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Effects on Urban Form

By Elizabeth Deakin
University of California, Berkeley

Two arguments have been made about the impact of transportation congestion pricing on urban form. Some argue that underpriced transportation has led to lower-intensity, lower-density land use patterns and a larger metropolitan area than would occur with efficient pricing and investment and that congestion pricing would correct this underpricing and thus would encourage more compact urban form. Others argue that congestion pricing on balance would have a further decentralizing effect by reducing the attractiveness of destinations served by the priced facilities and accelerating movement to locations within the region with lower costs (and often less congestion). Many in this latter group also believe that road pricing would create a negative image that could stymie business, developer, and consumer interest in the affected areas and that land regulations would largely block any higher-intensity center-oriented development that might be proposed.

The arguments matter for several reasons. First, to the extent that changes in land use, development, and urban form occur in response to congestion pricing, the impacts are likely to vary with the design of the pricing system and the use of the revenues. The developers of congestion pricing programs need information and insights into these potential effects in order to capture benefits and avoid unintended and undesired consequences. They also need some information about the size, scale, and time frame of the impacts in order to assess their overall importance.

Second, anticipated (or feared) impacts on businesses and residents, and their likely travel and locational responses, will be a significant political issue in debates over transportation congestion pricing; potentially affected groups may be sources of support or of opposition depending on the impacts predicted. Both the affected interests and the decision makers to whom the interest groups will plead their cases need well-founded information on potential impacts and their likely magnitude and timing.

Third, in a number of metropolitan areas there is concern about growth patterns and economic development and their social and environmental consequences. In these areas the question of the impact of transportation congestion pricing on urban land uses and development will be debated directly. The assumptions underlying the contrasting arguments need to be clarified and made explicit.

The potential effects of congestion pricing on urban form are examined, drawing on both theoretical work and empirical evidence. The paper begins with a brief review of the literature on transportation and urban form, focusing primarily on the effects of changes in accessibility on land use and location. The many options available to travelers for responding to congestion prices are discussed next, some of which may considerably dampen or offset the potential for congestion prices to reshape urban form. Finally, the results are presented of interviews with a small sample of businesses and local government officials in which likely responses to congestion pricing were explored. The interviews, although preliminary, indicate that here too a number of strategies may be pursued. at least some of which could offset the potential impacts of congestion pricing on land use and development.

Models of Location and Land Use

Land use-transportation interactions have been the subject of a long tradition of inquiry, and a strong framework for the understanding of key relationships has emerged. Economic theories of location and land use are dominant, but sociological and historical theories also offer insights. A brief review of this work is presented here to serve as a framework for later discussions. Also presented are the results from recent models of location and transportation choice processes and case studies and statistical analyses.

Location Theory

More than a century and a half ago, von Thunen and Ricardo observed that land, labor, and capital are the primary inputs of production and that the use of land is determined in part by its location. The location of transportation facilities and transportation technology determine the relative location, or accessibility, of places. Thus land values as well as land uses reflect the relative locational advantages that transportation systems confer. The theory postulates a clear causality: accessibility determines the worth of land for different uses at different locations.

In more recent times, Dunn (1954), among others, dealt with agricultural land uses; Isard (1956), Wingo (1961), and Alonso (1964), among others, dealt with the urban case. Kain (1975), Mills (1967), Anas (1985), and others have extended and elaborated on the basic approaches. All of this group of models are rooted in land economics and in the concepts of optimality and equilibrium in land allocation.

In simple form, consider a center at which production and distribution activities are concentrated. Transportation costs increase with distance from the center, and in determining the amount to bid for land at a particular location, the bidder takes the transportation costs into account. All else being equal, location at the center minimizes transportation costs; land values therefore are highest at the center, and other locations will command lower rents reflective of their greater costs of transport.

But not all land uses would gain equally from a central location. If transportation is ubiquitous, a central location maximizes access to suppliers and to markets. Specialization is best supported by such a location, which also offers greater opportunities for economics of agglomeration and economies of scale than do less centrally situated sites. Activities that are specialized, that can capture the economies that central places make possible, or that need regular face-to-face contact with other firms can minimize their costs by grouping close together in central locations. They thus outbid others for space there.

