TCA NJTA THCEA:Three Pikes Peak Pricing

The New Jersey Turnpike and the Tampa-Hillsborough Expressway Authority are seriously studying the possibility, and seem quite likely to implement “value pricing” too. One or both of them might even move earlier than the TCA.

Peak hour tolls at the Orange Grove and Portola Parkway plazas of the Foothill-Eastern (FE) toll roads (CA-241) will rise by a quarter in 2001. Other toll plazas will raise their peak hours tolls in 2003. Spokesman Lisa Telles said the differential rates are part of commitments to potential bondholders in a refinancing of the FE-TCA debt.

She said that the general plan is to steadily widen the gap between peak and off-peak tolls because “this makes business sense.” The toll roads’ traffic consultant Wilbur Smith is doing a study of proposed “value pricing” for the TCAs’ largest pike the San Joaquin Hills Toll Road (CA-73). Telles says the general thought is that the toll road offers more value to its patrons during the rush hours, when the time saving over the freeways is much greater.

‘We are driven by our competitors,” she said. We thought she was referring to 91-X, which of course has a heap of different toll rates, hour by hour.

“No, our competition is I-5, I-405 and the 55. When they are running freely it is difficult for us to compete, but when they are clogged, our toll is really worth paying.”

The Eastern (CA-241) is an alternative to CA-91 and CA-55. In the rush hour the Eastern and 91X are similar in tolls, but off-peak the 91X/55 tolls are much cheaper. The San Joaquin Hills (CA-73) parallels the I-405/I-5 freeways. Though its 6-lanes give it plenty of spare capacity most times, northbound in the mornings it is approaching 2k veh/lane/hr, so it has little spare capacity. The road has space in the median for widening but this would not probably not be financable based on rush hour traffic alone. There is therefore some logic to applying a toll differential to move some of the traffic to either side of the peak hour when it can be handled more readily.

Ed Gross, 28

New Jersey Turnpike executive director Ed Gross made news recently at the Federal Hwy Admin/Humphrey Inst “Value Pricing Workshop” in New York City June 25. He said that the Turnpike “will be among the first of the toll agencies to announce a value pricing program.” A more discriminating approach to toll rates would be essential to properly manage traffic, he said, and the Turnpike is very serious about adjusting toll rates to achieve this.

“Some day in the not very distant future when the Turnpike is prepared to make a decision on increased tolls, we will introduce a real and meaningful value pricing program,” Gross said. He called it a “very delicate issue” and said it was “important to do it right, first time.”

The NJ Turnpike chief is a man of normally dour demeanor. But as he described his job as having “aged him” he stopped and said with only the trace of a twinkle from the swarthy eye sockets: “I am 28 actually.”

Trucker organizations, he said, remain resistant to varied toll rates, considering the peak rates a punitive device.

“So I doubt whether we will change toll rates for the very large ones (trucks). We have to take this whole thing gradually and get people to see that different toll rates are part of life, just like in hotels and airlines. But we have to do it as an incentive. Not as a penalty.”

In discussion Gross said of truckers “We have to persuade them there is a benefit” rather than imposing it on them.

The Turnpike is already offering a discount of up to 10% on toll rates for truckers who establish a commercial credit account and travel outside the 3 peak hours. This is intended to attract heavy trucks off local arterials.

Gross said the 21-hour/day off-peak discount has been “very successful” in attracting trucks, without adding to the problems of peak-hour commuters. He said the next major toll move by the Turnpike was likely to focus most heavily on passenger vehicles. By using incentives to get some to change their travel times, the Turnpike could free up peak-hour travel while making better use of spare capacity out of peak.

Wilbur Smith Associates has been studying various price options for the NJ Turnpike for some months. The Turnpike is under considerable pressure to raise its toll rates. It made heavy borrowings earlier in the decade to finance widenings including the extension of the mid-section dual/dual roadway and rebuilding of interchanges to the north. It has been scratching to service the debt. One bond rating agency has already reduced the Turnpike’s rating because of the turnpike’s failure to increase tolls as previously planned to support debt service.

The Turnpike needs to improve its capacity at its southern end and is committed to the Secaucus interchange and eastward spur toward Jersey City. This fits state plans to improve access to the important ports and rail facilities in the Meadowlands area. In addition the Turnpike faces a regular creep in costs. A variety of repaving and bridge jobs are scheduled. Electronic toll conversion is supposed to be self-financing, but that difficult process could be another cost at some point.

The last toll increase on the NJ pike was in March 1991. Most toll rates were doubled then. Traffic dropped 6.5% and grew more slowly for a couple of years, generating criticism of the Turnpike that it dumped traffic on non-tolled roads such as US-1 and I-295. Under Gross a more nuanced policy seems likely.

