPP should be considered. The FHWA dedicated
an official page listing various PPP case studies and contractual agreements by Public-
7
Sven Ivarson and Christina Malmberg, Street Smart: Competition, Entrepreneurship, and the Future of
Roads, ed. Gabriel Joseph Roth (Transaction Publishers, 2006), 328-29 Retrieved November 26, 2008
8
Gunter J. Zietlow, Street Smart: Role of the Private Sector in Managing and Maintaining Roads, ed.
Gabriel Joseph Roth (Transaction Publishers, 2006), 347-48 Retrieved November 26, 2008
9
Wikipedia, “Congestion Pricing or Congestion Charges”; available from
http://en.wikipedia.org/wiki/Congestion_pricing; Internet; accessed 17 September 2008.
10
Virgina Department of Transportation, “About HOT lanes in the US”; available from
http://www.virginiahotlanes.com/beltway-how-hot-lanes-work-about.asp; Internet; accessed 5 October
2008.
3

4. Private Partnership involvement11. The Public-Private Partnership page displays a wealth
of information for the public transit agency and private sector to come together to work
on a relationship that best fit both of their needs. In addition, the Transportation
Infrastructure Finance and Innovation Act (TIFIA) came about which established a new
Federal program under which USDOT could provide credit assistance to major
transportation investments. The TIFIA program was designed to draw private investment
into projects by providing supplemental capital and credit rather than solely distributing
grants12.
If the idea of a congestion toll were brought about in a local newspaper or a
question about its effectiveness was sent via survey for public response, there will always
be reaction of defense, frustration and resentment. In the public’s opinion the freeway has
always been a free good to those who have the privilege to drive. To impose another tax
would be inequitable, stifling towards local businesses within the congestion zone and
potentially requiring additional funding through increased sales taxes or governmental
bonds. However, once the congestion price scheme is successfully implemented and
traffic wanes; the residents and business owners will be aware of how decreased traffic
affects their lives for the better. Public-Private Partnerships assist with the public’s
acceptance towards the congestion scheme by aiding the transportation agency by taking
on the responsibility of funding a project and supplying technological processes.
The partnership is also ideal from an economic standpoint because it forces
multiple corporations to compete for the contract and consequently spurs competition
which in turns provides quality services at a reasonable price.
Various private partnerships agreements consist of:
Project design and implementation
Financial strategic planning
Construction
11
Federal Highway Administration, “Public-Private Partnerships”; available from
http://www.fhwa.dot.gov/ppp/index.htm; Internet; accessed 5 October 2008.
12
Jim March. “Working with the private sector to meet transportation goals,” Public Roads, NOV 1, 2005.
http://www.highbeam.com ; accessed November 14, 2008.
4

5. Maintenance
Toll Collection
Program management
Technology to efficiently carry out the program13
The following case studies agree that Public-Private Partnerships have their
advantages; it allows the private sector to invest in the potential of the road project
without the aid of government funding and taxpayer dollars.
Let us return back to Singapore where a congestion scheme was first implemented
in 1975. The country first levied a congestion toll through an Area License and Restricted
Zone scheme towards drivers entering the Central Business District. The scheme initially
required all drivers to purchase a permit allowing them to enter the congestion zone.
Unfortunately, this posed a few problems; without the assistance of technology the
scheme was quite labor intensive requiring enforcers to check each permit by vehicle
class. It also allowed permits to be transferred to different cars14. In the 1990s Singapore
continued to enact their vehicle management framework by implementing a Vehicle
Quota system to restrict the amount of personal vehicles that could be registered within
the state. Eight years later, the Electronic Road Pricing System was implemented and
required all drivers to purchase or rent an in vehicle unit equipped with a smart card
which deducted the toll when entering a sensored Gantry point15. The new technology,
which is solely operated by Singapore’s transit agency, Land Transit Authority (LTA)
and its subsidiary MSI Global allowed toll to vary by the amount of congestion, vehicle
class and by peak period hour. Not only did congestion decrease by 13%, but the revenue
generated from the toll scheme was used to improve and increase transportation systems
around the country. Through the technology offered by private corporations, Singapore’s
Electronic Road Pricing technology was developed through a consortium consisting of
Philips Singapore Pte Ltd., Mitsubishi Heavy Industries Ltd., Miyoshi Electronic
13
ITS Decision, “Congestion Pricing”; available from
http://www.calccit.org/itsdecision/serv_and_tech/Congestion_pricing/congestion_pricing_report.htm;
Internet; accessed 14 November, 2008.
14
Dr. Chen Kian Keong, “Road Pricing Singapore's Experience,” Imprint Europe (2002 Oct): under
“Seminar: Europe Thematic Network,” http://www.imprint-eu.org/public/Papers/IMPRINT3_chin.pdf
;accessed 14 October, 2008.
15
Land Transport Authority, “Electronic Road Pricing”; available from
http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm; Internet; accessed 29 October, 2008.
5

