The right lane?

A consensus is emerging among transportation economists that the best way to deal with freeway congestion is to charge for driving during peak hours. The main barrier to implementation is political: Drastic change is politically unpopular. So how can we overcome the political obstacles by phasing in congestion pricing over a period of many years?

We could modify the current concept of high-occupancy vehicle (HOV) lanes. Current HOV lanes aren't very effective at reducing traffic; 43 percent of car-poolers are members of the same household. They cost everyone but serve few drivers. What about replacing HOV lanes with HOT lanes: high-occupancy toll lanes? A HOT lane would give free passage to three-occupant vehicles (HOV3s) but permit all others to pay a peak-hour toll for access. This would utilize more of the lane's capacity, demonstrate congestion pricing on a wide scale and generate revenues to pay for HOT lane construction.

Existing HOV lanes would be converted to HOT lanes, and planned HOV lanes |would be~ built as HOT lanes instead. Once a HOT lane reaches capacity, ... the adjacent lane would be converted to a second HOT lane. Over time this process could be repeated.

Two Southern California projects will soon offer drivers the opportunity to experience HOT lanes. One is the private toll lanes project under construction on the Riverside Freeway (SR 91) in Orange County. The other is a planned HOT lane conversion on I-15 in San Diego County.

Can HOT lanes actually be financially self-sufficient and therefore attractive to the private sector? Surface-level HOV lane additions in Los Angeles County (which generally involve some new paving plus new signage and lane restriping) cost in the vicinity of $2 million to $5 million per lane-mile. Elevated HOV facilities, built above existing freeways, cost in the range of $19 million to $23 million per lane-mile.

To estimate possible revenues, we developed an optimistic scenario (from a financial standpoint!) saying that congestion lasts seven hours a day, six days per week, 52 weeks a year. During these priced hours, the charge for lower-occupancy vehicles is 25 cents per mile to use the HOT3 lane. The lane carries 2,000 vehicles per hour per mile, 70 percent of which are lower-occupancy and pay the charge. Therefore, the annual revenue per lane-mile in this case is $764,400.

How does this revenue compare with costs? If we again construct the most optimistic case, using the low end of the construction cost range ($2.14 per lane-mile) and the high end of the revenue range ($764,400 per lane-mile), the gross return on investment is 35.7 percent. If annual operating and maintenance expenses equal 10 percent of construction costs (i.e., $214,000 per lane-mile per year), then the net return on investment is 25.7 percent. This would be more than adequate to attract taxable debt and equity investment.

On the other hand, for the elevated HOT lanes, the extremely high construction costs would require a rush-hour toll in the vicinity of $1 per mile to obtain a 15-percent annual return on an investment of $20 million per mile.