October 14, 2019

October 14, 2019

Subscribe to Latest Legal News and Analysis

October 11, 2019

Subscribe to Latest Legal News and Analysis

Cities Evaluate Congestion Pricing Systems

Over the last half century, urban centers have been combating the blessing and curse that is the automobile and freeway system. While historically providing means and opportunity for people to move themselves at high rates of speed over long distances, this also meant people no longer had to live close to their area of work. As a result, suburban sprawl gripped many American cities as residents sought more and more land and freedom from the chaos of city life.

This trend has changed in recent years, with city centers experiencing a renaissance that has long been stifled by suburban sprawl, fed by an ever growing freeway system. This gradual trend of residents back towards big-city downtowns has been driven largely by empty-nester baby boomers and newly graduated millennials. These recovering suburbanites are starting to realize the allure of walking outside their house to their local coffee shop, bar, restaurant, and shopping district, without the need to hop in their car for even the simplest errand. Instead, they’re trading in their riding mowers and backyard pools, for commercial and entertainment districts walking (or stumbling) distance from their high-rise apartments and condominiums. But, increased population density has brought with it negative externalities as well.

This increased interest in the live, work, and play lifestyle of big-city downtowns have brought with it the unintended externalities of congestion, pollution, and other negative health and environmental impacts. In an effort to mitigate congestion, increase traffic flow, and optimize urban transit platforms, cities are increasingly looking towards data to provide this panacea so as to not stifle their newfound popularity.

In confronting an issue every driver is ever so familiar with, cities like London, Stockholm, New York, Los Angeles, and San Francisco are in different stages of evaluating a “congestion-pricing system” to monetize high traffic areas of their commercial and residential corridors. Not only is the goal of this system to raise funds for vastly underfunded public transit systems, but to act as a deterrent in an effort to change commuter behavior and trends alike. The types of systems being evaluated by many cities, plan to incorporate static and dynamic pricing to drive commuter decision making towards less negative-externality generating activities.

These systems will analyze traffic trends, and when appropriate, raise prices on drivers as congestion is prone to increase and similarly drop prices at low congestion times. The goal of this system is to force commuters to realize for the total cost of their commute, beyond the fuel cost and direct wear and tear on their car. In fact, most drivers only pay for a small percentage of the “cost” associated with their commute, often ignoring or not accounting for their impact on other commuters, including bicyclists, public transit riders, and pedestrians as well as their impact on the health of the community and the environment. In fact, following the implementation of congestion pricing in Stockholm, city air quality saw an improvement of 5-15% in air quality and a dramatic decrease in the level of acute asthma attacks among small children at the same time.

While New York is in the early stages of implementing congestion pricing, and San Francisco and Los Angeles are still in the evaluating stages, Stockholm and London have been enforcing these fares on drivers since the early 2000s, so far with positive results. Since 2003, when London incorporated congestion zone pricing into certain areas of the city, commuter “average speeds [have] increase[ed] by 30% and [almost] 11% [of commuters have] shift[ed] from car use to mass transit, cycling, and walking”.

Despite the promises of robo-taxis and ride-sharing being the elusive kryptonite to urban congestion, some urban planning experts forewarn that the rise of autonomous vehicles might actually exasperate the issue, further necessitating the need for congestion pricing schemes. As Uber, Lyft, and other ride-sharing companies have cannibalized the local taxi markets and existing infrastructure faced cost cutting and disinvestment, many consumers have opted for the convenience of ride-sharing over the dilapidated and delay prone infrastructure, like subways, elevated rails, and bus routes. In turn, cars utilized for ride-sharing in urban corridors has surged, with new York seeing 80,000 vehicles for that purpose over the past five years.  As a result, cities are looking to recoup lost revenue and declining federal subsidies through congestion pricing taxes that can both drive tax-revenue from drivers, and drive commuters towards alternative forms of transit.

© 2019 Foley & Lardner LLP

TRENDING LEGAL ANALYSIS


About this Author

Christopher R. Boll, Foley Lardner, Transactional Lawyer, Securities Attorney
Associate

Christopher R. Boll is an associate with Foley & Lardner LLP, and a member of the Transactional & Securities Practice.

During law school, Mr. Boll interned with GE Capital and received the Henry Hubschman Fellowship at GE Capital Aviation Services. Before pursuing a legal career, Mr. Boll was an investment banking associate with Falls River Group, LLC, and IMAP, Inc., where he advised and consulted on joint ventures, acquisitions, mergers, and other strategic ventures in various industries and stages of corporate lifecycles. While...

313-234-7145