6. Corporation and CSE Global Ltd. for a total cost of S$197 million16. Singapore also
partnered with SingTel Mobile to develop the Easi-ERP payment system which allows
SingTel account holders to pay for ERP violations via their phone bill with an additional
S$4 added for administrative costs. The partnerships allowed the highest technology to be
utilized to regulate traffic as well as provide an additional channel for customers to pay
their fee.
In the 1990’s England became a supporter of Public-Private Partnerships in order
to expand and maintain the nation’s highways, bridges and tunnels. During the economic
reforms under the government of Prime Minister Lady Margaret Thatcher, the
Conservative party created the Riley Rule, which allowed private companies to
intermingle with transportation infrastructure development. This would only occur if the
benefits outweighed the costs17. By 1992, the Thatcher government adopted a Private
Finance Initiative (PFI) as the preferred approach for developing infrastructure of all
types for the British government18. The Private Finance Initiative was to promote the
cooperation between the public and private sectors and introduce private sector skills and
disciplines into the delivery and management of projects and services which were
traditionally overseen by the public sector19.
London’s cordon congestion scheme was first implemented in 2003 which
required drivers to pay a fixed toll when driving into central London during peak period
hours. The tolls are levied in entrance points around the congested center with the support
of high resolution cameras, which record the vehicle plate number and transmit it to their
16
Eddie Lim Sing Loong, “Electronic Road Pricing The Singapore Way”, present. National University of
Singapore, 2008), in Online database name http://www.comp.nus.edu.sg/~wongls/icaas-
web/links/NLB/innovsymp06/eddie-erp-talk.pdf accessed 14 October 2008.
17
ITS Decision, “Congestion Pricing”; available from
http://www.calccit.org/itsdecision/serv_and_tech/Congestion_pricing/congestion_pricing_report.htm;
Internet; accessed 14 November, 2008.
18
Ibid
19
Federal Highway Administration, “Resources/ User Guidebook and Domestic and International Case
Studies for Transportation Public-Private Partnerships”; available from
http://www.fhwa.dot.gov/ppp/pdf/int_ppp_case_studies_final_report_7-7-07.pdf; accessed 14 November
2008.
6