PANYNJ

At the FHWA conference Cruz Russell, director of planning and policy at the Port Authority NY & NJ said his agency was studying truck movements in the area and the implications of different toll rates for the area’s freight movement. Many truckers already avoid the peak hours because of the congestion and slow travel speeds, he said. The pressure for reliable just-in-time delivery posed major dilemmas for trucking companies as the widening periods of congestion catch them up in heavy traffic.

Jeffrey Zupan, senior analyst at the area Regional Plan Association is engaged in another truck and tolls study. He told the conference that unilateral changes in toll rates by any of the five toll agencies in the region often have perverse and unexpected impacts on travel in the region. He said the lack of cooperation between regional agencies extends to data which is often inconsistent between one agency and the other. A major problem in the region is the odd mix of tolled and untolled crossings on the East River between Manhattan and Queens and Brooklyn, and on the Harlem River between Manhattan and the Bronx.

Louis Berger is conducting a variable toll rate truck study for the Port Authority, while the New York State Thruway, under Will Ristau has a study under way of possible pricing scenarios. It has already implemented a discount program for trucks using the Tappan Zee bridge out of peak so long as they are equipped with a transponder. The only agency not yet with studies under way is the largest toll agency in the area (and in the country) the MTA, which operates all nine tolled New York City crossings.

MTA came under sharp criticism at the event, especially for not sending a speaker. The New York press and many politicians including the city’s mayor Rudolf Giuliani all favor flexible tolls, as do a lot of citizen and activist groups. MTA is mainly a rail and bus agency which regards the toll crossings more as a source of revenue for transit than a way of managing traffic. The Bridges and Tunnels division, formerly the Triborough Bridge and Tunnel Authority that actually runs the toll facilities, appears to be given little say in toll rates by the overall MTA.

Jay Walder of the Kennedy School at Harvard suggested that the most effective way to alleviate the region’s traffic problems would be to concession out major corridors to investors. He said the public agencies are incapable of building any new capacity: “The subway system was essentially completed in the 1930s and the last bridge was built in the 60s. The public agencies are struggling to maintain the assets they have. They are all borrowed out.”

He said the one success of the public agencies in the past 30 years has been E-ZPass electronic toll system which should become “the linchpin of regional transp.” In addition to being a powerful tool for managing traffic by properly pricing it he suggested E-ZPass “supplemented by systems such as 407’s in Toronto and Melbourne CityLink” could be the basis for financing new facilities and rebuilding old ones by investors. Toll rates were far below market rates, Walder said, and the concessioning of major corridors could, on a preliminary estimate, generate $15b of investment in New York City highway improvements.

Tampa-Hillsborough

Another tollster looking at differential tolls is the Tampa Hillsborough Co Expressway Authority (THCEA) in southwest FL. Its 1960s Crosstown Expressway (FL-618) runs 24km (15mi) east-west and where it runs by the central business district and waterfront of Tampa it is largely elevated. Downtown it is paralleled only a mile to the north by the untolled I-4 freeway. Both the Crosstown Exwy and I-4 connect at the east to I-75, to the downtown and to the west to bridges over Old Tampa Bay to St Petersburg, so they are heavily competitive alternate routes. THCEA has already been enhancing its facility with connector spurs to the east of I-75, attempting to serve a different residential clientele. THCEA wants to have the revenue to support rehabilitation and improvements of the long elevated section downtown and to improve connections to the north and handling of peak hour traffic. With flat rate tolls it has trouble attracting traffic out of peak, so it is studying a peak hour toll rate increase and possible lower tolls off-peak.

Kerasiotes

Another indicator of a politician’s sense of what is possible was a statement by James Kerasiotes, chairman of the Massachusetts Turnpike. He told a reporter for the suburban METROWEST DAILY NEWS (6/6/99) that the new electronic toll system (Fast Lane) could allow varied toll rates in the future (see our p1).

“There may be ways as time goes on, and it becomes more accepted, to encourage different kinds of use, and to allow for variable rates of tolls, so if you use it at certain times you might pay less than at other times. I think there are all kinds of things you can do to manage the road way better as usage (of ET) increases.... It’s something we’d obviously like to think about. Our first responsibility, obviously is to make sure that nothing we do would affect our ability to pay back the debt that we have outstanding, which is substantial.”

Though it seems clear the Mass Turnpike chief was merely musing about future possibilities for consideration and study, AP and some radio stations apparently beat this up into a “Mass Pike Plans Peak Hour Toll Hike” story. But Kerasiotes seems to be surviving it all. He also confided recently to a reporter that he has a route to work that allows him to use a short section of the turnpike without paying a toll. (Contacts Ed Gross NJ Turnpike 732 247 0900, Cruz Russell PANYNJ 212 435 4469, Jeff Zupan RPA jeff@rpa.org, Will Ristau NYSTA 518 471 5043, J. Walder jay_walder@harvard.edu, Pat McCue THCEA 813 272 6740, Mass Turnpike 617 248 2800)