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Why Tolls Will Be Waived On One Virginia Highway This Weekend

Friday, April 05, 2013

A dynamic tolling system is set to open on a new section of the Beltway later this year.

495, shown last year while under construction

Nearly five months after opening, the operators of the 495 Express Lanes are struggling to attract motorists to their congestion-free toll road in a region mired in some of the worst traffic congestion in the country.

Transurban, the construction conglomerate that put up $1.5 billion to build the 14-mile, EZ Pass-only corridor on the Beltway between the I-95 interchange and Dulles Toll Road, will let motorists use the highway free this weekend in a bid to win more converts.

“It takes a lot of time for drivers in the area to adapt to new driving behaviors. A lot of us are kind of stuck on autopilot on our commutes. That trend might continue for a while, too,” said Transurban spokesman Michael McGurk.

Light use of HOT lanes raises questions

McGurk says some drivers are confused about the new highway’s many entry and exit points. Opening the Express Lanes for free rides this weekend will let motorists familiarize themselves with the road, he said.

After opening in mid-November, the 495 Express Lanes lost money during its first six weeks in business. Operating costs exceeded toll revenues, but Transurban was not expecting to turn an immediate profit. In the long term, however, company officials have conceded they are not guaranteed to make money on their investment. Transurban’s next quarterly report is due at the end of April.

To opponents of the project, five months of relatively light traffic on Virginia’s new $2 billion road is enough to draw judgments. Vehicle miles traveled (VMT) has not recovered since the recession knocked millions out of work and more commuters are seeking alternatives to the automobile, according to Stewart Schwartz, the executive director of the Coalition for Smarter Growth.

“They miscalculated peoples' time value of money. They overestimated the potential demand for this road,” said Schwartz, who said the light use of the 495 Express Lanes should serve as a warning.

“We should not have rushed into signing a deal for hot lanes for the 95 corridor, and we certainly shouldn’t rush into any deal on I-66,” he said.

Transurban is counseling patience.

“We’re still in a ramp-up period. You’ve probably heard us say that since the beginning, too, but with a facility like this it’s a minimum six months to two years until the region falls into a regular pattern on how they’re going to use this facility,” McGurk said.

In its first six weeks of operations toll revenues climbed on the 495 Express Lanes from daily averages of $12,000 in the first week to $24,000 in the week prior to Christmas. Traffic in the same period increased from an average of 15,000 daily trips to 24,000, according to company records. Despite the increases, operating expenses still outstripped revenues.

It is possible that traffic is not bad enough outside of the morning and afternoon rush hours to push motorists over to the EZ Pass lanes on 495.

“It may also show that it takes only a minor intervention to remove enough cars from the main lanes to let them flow better,” said Schwartz, who said the 14-mile corridor is simply pushing the bottleneck further up the road.

Even Transurban’s McGurk says many customers who have been surveyed complain that once they reach the Express Lanes’ northern terminus at Rt. 267 (Dulles Toll Road), the same terrible traffic awaits them approaching the American Legion Bridge.

Express Lanes a litmus test for larger issues

The success or failure of the 495 Express Lanes will raise one of the region’s most pressing questions as it looks to a future of job and population growth: how best to move people and goods efficiently. Skeptics of highway expansions, even new facilities that charge tolls as a form of congestion pricing, say expanding transit is cheaper and more effective.

“An approach that gives people more options and reduces driving demand through transit and transit-oriented development may be the better long-term solution. But we’ve never had these DOTs give us a fair comparison between a transit-oriented investment future for our region and one where they create this massive network of HOT lanes,” said Schartz, who said a 2010 study by the Metropolitan Washington Council of Governments pegged the cost of a tolled network of 1,650-lane miles of regional highways at $50 billion.

Transportation experts say a form of congestion pricing, either tolled lanes or a vehicle miles traveled tax, may be part of a regional solution to congestion. The public, however, needs to be explained why.

“As long as the majority of system remains non-tolled and congested then you are not going to solve the problem,” said Joshua Schank, the president of the Eno Center for Transportation, a D.C.-based think tank.

“Highways in this region are drastically underpriced. People are not paying enough to maintain them and they certainly are not paying enough to pay for the cost of congestion. The American people have been sold a bill of goods because they have been told that roads are free. Roads cost money,” he added.

