BACKGROUND

"Good Practice in Value Pricing" is a series of briefs highlighting good practices in project planning, implementation and evaluation used in projects being funded under the auspices of the Federal Value Pricing Pilot Program. The purpose of the series is to provide assistance to current and potential partners in the Pilot Program, as well as to others interested in evaluating value pricing initiatives as part of the local transportation planning process. Briefs will be issued periodically and will highlight projects and topics of interest among Pilot Program participants. This first brief summarizes practices used in the pre-project study undertaken by Portland Metro and the Oregon Department of Transportation (ODOT). The information in this brief is taken from the study’s final report, "Traffic Relief Options: Peak-Period Pricing Incentives to Relieve Congestion," dated November 2000.

The Federal Value Pricing Pilot program provides funds to support the development, operation and evaluation of pilot tests of innovative road and parking pricing projects. Value pricing, also known as congestion pricing or peak-period pricing, relies on market forces to reduce the waste associated with traffic congestion. It entails fees or tolls for road use which vary with the time of day or level of congestion. More information about the FHWA value pricing program can be found at: http://www.fhwa.dot.gov/policy/vppp.htm. Additional information about value pricing concepts and projects can be found at http://www.valuepricing.org

PORTLAND’S PRE-PROJECT STUDY

Faced with rapidly increasing traffic congestion, forecasts of continued population growth, and constraints on State and local transportation budgets, transportation planners at Portland Metro and ODOT decided that the option of value pricing should be considered in the transportation planning process. The State initially used its own funds to conduct an overview study of value pricing (then called congestion pricing), and, in mid-1996, applied for a pre-project study grant under the FHWA Value Pricing (then Congestion Pricing) Pilot Program.

The Portland study, labeled the "Traffic Relief Options" study, had the following key elements:

• Study review committees that played an essential role in guiding the study and providing citizen input into the study process;
• A study approach that allowed evaluation of a broad range of specific pricing options in the Portland area;
• Use of detailed tour-based activity models to estimate the effects of pricing options; and
• An extensive public outreach and participation component.

The complete study report with conclusions and recommendations is available at: www.metro.dst.or.us/metro/transpo/tros/tros.htm

Study Review Committees

The committee structure used in guiding the Portland study is a model of good practice because it represented all relevant agencies and interests, provided a mechanism for strong technical input, and afforded ample opportunity for public participation in developing and evaluating pricing options. The key element of the committee structure was a Citizen’s Task Force, which provided overall direction to the study.

Supporting the Citizen’s Task Force was a Technical Advisory Committee (TAC), which included technical staff from principal agencies, jurisdictions, interest groups, and consultants; and a Project Management Group (PMG), consisting of director-level staff from local jurisdictions and agencies. The PMG was the body assigned to consider policy issues at key decision points. It met about 2-4 times per year. The TAC generally met twice a month to provide detailed technical support to all aspects of the study.

The Citizen’s Task Force relied on input from these groups and the general public at major decision points to develop recommendations for consideration by the regional transportation governing bodies--the Joint Policy Advisory Committee on Transportation (JPACT), the Metro Council, and the Oregon Transportation Commission (OTC).

The 15-member Citizen’s Task Force was both geographically and demographically diverse, allowing the study to incorporate the views of all segments of the community. The Task Force included a media representative, the urban league director, high-tech and communications industry representatives, elected officials, a representative of the academic community, and small business owners. Also included were the chair of the OTC and Metro’s Executive Director, who acted ex-officio. The Task Force met monthly throughout the course of the study, with all of its meetings open to the public. A portion of each meeting was set aside for public comment.

Study Approach

The study approach evaluated pricing concepts through application to specific possible project locations, beginning with a wide range of options and narrowing down to a select number of options for detailed analysis. Consideration was given to major congested roadways and destinations in the region. The time-of-day pricing options considered for each location were:

• Corridor pricing (all lanes of a highway and parallel arterial highways);
• Facility pricing (all lanes of a specific highway section);
• Partial facility pricing (pricing of a single lane in one or both directions);
• Spot pricing (pricing a single congested point on a highway or bridge);
• Areawide pricing (pricing of an entire regional network of highways, e.g., all downtown streets); and
• Parking pricing (pricing all or most parking spaces in a downtown or other regional destination)

The process of evaluating pricing options incorporated a strong role for the citizens’ task force and input from public workshops. Evaluation criteria were proposed by the technical committees and finalized by the task force after consideration of input from public workshops. The evaluation criteria agreed upon were categorized as:

• Implementation Concerns--legality, technological considerations, privacy concerns, institutional impacts, financial feasibility, use of revenues, and demonstration value;
• Transportation System Performance-- capital and operating costs, travel time savings, and safety;
• Equity-availability of transportation alternatives, cost/benefit impact by income group, cost/benefit impacts on business and commuters;
• Consistency w/Land Use and Transportation Plans and Policies;
• Societal and Market Effects-- environmental effects, employment and freight impacts, neighborhood effects/traffic diversion; and
• Public Acceptance--general public, interest groups, and decision makers.

After screening all pricing options according to these criteria, the Task Force recommended that eight options be carried forward for detailed review.

