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Prospectus Blog Congestion Pricing in Manhattan: What Comes Next?

The New York State legislature has taken the first step toward the possible implementation of congestion pricing in Manhattan by voting to establish a “New York City Traffic Congestion Mitigation Commission.”
The bill establishes a rigorous timeline for the development, review and approval of a preliminary traffic mitigation plan advocated by New York City Mayor Michael Bloomberg, which would charge drivers entering Manhattan south of 86th Street an $8 toll between 6 a.m. and 6 p.m. on weekdays, with much of the proceeds going to fund transit improvements. Under the new legislation, April 1, 2008 is the target date to give the City the green light to proceed with implementation of the traffic mitigation plan. The vote was 122-16 in the Assembly and 39-19 in the Senate in favor of the legislation.
The establishment of the Commission marks an initial step in what promises to be a complicated and contentious process whose ultimate outcome is difficult to predict. The plan to implement congestion pricing in Manhattan has to clear two major hurdles. The first is to obtain a federal grant under the US DOT’s $1.2 billion Urban Partnerships program. The state legislation stipulates that the program cannot proceed unless the City obtains at least $250 million in funding — either in the form of a single federal grant of $250 million or with a federal grant of $200 million to be supplemented by a City commitment of $50 million. The federal grant must be in place by October 1 and the city commitment by December 31.
The second hurdle is to obtain the blessings for congestion pricing from the 17-member Congestion Mitigation Commission and three separate politically elected bodies — the City Council, the State Senate and the State Assembly. The bill, which uses the term “congestion mitigation” rather than “congestion pricing” in its title, empowers the Commission to come up with alternatives to areawide congestion pricing. However, the bill stipulates that the adopted congestion mitigation measures must produce at least a 6.3% reduction in average vehicle miles traveled (VMTs), as promised in the Mayor’s original plan. Such a reduction might possibly be accomplished by tolling the East River bridges— and do so with less disruption and at a lower capital and operating cost.
Both challenges bear further scrutiny.
The First Hurdle: Obtaining Federal Financial Support
The U.S. Department of Transportation is now faced with a difficult decision. It must decide whether New York City has met the conditions of the Urban Partnerships program and qualifies for a federal grant under that program. The Department has stipulated from the very outset that applicants must show evidence of having the authority to move forward with their proposed pricing strategy. New York City currently lacks such authority. The City will obtain authority to act only if and when the City Council and the State Legislature approve the implementation plan recommended by the Congestion Mitigation Commission. The consent will come at the end of March 2008 at the earliest. By selecting NYC for an award despite its current lack of authority to act, the Transportation Department would open itself to accusations of favoritism, since it had disqualified other candidate cities, such as Los Angeles, precisely because they offered to “study” rather than implement congestion pricing.
The quandary from the federal perspective comes from the fact that the NYC project offers a unique opportunity to demonstrate the concept of areawide (cordon) congestion pricing. It is generally agreed that New York City offers the most favorable venue for such a demonstration. A congestion pricing showcase in Manhattan could significantly enhance the political legitimacy of this concept and accelerate its public acceptance throughout the country — an avowed policy goal of U.S. DOT leadership. We suspect there may also be some discomfort in denying an award to an important “client” such as New York City, although we think the Department would be on solid ground in defending a decision to turn the City down because of its inability to meet the program’s eligibility criteria.
A possible way out of this dilemma is for the Department to employ the mechanism of a “pre-implementation grant” under the discretionary Value Pricing Pilot Program. An award of $200 million in the form of a pre-implementation grant would enable the New York initiative to go forward without doing violence to the Urban Partnerships program’s selection criteria. The proceeds of the pre-implementation grant could go toward providing financial support to the Congestion Mitigation Commission and funding the City’s activities preparatory to implementing the Commission’s recommendations ( as, for example, improving bus service.)
So far, despite repeated press inquiries, the U.S. DOT has maintained silence as to its intentions. Its decision will be made known on August 8 when the Department announces the finalists in its Urban Partnerships program.