The 495 Express Lanes are dynamically-priced, meaning the tolls increase with demand for the lanes. The average toll per trip in the highway’s first six weeks of operations was $1.07, according to Transurban records. As motorists enter the lanes they see signs displaying how much it will cost to travel to certain exits, but no travel time estimates are displayed. “It is important to be very clear to drivers about the benefit of taking those new lanes, and I am not sure that has happened so far,” said Schank, who said it is too early to conclude if the Express Lanes are working as designed.

“It’s hard to know if it works by looking whether the lanes are making money. I don’t know if that is the right metric. It’s the right metric for Transurban, but it’s not necessarily the right metric from a public sector perspective,” he said. “The real metric is to what extent does it improve economic development and regional accessibility, and that’s a much harder analysis that takes some real research and time.”

Follow @MartinDiCaro on Twitter.

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Transportation Nation

Virginia's 495 Express Lanes Unveil News Ops Center

Thursday, October 18, 2012

The operators of Virginia’s I-495 Express Lanes unveiled the highway’s incident command center on Wednesday where traffic monitors will watch the flow of vehicles on a widescreen monitor displaying a dozen camera angles. The new lanes are expected to open by the end of fall.

The center will operate 24/7 with staffers monitoring traffic volume in order to compute toll rates. The new roadway – connecting the Dulles Toll Road to the I-395/I-95/Springfield interchange 14 miles to the south – will charge drivers dynamic tolls, meaning the price will change depending on traffic volume. The more traffic, the higher the toll.

The express lanes’ private sector operator, Transurban, is required to keep traffic moving at least 45 m.p.h., so if traffic slows due to heavy volume tolls, will be significantly increased to deter further drivers. Transurban invested $1.5 billion into the lanes as part of a public-private partnership with Virginia, and will receive toll revenues for the next 75 years.

“Three times per mile we will have detector stations that will give our control center here information regarding what is the volume of traffic and what is the speed of traffic,” said Transurban operations manager Rob Kerns. “Our dynamic pricing is scheduled to update every fifteen minutes.”

Transurban has not released precise toll rates because of the dynamic nature of the pricing system. Moreover, once the highway opens, staffers will need some time to determine what rates work best.

Simulation of Express Lanes signage (image courtesy of Transurban)

“The tolls are set minute to minute based on what's actually happening out there. We won't know until the road opens how drivers are reacting to different toll prices,” said Jennifer Aument, a project spokeswoman.

The average toll will be between $3 and $6 during busy periods, said Aument, who said the Express Lanes are designed for use a couple times a week when drivers need a dependable ride. The new lanes will run parallel to 495’s regular travel lanes that are often clogged bumper-to-bumper.

Aument is encouraging drivers to familiarize themselves with the coming changes to the Beltway at 495ExpressLanes.com and to sign up for an E-ZPass as soon as possible.  Only E-ZPass will be accepted in the new lanes, with HOV-3, buses, and motorcycles riding free. However, carpoolers will still need to obtain an E-ZPass Flex transponder.

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Transportation Nation

Virginia Breaks Ground on I-95 Express Lanes

Tuesday, August 07, 2012

(photo by Martin DiCaro/WAMU)

Virginia broke ground on a plan to improve and expand 30 miles of High Occupancy Toll lanes along a stretch of the state's I-95 corridor.

Like the 495 HOT lanes, the I-95 Express Lanes will be located adjacent to the regular, non-toll lanes, giving drivers a choice: take the chance of getting stuck in traffic or pay a dynamically-priced toll for a faster ride. The goal is to enhance existing lanes while adding a third HOT lane to 14 miles in the northern most stretch of the corridor and two new lanes to the nine miles at the southern end.

The $1 billion project is scheduled for completion in December 2014. The I-95 Express Lanes are the result of another public-private partnership between the state and Fluor-Transurban, the company that is building the soon-to-be completed 495 HOT lanes. Transurban is paying for nearly 90 percent of the project while applying for a federal loan of $300 million to assist in the financing.

Under the agreement, Virginia gets an expanded commuting corridor with fully electronic toll lanes connecting Fairfax to Stafford County for contributing less than 10 percent of the project’s cost, while Transurban will receive the toll revenues for 75 years. The state's financial exposure is limited.