Ancillary firms that provide goods and services to these central offices also need good access to the center but require less face-to-face contact (and probably have a lower-salaried work force with lower values of time). Hence, they will locate near, but not at, the center. Other activities with less frequent need for central access bid less and locate farther out. Housing is one such activity, since access to the center is primarily needed for employment. A balance is reached, with particular uses characteristically found in central places and others in successive rings farther out.

If transportation costs are changed, the rent gradients change; since land uses and rents for land are tied to each other by market processes, land use potentials are changed. All else being equal, it would be expected that investments that lower the cost of transportation to an employment center would simultaneously reduce the value of land at the center and increase the value at the periphery. Conversely, when transportation costs increase, the price of land close to the center increases.

These impacts play out in different ways for residential development than for commercial development. In the case of housing, reduced commuting costs (or times, since time has value) would make it possible for commuters to spend more on housing, travel farther, or both. If, as is usually the case, transportation is cheap relative to housing and one can buy more house per dollar farther from the center, households will have an incentive to live farther away from their workplaces. All else being equal, then, investments in transportation are likely to decrease residential density and increase the size of the urbanized area.

Business location choice will be affected somewhat differently. Although some businesses are tied to particular sites because of needs for special qualities available only there, others can choose where to locate within an urban area by considering the relative costs and benefits of doing business at any particular place. Transportation is one such cost; businesses need access to goods and markets, and their labor costs reflect commuting costs.

If transportation costs are reduced at a particular place, businesses there will be more profitable and better able to expand; other businesses also will find the location comparatively advantageous because of accessibility to metropolitan-wide labor and customer markets, and will seek to locate there. Thus, in theory, businesses will tend to congregate at points where transportation costs are low.

Population-serving businesses, which sell frequently purchased goods and services, are a special case because their competitive edge depends in large part on their convenience to residences. If residences decentralize, these businesses follow, decentralizing this portion of the work force as well. The specific location of these businesses, however, still depends on the relative costs of transportation to alternative locations. A general reduction in shopping-trip costs would permit population-serving firms to locate farther from residences and still be convenient to customers. Put another way, firms could attract customers from a wider area and still benefit from lower transport costs for inputs. In so doing, they might be able to lower costs, expand offerings, or both, and perhaps capture economies of scale and outcompete firms in less advantageous locations.

Overall, then, location theory holds that transportation improvements will tend simultaneously to increase employment at benefitted sites and to decentralize workers' housing. However, over time these very changes will stimulate countervailing effects: increased employment will generate demand for housing near the worksites and suburban housing will create a pull for service-oriented employment, and so on.

Other Theories of Urban Growth

Although theories focusing on economic factors in explaining the spatial distribution of various land uses have been favored in transportation analyses, other theories of urban growth have emphasized historical and social factors and cycles of growth and decline. Burgess (1972), Hurd (1924), and Hoyt (1939) were among the early writers on the topic. As they saw it, industries located near the waterfront to utilize water transport and the water itself; their activities attracted workers' housing but repelled many other uses. The wealthier classes originally built houses near the center of the city, but as those houses grew obsolete, they chose to build new ones in outlying areas made accessible by new transportation systems. Their old houses filtered down to less affluent classes. Durability of buildings and infrastructure, along with patterns of blocks and ownership of parcels, retarded change in land uses by making land assembly, consolidation, and clearance difficult and expensive. Economics of scale in building made new construction cheaper on vacant land, and this, quite apart from land rents, further spurred suburbanization.

Harris and Ullman identified still additional factors affecting development, including the need for specialized facilities and services (transportation and other), agglomerations that support mutual profitability, forced clustering of nuisances, and constraints working against alternative housing location choices (e.g., lack of money, class segregation). In this conception of urban growth, different activities would locate in distinct nuclei, or subcenters, because of the interplay of these factors. Transportation would exert a different influence over location in the various nuclei because of different. specialized needs of the occupants. Berry (1967) emphasized specialization of places and the growth of hierarchies of places, with both historical factors and agglomeration economics playing a role.

