Bonds

NYC congestion pricing moves ahead as mobility board proposes toll plan

The Traffic Mobility Review Board has issued a plan that details a toll structure for New York City’s Central Business District, including a $15 fee for cars coming into Manhattan during certain hours.

The TMRB’s congestion pricing proposal will be reviewed by the board of the Triborough Bridge and Tunnel Authority on Dec. 6, and an approved toll schedule will be placed before the public for review.

“With this report the Traffic Mobility Review Board, an advisory body, is recommending to the Triborough Bridge and Tunnel Authority a tolling structure designed to reduce congestion and reduce air pollution in the Central Business District and the region, and generate $15 billion for capital projects that increase sustainability and improve public transit for millions of people,” the report said.

New York City, pictured here, is poised to become the first city in the nation to charge drivers to enter an urban center, but a New Jersey lawsuit may derail this hope.

PhotoSpirit – stock.adobe.com

In June, New York won final federal approval for its congestion pricing plan, which would make it the first U.S. city to charge drivers to enter an urban center.

However, in July, New Jersey sued to block the plan, claiming the federal approval was ill-considered and missed numerous risks to Garden State residents.

According to the report, the TMRB recommends:

  • Passenger vehicles and passenger-type vehicles with commercial license plates should be charged a $15 toll for entering the CBD, no more than once per day.
  • Trucks should be charged a $24 or $36 toll for entering the CBD, depending on their size.
  • Buses providing transit or commuter services should be exempted from the toll. Other buses should be charged a $24 or $36 toll for entering the CBD, depending on their type.
  • Motorcycles should be charged half the passenger vehicle toll, no more than once per day.
  • Tolls should be charged to vehicles only as they enter the CBD — not if they remain in or leave the zone.
  • Congestion toll rates should apply during the most congested times of the day — from 5 a.m. to 9 p.m. on weekdays, and from 9 a.m. to 9 p.m. on weekends. Toll rates should be 75% lower in the nighttime.
  • A credit against the daytime CBD toll rate should be provided to vehicles entering through the four tolled entries that lead directly into the CBD: the Queens-Midtown, Hugh L. Carey, Holland, and Lincoln Tunnels. The credit should be $5 for passenger vehicles, $2.50 for motorcycles, $12 for small trucks and intercity/charter buses, and $20 for large trucks and tour buses. No crossing credits should be in effect in the nighttime period.
  • NYC Taxi and Limousine Commission (TLC)-licensed taxis and for-hire vehicles (FHVs) should be exempted from the daily system toll on vehicles. Instead, a per-ride CBD toll should be added to each paid passenger trip fare for rides made to, from, or within the CBD at the toll rate of $1.25 per-ride for taxis and $2.50 per-ride for app-based FHVs.
  • Specialized government vehicles should be exempted from the CBD toll (in addition to emergency vehicles and vehicles transporting people with disabilities, as required by law).
  • Low-income vehicle owners who qualify and register with TBTA should receive a 50% discount on the daytime auto toll after the first 10 trips made by that vehicle in a calendar month. 

“I am so grateful that this all-star panel has produced an incredibly thoughtful, detailed and balanced report that points the way forward for effective implementation of congestion pricing,” MTA Chair and CEO Janno Lieber said in a statement. “Congestion pricing will mean less traffic, cleaner air, safer streets and better transit.”
Howard Cure, a partner and director of municipal bond research at Evercore Wealth Management LLC, said he was glad to see that there weren’t many exemptions made, “which should help maximize revenues and make them more predicable when considering leveraging this new revenue stream for infrastructure improvements.”

“The MTA did provide a discount to low-income drivers which, I think, is a smart move politically and consistent with many of the equity issues the MTA is trying to address,” Cure told The Bond Buyer.

“There are also credits for certain existing tolls which should help prevent drivers from going out of their way to toll shop and add to pollution and congestion in neighborhoods that host free bridges,” Cure said. “This should cause drivers to look for the fastest and most direct route. Some of these concessions might assuage New Jersey drivers, although I suspect that it will be litigated.”

He also noted the greater toll burden on trucks, which cause more pollution and wear-and-tear on the roads.

“The MTA really needs to use these revenues for improvements to reliability of the system so people switching from cars to mass transit won’t be as burdened,” Cure said. “While it is out of the hands of the MTA, hopefully there are also improvements to NJ Transit and the PATH systems to make those more viable options over driving in.”

