May 20, 2019

The Interstate Tolling Conundrum – Who Pays?Kamran Khan Senior Vice President

Presented AtIBTTA Summit on Policy and Finance

Philadelphia

The Tolling Potential

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Toll Rates/MileCars $0.04 $0.06 $0.08Trucks $0.10 $0.15 $0.20

Estimated Average Annual GROSS Revenue FromEntire Interstate System Tolling

(2020-2040 Inflation Adj. 2.0%)

The Tolling Potential

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O&M NetToll Rates/MileCars $0.04 $0.06 $0.08Trucks $0.10 $0.15 $0.20

O&M Cost as% of Revenue 20.5% 13.8% 10.5%

Estimated Average Annual NET Revenue FromEntire Interstate System Tolling

(2020-2040 Inflation Adj. 2.0%)

Tolling All InterstatesMiles Tolled: 42,500AET Toll Points: 13,000Capital Cost: $65.0 BNAnnual O&M Cost: $13.0 BN

Problem Solved - So Why Not Toll?

Generally prohibited on existing free Interstates routes, with exceptions: New capacity .. New routes or new lanes on existing routes Reconstructed bridges and tunnels ISRRPP – three existing slots may come available Value Pricing Program

Charging for something that is “free” today The ‘Politics’ Double taxation Increase gas/sales taxes in lieu of tolls more efficient Low income users cannot afford to pay tolls Economic impact to businesses and economy make the region less competitive Toll Collection Traffic Diversions Toll Rates

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Toll Diversion Considerations

Toll Rates Motorist Value of Time

Key parameter Averages and distributions Varies widely by individuals, income and situation

Potential Travel Time Savings vs. Free Alternative Routes

Congestion on Alternative Routes Potential Distance Savings Current and projected Competitive

transportation improvements More Subtle Factors

Motorist familiarity Signing Safety Reliability Frequency Electronic toll collection

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Setting the Pricing Strategy

Define capital and operating costs How much are tolls expected to cover? Setting the toll is a trade off between

Revenue and Demand Develop market segments for your traffic Define pricing by market segment

Electronic Tolling vs Video Pre-Registered Un-Registered

In-State vs Out-State Passenger Cars vs Commercial Vehicles Time of Day Traffic Distribution Frequency of Use

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Robust Analytical Framework

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DATA COLLECTION Obtain/Collect traffic counts by

Vehicle Class Video Surveys – for In-state and

Out-state Obtain Travel Times Obtain Travel Pattern Information Obtain Trip Frequency Estimates

MODEL DEVELOPMENT Integrate Data Collection into

Base Year Model Update Future Year Trip Tables

Incorporate Tolling Algorithm into new Model Platform

Incorporate Values of Time Incorporate Tolling Configuration Method of Payment Distribution Toll Costs

TRAFFIC MODEL FORECAST Toll Rate Sensitivity Traffic and Revenue

Forecasts Passengers Cars and Trucks In-State vs Out-State ETC-Non-ETC Commuter Frequency Income Groups

Traffic Impacts Diversion Impacts

Several States have Studied/Implemented Interstate Tolling at Various Levels

Missouri I-70 Wyoming I-80 North Carolina I-95 Pennsylvania I-80 Minnesota Statewide Indiana Statewide Wisconsin Statewide Virginia I-81

Illinois – Chicago Metro Area Connecticut Statewide Alabama I-10 Bridge Crossing Indiana-Kentucky I-65 Ohio River

Crossing Rhode Island Statewide Oregon I-5/I-205

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Pricing Strategies Evaluated/Implemented

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FACILITY TYPE AGENCY DATE PERIOD ETC Video ETC Video TOLL SYSTEM NOTESHighways Wyoming DOT 2009 Daily 0.049$ NA 0.50$ NA Open I-80 Tolling

North Carolina DOT 2003 Daily $0.04-0.12 NA NA Open I-95 Tolling Wisconsin 2016 Daily $0.04-0.06 50 % Surcharge $0.16-0.24 50 % Surcharge Closed StatewideIndiana DOT 2018 Daily $0.04-0.07 50 % Surcharge $0.19-0.38 50 % Surcharge Closed StatewideMinnesota DOT 2018 Daily $0.04-0.10 50 % Surcharge $0.15-0.38 50 % Surcharge Closed StatewideVirginia DOT 2018 Daytime 0.075$ No Surcharge 0.150$ No Surcharge Open

