Managed Lane Projects – Growth and Growing Pains

Around the country, express toll lanes (aka managed lanes) continue to expand, bringing welcome congestion relief to clogged expressways. An informal tally of projects currently in operation, compiled by Chuck Fuhs (co-chair of the TRB Managed Lanes Committee) identified 475 route-miles of ETLs in operation, comprising 1,096 lane-miles of capacity. And dozens of other projects are under construction or in planning or procurement stages.

Last month Fitch Ratings released a “Peer Review of U.S. Managed Lanes” report, explaining how it evaluates the creditworthiness of project that have been financed and are under construction, as well as those in operation. These projects involve either some or all new capacity and hence require financing via a mix of debt and equity. Bond-buyers look to rating agencies like Fitch for an arm’s-length assessment of the bonds in question. I found it encouraging that Fitch has rated all the projects under review (including those under construction) as investment grade. Compared with conventional toll roads, there is greater volatility and uncertainty of traffic and revenue, which is one of the reasons debt-financed projects of this kind are often done as long-term concessions, in which the private-sector partner takes on the traffic and revenue risk.

Since my last update, a number of new projects have opened, been financed, or been proposed. Here are brief highlights.

Colorado: A 13-mile ETL opened Dec. 19 on I-70 west of Denver, operating primarily on weekends when I-70 is clogged with people going to and from ski resorts. And CDOT’s project to add ETLs to the C-470 beltway in Denver got a boost, with an official FHWA “finding of no significant impact,” clearing the way for construction of this $385 million project.

Florida: FDOT’s ambitious plans for a managed lanes network in Tampa (Tampa Bay Express) is being challenged by neighborhood protests over proposed land takes, as well as opposition from rail transit supporters who don’t appreciate the express-bus benefits inherent in a network of uncongested express lanes. Meanwhile, construction proceeds on the Veterans Expressway, where Florida Turnpike Enterprise is adding variably tolled express lanes to this long-time toll road.

Georgia: In January, Gov. Nathan Deal announced a $10 billion, 10-year transportation plan that will include major portions of GDOT’s planned region-wide ETL network in the Atlanta area (about $7 billion of the $10 billion total). New additions to the network will include the west, north, and east portions of I-285, plus new sections on GA 400, I-75, and I-85.

Illinois: The Stevenson Expressway (I-55) in Chicago may host the first express toll lanes in Illinois, as IDOT completes its alternatives analysis for this congested corridor. The legislature passed a resolution in February endorsing a P3 approach for such a project.

Texas: Despite an anti-tolls backlash in the Lone Star state, new ETL projects continue to be authorized, some that were previously approved for TxDOT to pursue and others sponsored by local MPOs or Regional Mobility Authorities. Recent projects include a 49-year P3 concession for the SH 288 toll lanes project in Houston and two such projects in Austin, US 183 and SH 71.

Virginia: The P3 community rejoiced when VDOT opted for a P3 toll concession for the addition of ETLs to 25 miles of I-66 outside the Beltway. A conventionally funded project will convert the HOV lanes on I-66 inside the Beltway to ETLs, while adding an additional tolled lane in one direction.

Despite this continued expansion, growing pains are being experienced by some of the projects. One example is bottlenecks where an ETL project terminates, and traffic from it must merge into the general-purpose (GP) lanes. At the southern end of the year-old I-95 ETLs in northern Virginia, the exiting ML traffic often overwhelms the GP lanes. In November, VDOT reached agreement with I-95 concession company Transurban to extend the ETLs two miles further south, enabling southbound ETL users to avoid conflicting with GP lanes users who exit near the current ETL terminus. Transurban also reached an agreement to extend the ETLs northward along I-395, to the District of Columbia line.

A similar bottleneck problem arose on the new I-405 ETLs in metro Seattle when they opened last fall. The northern portion of the project narrows from two ETLs each way to one, creating a serious bottleneck. Local media were filled with premature conclusions that the ETLs were not reducing congestion or had made congestion worse. WSDOT data show that overall commute times have improved for most 405 users: those traveling the full length, transit riders, and those using portions of the southbound lanes. But GP lane motorists making short trips as well as those affected by the northern choke-point have seen longer travel times. In February, Gov. Jay Inslee announced a relief plan from WSDOT that includes adding auxiliary lanes and allowing use of shoulders for certain stretches.

Another kind of problem has surfaced in California, where extensive ML network plans are under way in both the Los Angeles and the San Francisco metro areas. Several of the few ETL in operation so far are not fully delivering their congestion-relief promise—but this is not because the concept is flawed. Rather, political constraints are reducing the power of variable pricing to control congestion. Those constraints are two: mandating that HOV-2 vehicles go free and mandating that alternative fuel vehicles go free. On the SR 237 ETLs in San Jose, tolled traffic during peak periods averages only 17% of all vehicles—and whenever congestion reduces speeds below the federal standard of 45 mph, the policy is to exclude toll-paying vehicles altogether. That policy was in effect for 360 hours during FY 2015, I learned from a presentation at the TRB Annual Meeting in January. In recent years, the state has issued 85,000 green stickers authorizing hybrids to go free in HOV lanes and ETLs, and over 90,000 white stickers for electric and natural gas cars, with no limit in sight for the latter.

These policies threaten both the financial viability and the congestion-management effectiveness of the planned ETL networks. California should serve as an object lesson to DOTs and elected officials in other states. For financial viability, the only ETL freebies (besides buses and emergency vehicles) should be HOV-3s. There are other government policies (subsidies and rebates) to encourage alternative fuel vehicles. Uncongested ETLs themselves reduce emissions of both conventional pollutants and CO2, but variable pricing can only produce this worthwhile result if nearly all the vehicles in the lanes are charged. That will not be the case if current California freebie policies continue.