7. central service center20. The center will send violation notices to those who have not paid
for a monthly pass21. A year prior to the roll out of the pricing scheme Transportation for
London, the operator of London’s transportation system, awarded British outsourcing
company Capita Group a five year £200 million contract to design, deliver and operate
the congestion price scheme22. Spearheaded by Derek Turner, the Director of Transport
for London Street Management, the contract made clear that certain deadlines were to be
established and attained. In addition, each body had a clear understanding of one’s
responsibilities. Capita would initially design and implement the scheme, oversee the
central service center and maintain all operation of infrastructure while the
Transportation for London would publicly advertise and enforce the policy amongst all
visitors and drivers entering the city23. The specific contract which required strict
benchmarks allowed the Transportation for London (Tfl) to get the word out with the
support of the city’s mayor Ken Livingston’s before the next administration could tear
the system down.
During the onset of the congestion scheme roll out traffic was reduced by 20%
and one local newspaper, The Guardian UK, reported that public opinion towards the
strategy appeared positive with 72% of business owners agreeing that the congestion
scheme was effectively working for the better and 58% of London residents believing
that implementing the congestion scheme was positive for London24. However, there
were a few controversies along the way with Capita Group’s involvement with the
scheme. Within the first five month’s Capita’s operating system involving their service
center’s printers malfunctioned and overcharged hundreds of motorists who entered the
congestion zone. It also appeared that motorists entering the congestion zone fell by 18%,
20
Todd Litman, “London Congestion Pricing Implications for Other Cities,” Victoria Policy Institute (Jan
2006) http://www.vtpi.org/london.pdf ; accessed October 5, 2008.
21
Ibid
22
Nick Fildes, “Capita wins deal to charge polluting vehicles”, London Independent, September 7, 2006.
http://findarticles.com/p/articles/mi_qn4158/is_20060907/ai_n16709367?tag=content;col1 ;accessed
December 1, 2008.
23
ITS Decision, “Congestion Pricing”; available from
http://www.calccit.org/itsdecision/serv_and_tech/Congestion_pricing/congestion_pricing_report.htm;
Internet; Accessed 14 November, 2008.
24
Todd Litman, “London Congestion Pricing Implications for Other Cities,” Victoria Policy Institute (Jan
2006) http://www.vtpi.org/london.pdf ; accessed October 5, 2008.
7

8. which was 3 percentage points higher than estimated. This led the Transportation for
London to renegotiate their contract and introduce a £ 31million incentive program
(funded by taxpayer dollars) which required Capita Group to “amp” up their customer
service program by employing additional staff and reviewing processing procedures to
avoid errors25.
Although the scheme was an overall success which garnered a 2008 Sustainable
Transport award from the International Transportation and Development Policy (ITDP);
the technology implemented in the beginning could be advanced. Just as Singapore
graduated from an Area License Scheme to an ERP system, London has the possibility to
convert to an Electronic Payment system using transponders or Global Positioning
Systems. In 2007, Tfl decided to discontinue their contract with Capita Group in 2009
and in turn extended their 5 year offer to IBM who undercut Capita’s bid and best met the
operational and technical requirements. Graeme Craig, the interim director of congestion
charging at Transportation for London believed the offer was more economically
advantageous due to the fact that the revenue received goes towards the improvement of
transportation and construction projects within the city26.
One well-known US based Public-Private Partnership which is the country’s first
fully funded private road project that implemented variable pricing involves a ten mile
stretch of four express lanes (two in each direction), which runs along California State
Route 91/55 junction in Anaheim and Orange/Riverside county lines27.
The express lanes implement a variable toll pricing scheme during peak period
hours, where HOV-3 vehicles, requiring three or more passengers, receive a 50%
discount and all others using the lane are required to setup an account with FasTrak™28.
25
"Livingstone pays pounds 31m price of congestion charging success”, Birmingham Post, July 30 2003.
http://www.highbeam.com (accessed November 14, 2008).
26
Capita driven out of capital, Birmingham Post, October 26, 2007. http://www.highbeam.com/doc/1G1-
170265342.html (accessed November 19 , 2008)
27
91 Express Lanes, “91 Express Lanes Snapshot”; available from
http://www.91expresslanes.com/learnabout/snapshot.asp; Internet; accessed 14 November, 2008.
28
Edward Sullivan, “Continuation Study to Evaluate the Impacts of the SR 91 Value-Priced Express
Lanes” (diss., State of CA Department of Transportation- Traffic Operations Program HOV Systems
Branch, DEC 2000), in Online database name,
8