“The contract we signed with the state is a very equitable contract. We are taking the traffic risk,” said Transurban General Manager Tim Steinhilber. “Once we build the road, if no one comes to use the road then we don’t make any money. We lose money.”

Naturally, Transurban expects to turn a profit.  If profits exceed a certain threshold, the state may share in toll revenues. At the other end of the spectrum, if HOV-3 carpoolers exceed a thirty-five percent threshold under certain circumstances, the state would have to subsidize those trips to ensure Transurban doesn’t take a bath on the free rides. There is a similar safety net in the 495 HOT (high occupancy toll) lanes contract.

“Traditionally across the country, HOV lanes are underutilized. We are working with the state to encourage carpoolers because that takes cars off the road and reduces congestion for everyone,” said Steinhilber. “If we get to the point where the state would start [subsidizing] the HOVers, it’s a win-win.”

At a groundbreaking ceremony at the Dale City rest area Tuesday, state and federal officials -- including Virginia Governor (and possible Republican Vice Presidential choice) Bob McDonnell -- touted the project’s estimated economic benefits: 500 construction personnel with an overall impact of $2 billion by supporting 8,000 regional jobs. One thousand trees will also be planted along the corridor that is designed to eventually seamlessly connect to the Capital Beltway at I-495, quickening trips to job centers in Tysons Corner, Va. Express buses will also have free access to the toll lanes.

(photo by Martin DiCaro/WAMU)

“If you can’t move people and you can’t move goods quickly to market, you are not going to get businesses coming here and you aren’t going to get tourists.  It’s going to impair the quality of life for all of us,” said Gov. McDonnell.

When asked by Transportation Nation if northern Virginia is becoming overly reliant on highway expansion projects to solve its dreadful congestion problems, McDonnell responded that the state is trying different solutions.

“We are trying to do everything,” he said. “We are going to have a number of projects up here that will use mass transit. We’ve been advocating rail to Dulles.”

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Transportation Nation

What's the Best Way to Build New Highways: Private? Public? Tolls? Magic?

Friday, August 03, 2012

(Washington, D.C. -- WAMU) As the opening of the Interstate 495 Express Lanes on northern Virginia's Capital Beltway draws closer, backers of the $2 billion project say they cannot guarantee the four new HOT lanes will achieve the goal of reducing traffic congestion while simultaneously returning a profit for their private sector operator.

The admission is noteworthy because there was enormous investment made by a private entity. The tolls revenues that are supposed to supply its profit are off limits to the state of Virginia for the next seven decades.

The HOT (high occupancy toll) lanes will run next to the Beltway's non-toll lanes between the Dulles Toll Road and I-95 in Springfield, Va., one of the most heavily traveled corridors in the Washington, D.C. metropolitan region. The project is the result of a public-private partnership between the state of Virginia and Fluor-Transurban, a company that has built similar facilities in the United States and abroad.

In the deal, the state received four new lanes of traffic capacity, a repaving of the Beltway, and a fully electronic toll facility for individual commuters and HOV-3 carpoolers. Transurban gets the toll revenues for the next 75 years, but company officials say they may not turn a profit at all.

"The private sector is responsible for paying back the debt and paying to operate and maintain the lanes," said Jennifer Aument, a Transurban spokeswoman, at a recent press conference to promote the new E-ZPass Flex device that will be necessary for HOT lanes carpoolers to have.

Transurban provided about 75 percent of the capital necessary to build the new lanes and toll gantries. Public money was necessary to cover about one-fourth of the costs and finalize the partnership because projected toll revenues were not sufficient for Transurban to finance the entire project itself.

HOT lane popularity has been mixed in other cities. Houston is currently considering additional promotion and advertising to get more drivers using new HOT lanes that are under capacity.

"If the traffic doesn't come and we can't generate the revenue, we are taking the risk on this project," Aument said of the Virginia plan. "But we believe because the 495 Express Lanes will provide a faster, more reliable trip which is much needed in this great region, it will be a success for us, for VDOT, and for travelers."

Not your normal toll road

The idea behind the 495 Express Lanes is not that commuters will use them every day; commuters are expected to pay the potentially pricey toll on days when they need the reliability and predictability that a congestion-free highway would present.

The tolling will be dynamically priced; the more commuters that use the toll lanes at a given time during the day the higher the toll will be. Raising the toll during peak travel periods will prevent the new lanes from getting congested, as is usually the case during rush hour in the adjacent non-toll lanes.