Recent Models of Location and Transport Choice Processes

Both location theories and alternative theories on land use-transportation interactions provide useful concepts but are limited by restrictive assumptions and partial specifications of causal factors. Historical-sociological theories have been largely descriptive, with few attempts to extend them to formal prediction. Economic approaches, in contrast, have attempted to support forecasting; however, critics point to the limited number of factors explicitly considered and note the restrictive assumptions on which the basic analytic models are founded, particularly in their highly abstracted mathematical forms.

Adding realistic detail such as urban and suburban subcenters and multiworker households and accounting for other important factors such as land availability, building quality, and the effects of social class, race, and local government services requires simulation rather than analytic models. Models developed by Lowry (1964), Putman (1983), Herbert and Stevens (1960), Prastacos (1985), and others represent attempts to develop practical analysis and forecasting techniques for urban land use and transportation planning [see work by Hamburg et al. (1983), Berechman and Small (1987), and Bajpai (1990) for reviews of the state of practice].

In general terms, these models allocate jobs and housing within a region as functions of accessibility, land availability, population, and employment by category, income (for households), and other factors. Such models typically make several simplifying assumptions not wholly in accord with theory. Nevertheless, they can overcome some of the limitations of pure analytical approaches: for example, travel times and costs can vary in different parts of the region and other spatial and socioeconomic heterogeneities can be entered into the assessment. Although in many applications this class of models has only moderate predictive capability, model applications nevertheless indicate the importance to location decisions of transportation level of service.

Other modelers have attempted to develop a stronger behavioral justification for location decisions. Prime examples are legit models of household location and transportation choices (e.g., those by Lerman (1975) and Anas (1985), among others). These models typically include, in addition to land use and transportation accessibility variables. detailed household socioeconomic and life-style descriptors (including the number of workers present, household income, age of household members, presence of children, race and ethnicity, etc.) The studies confirm that transportation decisions on the location of jobs and housing reflect concerns about transport costs. Other things being equal, congestion is associated with a preference tor housing closer to work; long commutes are supported by better transport facilities.

For the most part, however, these models show that transport variables are no more critical to location decisions than such factors as housing type, size, and cost suitability; crime rates; and, for families with children, schools. Moreover life-style and life-cycle variations have been found to be as important as (in some cases, much more important than) transportation as determinants of location and land use choices.

Case Studies and Statistical Analyses

A fourth group of studies has used statistical or case approaches to investigate the effects of transportation investments on land use, location, and economic development. Regression analyses and input-output modeling have been used to examine national and regional effects; before-and-after assessments and survey research have been used to investigate the impacts of specific facilities and to understand transportation's effect on specific residential and industrial location choices.

Studies of the land development effects of both highway and transit investments have a long and detailed history [for example, see the highway cost-allocation studies of the 1950s and 1960s (U.S. Congress. House. 1957-1961) and the Spengler study (1930) of the land value impacts of the New York transit system]. Overall, however, the studies fail to provide a generalizable metric of the role of transportation in land development. Instead, they point out that the effects of transportation investments vary with the specifics of the case and must be considered in the broader implementation context.

Most of the highway studies have found that highway investments are but one factor in a larger growth and development equation [see a detailed review of this literature by Forkenbrock (1990)]. Some studies have failed to find an impact of any sort, especially in areas with weak markets for development; others have found that highway investments allow pent-up demand for new development to be released. Many of the studies that have attributed "growth" to a new highway have failed to account for the likelihood that the growth would have occurred elsewhere in the region had the highway not been developed, that a shift, not an increase, is what has occurred.

Environmentalists sometimes argue that it is precisely this shift that is of concern, particularly if development is induced by transportation improvements that make possible more trips, longer trips, or relocation from high-density areas in which many trips would be made by foot or transit to low-density areas heavily dependent on the automobile. [See the work by Frank (1989), among others, for a review of the literature on the transportation, environmental, and other consequences of alternative development patterns.] Newman and Kenworthy (1989) claim that international data on transportation, land use, and energy consumption establish a strong basis for this concern, although others point out the limitations of their data and methods. Among metropolitan planning organizations, scenario testing exercises and a few modeling efforts using real data have explored this issue sufficiently to support the conclusion that shifts could occur sufficient to offset at least some initial travel and environmental benefits of transportation investments. [For a discussion of the modeling issues, see work by Harvey and Deakin (1991).]