The Second Hurdle: Preserving the Integrity of the Congestion Pricing Option
The second hurdle facing Mayor Bloomberg’s congestion pricing proposal is of a more substantive nature. It involves (1) convincing the 17-member politically appointed commission that congestion pricing ought to be a key element of its overall congestion mitigation implementation plan; and (2) persuading three independent politically elected bodies — the City Council, the State Senate and the State Assembly– to adopt the implementation plan substantially as proposed by the Commission.
At each stage of the process, opponents of congestion pricing will have an opportunity to challenge the Mayor’s proposal, question his assumptions, offer amendments to his plan and propose other traffic mitigation alternatives, such as tolling East River Bridges.
“Real questions are going to be asked and answered, whether the mayor likes it or not,” said Assemblyman Richard Brodsky, a sharp critic of the Mayor’s plan. Echoed John C. Liu, Chairman of the City Council’s Transportation Committee, “Speaker Christine Quinn and I and our colleagues in the Council will be looking very carefully at the issues involved. We have local constituents who are very concerned about the impact that congestion pricing will have on their neighborhoods.”
The latest Quinnipiac poll tends to support the lawmakers’ concerns. It shows NYC respondents to be against congestion pricing by a margin of 52% to 41% (Manhattan voters support it 59% to 37%).
Challenges may be expected to many aspects of the Mayor’s proposal. Among them are the proposed northern boundary of the charge zone (86th Street), the proposed schedule of fees, the number and nature of exempted categories of drivers, the nature and timing of transit service improvements, ways of handling traffic and parking at the periphery of the zone, methods of collecting fees from drivers that do not have E-ZPass, the ability of the trans-Hudson transit links to handle the extra commuters diverted from their cars, and the possibility of substituting a targeted tolling component (such as tolls on the East River bridges) for a citywide congestion fee.
The Commission may also want to raise the larger question of the impact of congestion pricing on residents of other boroughs and of suburban jurisdictions. Finally, there exists the possibility of a lawsuit challenging the plan on the grounds it lacks an environmental impact statement (EIS), an eventuality that could seriously delay implementation..
“I am afraid the final outcome may bear little resemblance to what Mayor Bloomberg had in mind,” one local elected official who considers himself supportive of the Mayor’s plan told us. What he meant was that a number of things could still derail or seriously modify the plan or delay the start of implementation. Adding further uncertainty is the fact that 2009 is a mayoral election year. Congestion pricing could well become a volatile electoral issue.
Implementation Timeline
July 26, 2007: The state legislature approves A9362, a bill to establish the New York City Traffic Congestion Mitigation Commission, a 17-member body appointed by the Governor (3 appointees), the Mayor (3), City Council (3), State Senate Majority Leader (3), State Assembly Speaker (3), Senate Minority Leader (1), and Assembly Minority Leader (1)
By August 1, 2007: The Mayor submits a congestion pricing plan to the Commission. The Commission may hold hearings and consider a variety of options before producing an “Implementation Plan.”
August 8, 2007: US DOT announces finalists in the Urban Partnerships Program. US DOT must award New York City at least $200 million or the deal is off.
By October 1, 2007: The NY State DOT and the Metropolitan Transportation Authority submit comments on the Mayor’s plan, including additional capital required by the plan. US DOT must “commit” at least $200 million or the deal is off.
By January 31, 2008: The Commission votes on an Implementation Plan.
By March 28, 2008: The City Council votes on the Implementation Plan, and sends a “home rule message” to the state legislature indicating the outcome of its vote.
By March 31, 2008: The New York State Assembly and Senate vote on the Implementation Plan.
TECHNORATI TAGS: <a href="http://technorati.com/tag/NEW YORK CITY, TRAFFIC CONGESTION, CONGESTION PRICING, MICHAEL BLOOMBERG, U.S. DEPARTMENT OF TRANSPORTATION, URBAN PARTNERSHIPS PROGRAM"rel="tag"NEW YORK CITY, TRAFFIC CONGESTION, CONGESTION PRICING, MICHAEL BLOOMBERG, U.S. DEPARTMENT OF TRANSPORTATION, URBAN PARTNERSHIPS PROGRAM