Carpoolers may use the HOT lanes for free as long there are at least three occupants in the vehicle. If carpooling is too successful, Virginia taxpayers will wind up subsidizing some HOV-3 trips.

The contract between Virginia and Transurban requires the state to pay subsidies if the number of carpoolers reaches at least 24 percent "of the total flow of all [vehicles] that are... going in the same direction for the first 30 consecutive minutes during any day... during which average traffic for [the toll lanes] going in the same direction exceeds a rate of 3,200 vehicles per hour..."

During peak travel times -- if carpoolers make up about one-fourth of all vehicles in the HOT lanes -- the state will have to pay Transurban 70 percent of the lost toll per vehicle. Both VDOT and Transurban are downplaying the possibility that taxpayers will have to subsidize carpoolers.

"Is there a back stop? The answer to that is yes. Do we think we will get there? The answer to that is no. And if we do, we still consider that a success," says Charlie Kilpatrick, VDOT's chief deputy commissioner. "That's a success story because we would have such a great usage in HOV, much further beyond what we ever imagined."

"Carpooling could expand by more than 10 times on the Beltway before this provision would go into effect," says Aument, who says the subsidy will not be paid if Transurban clears a certain profit on toll revenue, about 12 percent. "It's there as a stop-gap in the extraordinary circumstance that there are so many carpoolers that we can't collect enough toll revenue to operate and maintain the road."

Public-private partnerships are the future

Without the capital of Transurban the 495 Express Lanes would have remained just an idea. To build the $2 billion road, however, the state agreed to Transurban receiving the toll revenues for the next 75 years, even though the company hopes to have paid off its project debt in 30 years.

"It is frankly unrealistic to believe that there are sufficient public funds for these enormous projects in Virginia," says Kilpatrick.

Virginia has been one of the most active states in the country in signing public-private partnerships, according to Emil Frankel, a visiting scholar at the D.C.-based Bipartisan Policy Center and former assistant secretary of transportation policy at the U.S. Department of Transportation.

"The private sector is putting a lot of money into this only with the assurance that they will get a return on their investment to service the debt that they have incurred to construct it," Frankel says. "So the public had to give up something to get this built."

"If you like the Beltway the way it is and you don't want anything built at all, then it's a bad deal," says Frankel. "Most of the residents of Virginia wanted this increased capacity. By taking some of the traffic off the free lanes, it should improve the flow of traffic on the free lanes as well." Express buses will also have access to the HOT lanes.

Private entities take the risk

Some private highway ventures have not gone as planned. The Pocahontas Parkway near Richmond, an 8.8-mile tolled freeway between the junction of I-95 and VA-150, has yet to meet traffic projections and may have to go through another financial restructuring. The Dulles Greenway saw its finances restructured for the first time in 1999 after projected levels of traffic and tolls didn't materialize. Frankel expects 495 to be more successful than the aforementioned toll roads because the HOT lanes were built directly adjacent to congested travel lanes.

"You are getting increased capacity on a crowded, unreliable facility," says Frankel, who says the 91 Express Lanes, which run for 10 miles in southern California, are an example of a successful dynamic tolling and HOV-3 system.

Better options?

Smart growth advocates are unhappy with the deal the state received in losing access to toll revenues for 75 years, and argue that VDOT should have considered alternatives to Beltway expansion.

"I think we should be looking at all alternatives upfront, and look more objectively at transit and transit-oriented development and lower cost approaches," says Stewart Schwartz, the executive director of the Coalition for Smarter Growth. "We should look at public ownership of the toll lanes so we have access to those revenues in the future."

"VDOT rejected at the earliest stages a transit alternative for this corridor. They were prevailed upon to do another transit study, but they promptly put it on a shelf. They never took seriously a transit-oriented development for this corridor," says Schwartz, who says Virginia could have considered something similar to the Purple Line, a proposed 16-mile light rail line that will extend from Bethesda to New Carrollton.

"Our concern is the rush to do these public-private deals has been reducing the consideration of alternatives in project corridors," Schwartz adds. In his estimation, if the new lanes on 495 eventually attract more commuters, congestion could increase on secondary roads when those added vehicles ultimately exit the highway.

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