9. The company provides a transponder which deducts the toll via a gantry which is fitted
with antennas that communicate with the transponder and cameras which records
violators29.
The partnership between California Private Transportation Company (CPTC) and
Caltrans first came about due to the potential for cost benefits and the elimination of
requesting state funding in order to convert existing High Occupancy Vehicle (HOV)
lanes into express toll lanes30. Funding was attained by Toll Revenue bonds and
developer fees31. This particular partnership is unique in its cost savings due to the fact
that construction began five years ahead of what would be projected if it were publicly
financed and the HOV lanes that were to be converted to express lanes already received
an Environmental Assessment Report. Caltrans also discounted capital (lease of land)
costs at an incredibly low rate. Therefore, the total cost of construction was $199 million.
The revenue from the SR 91 toll roads were modeled after the Concurrent Regular
and Shadow Tolling (CRAST) concept32 (review Table 1) in which CPTC would set the
toll rates, which would be modified from year to year and depending upon analyzing
congestion levels for the express lanes. Caltrans would receive the full amount of revenue
generated by the tolls and CPTC would then receive a flat rate reimbursement for all cars
traveling along the express lanes33. This concept allowed the separation of revenue
between the public and private partners and therefore created an incentive for the private
company to comply with set standards agreed upon in the contract in order to operate and
http://ceenve3.civeng.calpoly.edu/sullivan/SR91/final_rpt/FinalRep2000.pdf ; accessed November 14,
2008.
29
FasTrak, “About FasTrak ”, available from http://www.bayareafastrak.org/static/about/index.shtml;
Internet; accessed 14 November, 2008.
30
ITS Decision, “Congestion Pricing”; available from
http://www.calccit.org/itsdecision/serv_and_tech/Congestion_pricing/congestion_pricing_report.htm;
Internet; accessed 14 November, 2008.
31
Ibid
32
Patrick DeCorla-Souza, “Implementing Congestion Pricing on Metropolitan Highway Networks with
Self- Financing Public - Private Partnerships,” Journal of the Transportation Research Forum 45, no. 1
(2006): 7-8
http://www.trforum.org/journal/2006spr/article1.php?PHPSESSID=462b888161e4c76e32efde0369266a2c
;accessed November 14, 2008.
33
Ibid, 11
9

10. maintain free flowing traffic lanes while receiving a return on the infrastructure and
cture
consultation invested34.
Source: Patrick DeCorla-Souza, “Implementing Congestion Pricing on Metropolitan Highway Networks with
Souza,
Self- F inancing Public - Private Partnerships
Partnerships.”
Once the scheme took effect in 1995, the Department of Transportation and
Caltrans noticed an increase in travel speed of 65 mph in the express lanes and reduction
crease speeds
in travel time by almost 50%35. The introduction of the express lanes also benefitted the
adjacent free lanes of SR 91 as it allowed traffic to move along at higher speeds than it
34
Ibid, 11-12
35
Edward Sullivan, “Continuation Study to Evaluate the Imp
Impacts of the SR 91 Value-Priced Express
Priced
Lanes” (summ., State of CA Department of Transportation Traffic Operations Program HOV Systems
Transportation-
Branch, DEC 2000), in Online database name,
http://ceenve3.civeng.calpoly.edu/sullivan/SR91/final_rpt/FinalRep2000.pdf ; accessed November 14,
2008.
10