The process for setting the final toll amounts will include a public review process that’s similar to those done by the MTA for its fare and toll increases.

In addition to virtual and in-person public hearings, the public will have 60 days to offer comments electronically, or via voicemail or U.S. mail.

Public hearings will be held in February. After that, the MTA board will review all comments and schedule a vote on whether to authorize the TBTA to adopt the tolls and start collection.

While the public review process is underway, related electronic tolling infrastructure will continue to be installed at TBTA bridges and tunnels. As of now, 60% of the sites are complete, the MTA said.

“Congestion pricing will be tested in terms of elasticity of demand,” John Hallacy, founder of John Hallacy Consulting LLC, told The Bond Buyer. “Actual versus budgeted revenues will become important very quickly.”

The Tri-State Transportation Campaign, a non-profit group “dedicated to reducing car and truck dependency,” commended the TMRB on its proposals.

“The TMRB’s recommendations follow the guidance of the 2019 bill passed by the state legislature and governor and create a rational and simple tolling structure that will benefit the region’s commuters and travelers, the overwhelming majority of whom commute into the CBD via transit,” the group said.

Reinvent Albany, a group that advocates for transparent and accountable New York government, said it was a strong supporter of a tolling plan.

“Reinvent Albany strongly supports congestion pricing because it’s the law and has been shown globally to reduce motor vehicle congestion, air pollution, and travel times, and will raise $15 billion to restore and improve transit,” said Rachael Fauss, senior policy advisor for the group. 

Our latest analysis of MTA data shows that in addition to all these benefits, congestion pricing will create tens of thousands of local jobs throughout NYS, largely from its capital plans,” she said.

The TMRB report noted preliminary traffic modeling shows the toll structure will result in:

  • Reduced congestion in the CBD — an estimated 17% fewer vehicles will enter the CBD, and 9% fewer miles will be driven in the CBD.
  • Reduced congestion in the region — the total number of miles driven in the 28-county study area is also projected to go down.
  • Improved regional air quality.
  • Minimal potential impacts to the taxi and for hire vehicle industry.
  • Enough annual net revenue to fund $15 billion for transit improvements outlined in the MTA’s 2020-2024 capital program.
  • Truck diversions in line with what was described in the Final Environmental Assessment. Areas with high existing air pollution and associated health burdens would see similar or reduced truck traffic.

“The TMRB recommends that TBTA closely monitor the impacts of the congestion pricing toll on driver behavior, traffic volume, congestion, transit ridership and air quality — and adjust toll rates in the future as needed to optimize the efficacy of the program and avoid any unanticipated adverse effects,” the report said.
On Wednesday, the MTA released its 2024 preliminary operating budget, the second in five years with a projected balanced budget.

The “November Financial Plan” detailed $427 million of operating efficiencies, exceeding its goal of $400 million in savings in its July Financial Plan.

The MTA said it is ahead of schedule in identifying the $500 million a year in savings that is set to start in 2025.  

“We’re continuing to show balanced budgets for five years thanks to Gov. [Kathy] Hochul and the state legislature providing stable long-term funding sources,” said MTA CFO Kevin Willens.The MTA is doing its part by identifying and delivering on expense savings while continuing to provide service that encourages customers to rely on the transit system.” 

Ridership on subways and commuter railroads continues to increase in accordance with the midpoint scenario as projected by the consulting firm McKinsey while bus ridership is now trending below the low case scenario, the MTA said. Crossings at MTA Bridges and Tunnels continue to track pre-pandemic levels, according to the MTA. 

In July, the MTA Board approved a 5.5% toll increase and 4% fare increase which went into effect in August and is projected to generate $117 million in 2023. The five-year plan includes an additional 4% increase in 2025 and 2027.

“After the recent funding success with the state, one must conclude that other direct state support will not be as forthcoming,” Hallacy said. “It is encouraging that ridership has been improving. Regular periodic toll and fare hikes are necessary. Return to office improvements are required to continue the positive trend.”

Cutbacks could occur.

“The last step is to consider whether any service cutbacks should be made,” he said. “This process is always the last option.” 

Ahead of the release, the Citizens Budget Commission said “while the budget outlook is positive, caution is warranted. The MTA and stakeholders should closely monitor ongoing results because certain risks threaten its projected revenue and expenses.”

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