Nightime 0.050$ No Surcharge 0.075$ No SurchargeConnecticut DOT 2018 Off-Peak 0.060$ 50 % Surcharge 0.252$ 50 % Surcharge Open

Peak 0.079$ 50 % Surcharge 0.316$ 50 % SurchargeBridges/Tunnels Indiana-Kentucky LSIORB 2016 Daily 2.05$ 100% Surcharge 10.25$ 20% Surchage

Alabama DOT 2018 Daily 5.00$ 40% Surcharge 20.00$ 40% Surcharge

Rhode Island 2018 Daily -$ - 3.25$ No Surchage Location 1-$ - 3.50$ No Surchage Location 2

Toll individual tractor-trailer once per general location per 24 hrs in each direction; Border to border travel on I-95 maximum toll $20.0; Maximum toll on any tractor-trailer $40

Frequency Discount for PC's 15% Discount for 20-39 transactions; 30 Discount 40 or more

$30 Annual Pass

PRICING STRATEGIES

10 % Surcharge Video Pre-registered; Frequency Discount 50% for 40 ore more transactions

PC Rates CV Rates (5-Axles)

30 % Discount for CT E-ZPASS, 20% Commuter Discount, 25% Surcharge Video Pre-registered

Summary of Pricing Strategies

All AET Facilities Passenger car per mile rates $0.04~$0.07. Comparatively low when compared to the national

average of $0.09 per mile for tolled roads Commercial Vehicles (5-Axle) charged higher per mile rates, typically 4 times that of a

passenger car toll In-State ETC registered accounts toll discounts 30% Video Surcharge typically 40-50% or more higher than ETC rates Pre-registered Video lower than Un-registered Peak rates higher than Off-Peak Rates by 25-50% Frequency programs providing discounts at certain volume thresholds Rhode Island put a maximum daily toll charge cap for plazas, through movements, individual

trucks Some consideration given to placement of plazas open vs closed, outside of metro areas

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The Impact of Tolling Toll

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Date Tolling Before Tolling Change After Tolling State/Province Facility Started Year Lanes Traffic Traffic Year Lanes Traffic FL Snapper Creek Expressway 7/17/2010 2009 4 43748 -20% 2011 4 34790IL IL 390 (US 20 to I-290) 7/5/2016 2012 4 191450 -23% July-Oct 2016 4-6 146550IN_KY Downtown Crossing 2013 7 125700 -49% 2018 12 64200

East End Crossing 2018 4 21200Total Ohio River Bridges 2013 7 125700 -32% 2018 16 85400

2/1/2014 2012 2 29000 -24% Mar-17 4 21900

VA Downtown Tunnel 2/1/2014 2012 4 91000 -16% 2016 4 76000VA Midtown Tunnel 2/1/2014 2012 2 35000 -20% 2016 4 28000WA SR -520 Bridge 12/29/2011 2011 4 93000 -25% 2016 6 70000WA Tacoma Narrows Bridge 7/16/2007 2002 4 86000 -10% 2008 7 77000

Tolls RemovedBC Port Mann Bridge 2012 2016 10 122770 27% 2017 10 155329BC Golden Ears Bridge 2009 2016 6 42501 30% 2017 6 55182

Dominion Boulevard Veterans Bridge

VA

12/30/2016

Impact of Tolling - Peak Hour Diversion SR 520

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Impact of Tolling - Peak Hour Diversion IL 390

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IL 390 Local Road Impacts

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Summary

Define purpose and need for project, clearly articulate the improvements and benefits

Significant revenue potential from Interstate tolling with relatively low tolls

Develop pricing strategies that considers various of market segments Discount programs can be developed to mitigate impact on local users Shifting higher costs to non-locals may result in higher revenue risk Finding the right balance between revenue and traffic demand Diversions will occur, mitigation strategies need to be in place Diversions in peak periods not as great when total network capacity

constrained

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Thank YouKamran Khan

khanka@cdmsmith.com

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