11. had before operation began. CPTC’s responsibility was to design and implement the
congestion scheme, operate the central service center and oversee maintenance
improvements when needed, while Caltrans and Orange County Transit Agency were
responsible for the advertisement of the scheme and enforcement through California
Highway patrol36. After four years of operation, CPTC transferred ownership of the
facility to Caltrans, whereby Caltrans signed a 35 year operations contract which leased
the improvement services back to CPTC37. Unfortunately, there were a few setbacks
which involved the newly drawn up contract. The leasing contract with CPTC was tied to
California law AB 680, which created a clause known as the Absolute Protection Zone.
The non-compete clause required that any transportation agency involved could not make
improvements to any lanes within a mile of the express toll lanes38. Originally, the non-
compete clause was applied to encourage private investment on public projects and to
retain a consistent revenue stream for CPTC39. However, once this information became
public news, Orange County Transportation and Caltrans were placed in a very
precarious position.
After several lawsuits involving the California Assembly, CPTC and Caltrans, AB
1010 was introduced which allowed Orange County Transportation Authority to null the
contract and buy out CPTC for the amount of $207 million40. Although there were
obvious setbacks and known unethical strategies made by CPTC, one of which was a
possible purchase of the existing toll facility to a non profit agency that would incur huge
profits, the revenue generated by the steady stream of toll allowed Orange County
36
91 Express Lanes, “91 Express Lanes Snapshot”, available from
http://www.91expresslanes.com/learnabout/snapshot.asp; Internet; accessed 14 November, 2008.
37
ITS Decision, “Congestion Pricing”; available from
http://www.calccit.org/itsdecision/serv_and_tech/Congestion_pricing/congestion_pricing_report.htm;
Internet; accessed 14 November, 2008.
38
The California State assembly, “Public Private Partnerships”; available from
http://209.85.173.132/search?q=cache:BDvzWk-
q7jgJ:www.assembly.ca.gov/acs/committee/c24/hearings/2006/PublicPrivate.doc+ab+680+absolute+protec
tion+zone&hl=en&ct=clnk&cd=1&gl=us; Internet; accessed 14 November,
39
Ibid
40
KCI Technologies, Inc., “Current Practices in Public-Private Partnerships for Highways” (summ.,
Maryland Transportation Authority, June 2005), in Online database name,
http://www.mdta.state.md.us/mdta/servlet/dispatchServlet?url=/About/currentpractise.pdf ; accessed
November 22, 2008.
11

12. Transportation Authority to pay back the issue of Toll Revenue Bonds all the while
monitoring congestion along SR 91 and providing improvements to the public transit
system41.
Issues will always arise when a new concept is brought into public light. Public-
Private Partnerships involving congestion pricing is a tricky affair, where both the public
sector and community leaders are involved in some aspect of the project. Therefore,
having a strong political leader who is a champion for the project, as was the case for
Mayor Ken Livingston’s implementation in London is quite important.
One way to rectify any miscommunication and possible litigations would be for
state agencies to hire experts who can look out for the State's best interest. This entails
hiring laws firms who are knowledgeable about US tax laws and financial services who
can present financial models from international transportation agencies42. Furthermore,
the state agency (local DOT or transit agency) should envision how the project will span
out in the long run, the private agency expects to go into the agreement with a sense that
it will gain equity and draw in additional contracts if the project deems successful.
Once the Private Public Partnership is finalized, and all parties involved are aware
of their responsibilities; including the concessions (fixed fee or by incentive basis) that
are agreed upon the following benefits created through the agreement consist of one or
more of the following:
Road projects are quickly funded
Road projects are quickly designed and constructed
Road projects are carried out efficiently
Advances are seen through innovation and technology
Beyond the box concepts are created to better serve the public
Large up front revenues are generated for the public sector
41
Ibid
42
Jim March. “Working with the private sector to meet transportation goals,” Public Roads, NOV 1, 2005.
http://www.highbeam.com ; accessed November 14, 2008.
12