Analytic Methods

The models used in analyzing the detailed effects of the final set of eight pricing options included a demand model to estimate the number of trips by origin and destination, mode, and time of day; a traffic assignment model (EMME/2) to distribute traffic to routes and modes; and an evaluation model to estimate the effects of pricing options on travel time, toll revenue, vehicle costs, equity, air quality, and energy. The demand model permitted estimates of complex responses to peak-period pricing, with possible traveler responses including shifting of route, mode, time or destination of travel, or foregoing trips. Pricing alternatives were compared to a base case which is a "best guess" of how the transportation system would change in the absence of pricing (e.g., projects planned for construction prior to the 2005 evaluation year are assumed to be implemented). The Portland study was the first regional analysis of peak-period pricing that was able to project trip activity on specific road segments.

Travel-time savings, operating cost savings and revenues collected are the determinants of economic benefits resulting from pricing roads, with benefits estimates adjusted to account for the effects of induced travel and mode switching. The EMME/2 model generated estimates by mode and income, allowing evaluation of equity impacts. The Portland models included a large array of key variables to address levels of service by auto and transit, urban characteristics, demographics and socioeconomic factors. The models relied on complex data specifications, with nested algorithms and feedback loops, and the use of revealed preference and stated preference survey data. The model framework is appropriate for use in other areas, but would likely need to be re-estimated using local data.

Public Participation Program

The first year of public participation efforts focused on holding detailed discussions with interest groups such as the business community, the trucking industry, social service organizations, elected officials and media representatives. The results of these discussions were used in shaping the pricing program and in developing a broader public message to be used once the program reached the stage of evaluating specific project options.

During the remaining two years of the study, efforts were focused on reaching out to a broader segment of the public through workshops held in concert with Portland Metro’s Regional Transportation Planning program, general media presentations, newsletters and public speaking activities. More than 60 speakers’ bureau presentations were key to the success of the public information program. As public input was gathered, it was fed into the technical phases of the study, giving participants an important role in providing direction to the study.

The Portland study team also used several nontraditional forms of outreach. Included were a project hotline, a computer webpage, a telephone service maintained by the regional newspaper, and a traveling exhibit. Communication tools used in the process of narrowing study options included stakeholder interviews, focus group discussions, targeted workshops, regional workshops, questionnaires, speakers’ bureau presentations, news stories provided to local media, and briefings to reporters and editorial staff of local and regional newspapers.

KEY LESSONS LEARNED

Over the course of the 3-year study effort, a number of important lessons were learned about the process of conducting a value pricing study. Further detail is contained in the final report.

• Prospects for study success can be enhanced by using a study committee structure that allows broad representation of major groups interested in the study, and provides for information exchange between these groups, the study team, policy interests, and sources of technical support.
• The approach of beginning with a broad regionwide review of a large number of pricing options, then narrowing to a small number of specific pricing project options had advantages and limitations. The study team felt that the broadbased review was necessary in Portland, given the lack of familiarity with tolling, but this phase of the study consumed more resources than had been anticipated. Also, it was difficult to engage the public in the broad regional study. Definition of specific pricing options, with modeling results, helped focus the debate. Narrowing the number of options to be included in the initial screening, perhaps by grouping like kinds of options together, or simply eliminating some options from consideration, may reduce study time and costs and help concentrate discussions on key pricing issues.
• A full evaluation of pricing impacts requires sophisticated modeling tools that can address responses to pricing related to mode, time of day, destination and route, with responses differentiated by income group. Detailed modeling results can add greatly to public understanding of the options and their potential benefits and costs. Use of modeling tools such as those used in Portland requires a significant commitment of study resources.
• Focused workshops reaching out to particular groups of interested citizens (e.g., freight industry) can be a very effective communication tool, and can help make these groups a productive part of the study process. It is important to quantify the effects of pricing on interested groups.
• A strong media program can be a very useful element of any value pricing study. Briefings should be scheduled, press materials should be concise and current, and staff and non-staff contacts should be available to provide information to the press. It is very important to develop a clear, concise project message early in the process. Task Force members need to be available and sufficiently briefed to respond to media inquiries. A "quick response" team with ties to the media community should be established early in the process.
• A project’s prospects for success will be greatly enhanced if "champions" can be found who are respected by the community at large and are willing to serve as representatives of the project. The public tends to be more receptive to messages coming from nongovernment task force members. It is important to select, develop, and train spokespersons for the project who will be well-received by the public.

THE FUTURE OF PRICING IN PORTLAND

Although this study did not result in implementation of a pricing project, the Task Force did conclude that "properly applied" peak-period pricing is a desirable tool to manage congestion and raise revenues, and should be considered whenever new capacity is added to a limited access highway. Additional corridor level work was felt to be needed to address technical issues, including land use effects, and to build public support for a demonstration project. As a result of the TRO study, peak-period pricing is now part of the Regional Transportation Plan and will be considered whenever major new capacity is added.

The Task Force concluded its work with the recommendation that additional work be carried out and that JPACT should identify a pilot project within two years. Follow-up activities will be conducted to support future corridor-level studies. Included will be a final newsletter outlining the TRO study process and recommendations, and a video or slide show to explain how pricing can be used to solve congestion problems.