13. Project risks are transferred to the private concessionaire43
Present road projects that are being financed under Public-Private Partnerships are
growing within the United States with currently 20 long term concession based PPP
projects underway ranging from a few million to hundreds of billions of dollars44.
Although congestion pricing and PPP concepts are just emerging in the US, there is a
growing recognition that providing both toll roads to manage traffic congestion and
having these project financed by the private sector can be a successful complement in the
new era of road/highway finance and vehicle management.
One congestion pricing project that is under construction is the United State’s first
Truck only Toll Lane (TOT) operating in the state of Georgia along I-285. The two TOT
lanes will span northwest and west of Atlanta. The TOT lanes will be designed, operated
and maintained under Goldman, Sachs & Co.; McGuire Woods, LLP; Post, Buckley,
Schuh & Jernigan, Inc. Financing for the project has yet to be determined but will most
likely involve a combination of private equity and a TIFIA loan45.
Northern Virginia’s Capital Beltway, which is currently under construction, will
soon operate a 14 mile stretch of variable toll HOV lanes (two in each direction) between
the Springfield interchange and north of Dulles Toll Road46. This will provide a seamless
connection to proposed HOV lanes along I-95 and I-66 leading towards Arlington County
in Northern Virginia and Washington, D.C. The project will be designed and operated by
43
ITS Decision, “Congestion Pricing”; available from
http://www.calccit.org/itsdecision/serv_and_tech/Congestion_pricing/congestion_pricing_report.htm;
Internet; accessed 14 November, 2008.
44
US Department of Transportation, “Innovation Wave: An Update on the Burgeoning Private Sector Role
in U.S Highway and Transit Infrastructure” 19 July 2008; available from
http://www.ncppp.org/councilinstitutes/dotpppreport_20080718.pdf ; Internet; accessed November 26,
2008.
45
Rick Fitzgerald, “I-285 Northwest TOT lanes Executive Summary” (sum.., Goldman Sachs & Co., MAY
18, 2006), in Online database name,
http://www.dot.state.ga.us/informationcenter/programs/ppi/ProjectsandProposals/Documents/I-
285/285ExecutiveSummary.pdf ; accessed 19 November, 2008.
46
Federal Highway Administration, “Case Studies: I-495 Capital Beltway HOT Lanes”; available from
http://www.fhwa.dot.gov/ppp/case_studies_i495_capital.htm ; accessed 19 November 2008.
13

14. Fluor-Transurban and Virginia Department of Transportation will own the facility. The
financial agreement was constructed with a combination of TIFIA loans, Private equity
and Private activity bonds47.
Ultimately, other government agencies will seek opportunities to finance road
investments with the assistance of the private sector. As existing cities expand and once
low density communities experience a surge in population growth, it makes sense to look
to others who have attempted to implement Private Partnerships and congestion pricing
schemes to manage personal vehicular trips. This is not an easy task and it takes the
strength of the political administration, government and local transit agencies to
announce and combine their objectives so the final agreement supports their constituents.
At first politicians are wary of introducing such a controversial system to drivers who
believe the government is pricing them off the roads, but these are the growing tactics
that must be used in order to maintain our infrastructure and reduce the collapse of our
interstate system.
Implementing a congestion price scheme especially HOV lanes is also favorable
to public transit agencies as it enables them to compete with the automobile due to an
increased level of service. In the example of SR 91 the local public transit agency
Metrolink’s rail service route SR 91 which paralleled the express lanes receive a modest
boom in ridership once the express lanes opened. This was also the case in London when
the congestion price scheme took effect ultimately increasing public transit ridership by
14% on both local buses and within London’s underground system48.
It also important for the government agency to focus on which finance procedures
best work for the project’s scope and long term fulfillment. In 2005, the Transportation
Research Board hosted a panel discussion centering on the increasing use of Public-
47
Ibid
48
Todd Litman, “London Congestion Pricing Implications for Other Cities,” Victoria Policy Institute (Jan
2006) http://www.vtpi.org/london.pdf (accessed October 5, 2008).
14

15. Private Partnerships to finance road projects. Various private and public sector
representatives came together to discuss the feasibility of managing a partnership which
could boost operating and cost savings and minimize potential risks. Bob Prieto, a
representative and panelist from the private maintenance and construction company,
Fluor examined the potential financial responsibility expected of the private sector by
explaining that “The private-sector needs a strong set of financing skills and a firm
understanding of the available tools (such as GARVEE bonds and TIFIA loans) to
determine which will provide the best risk-weighted return for the private and public-
sector partner49." This is essential because many public transportation professionals are
not knowledgeable about how a project is financed. Certain skill sets and available
funding options must be analyzed in order to create transparent dialogue between both
public and private parties.
Driving is not only a privilege but a responsibility and those who take on this risk
must realize the full costs of their actions. By implementing congestion tolls and
employing the private sector on the design and construction of the road project the
revenue from such tolls can help pay back the investment by the private sector through
revenue-issued bonds, improve the efficiency and operation of a public transit system and
maintain outlining public roads; all the while sending a clear message that an array of
options other than the private automobile exists.
49
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