But the magnitude of the effect remains unclear, and controversy continues over when and to what degree a highway improvement will induce trips, shift modes, and alter destination choices. Indeed, this is a topic for which focused research has been recommended (Suhrbier and Deakin 1988).

The results of transit studies are similar to those for highways. Most of these studies have focused on rail systems, though a few have looked at less place-specific investments such as trolleys on shared right-of-way and bus service [see, e.g., work by Spengler (1930), Warner (1962), Boyce et al. (1972), Cervero (1984), Gannon and Dear (1972), and Heenan (1968)]. In most of the transit studies the question of shifts is central, for many look to transit to help restructure development into more compact, efficient patterns. The studies found many localized land development benefits, but from a regional perspective the benefits have been quite modest. Shifts toward compact growth and increased density, when they occur, seem overwhelmed by stronger regional trends toward decentralization. Rail systems do seem to have supported additional downtown development, though several also apparently made once-remote suburban locations sufficiently accessible to spur development at the fringe (Warner 1962; Webber 1976). [See reviews by Knight and Trygg (1977), Libicki (1975), and Giuliano (1986).]

For both highways and transit, many of the studies suffer from methodological and other limitations (lack of explanatory power for observed correlations, difficulty in distinguishing cause and effect, failure to distinguish economic shifts within a region from investment-induced growth, double-counting of benefits). Few have been scoped broadly enough to identify possible shifts in production processes and changes in economic and social organization that might occur as a result of important new transportation investments. Nevertheless, the studies offer useful insights. Overall, they find that transportation availability and quality are factors in location and development, but investments - at least the modest investments typical of today's transportation programs - will do relatively little absent other critical factors including appropriate land, labor, and capital. They also point to the difficulties in identifying and measuring the impact of transportation projects in real-world contexts.

Implications for Congestion Pricing

Location theory, other theories of urban development, empirically estimated models of land use-transportation interactions and location choice, and case studies and statistical analyses of transport impacts all provide useful insights about transportation and urban form but no clear, singular findings concerning likely impacts. This wide-ranging body of work suggests that, all other things being equal, transportation investments that lower the costs of travel should decentralize housing and centralize employment but at the same time stimulate countervailing pressures for housing near the employment center and for service employment near housing. Conversely, worsening transportation services will favor decentralization of jobs but support higher densities of housing in more central locations, although the relationships are not a simple mirror image because of precedent conditions in the developed areas.

Moreover, the empirical work points out that many other factors may be equally as important as transportation, or more so, in location and land use decisions. Overall, then, the impacts of transportation projects on land use and urban form must be considered in context with full recognition of the complexity and contingent nature of the phenomena being considered.

Congestion pricing adds a twist to the evaluation because it is not a straightforward matter to determine the change in costs resulting from its implementation. In most cases some travelers will face higher generalized costs - money plus travel time - whereas others will find their costs reduced. Use of the revenues from congestion pricing could substantially alter the magnitude and distribution of costs and benefits, and the specific choices could have widely different implications for urban form. For example, using revenues to expand a congested facility would have far different impacts than using the revenues to reduce other taxes currently paid by affected parties. Again, the implications are that the urban form impacts are uncertain and contingent on the application and the details of implementation.

Finally, it is important to note that it is not always the case that congestion pricing on a particular facility will predominantly affect a specific place. Such a place impact would depend on whether the congestion- priced route is critical to a specific place (or strongly identified with it, to the extent that perceptions are driving decisions) or shared or even incidental to that place. As an example, congestion pricing of the San Francisco-Oakland Bay Bridge might have almost as much employment impact on south San Francisco, some miles away, as on downtown San Francisco, because the south San Francisco employees are highly automobile dependent, whereas downtown employees are not. Because of the complexity of the interactions involved, models will be needed to trace impacts through the transportation-land use system.

Congestion Pricing, Travel Behavior, and Land Use Impacts

Models of transportation and urban form deal primarily with changes in accessibility and the effects of these changes on land use and development patterns. However, congestion pricing could stimulate a variety of changes in travel behavior, some of which could directly affect land use and some of which could offset impacts on land use. Moreover, the use of congestion pricing revenues for transportation investments may invoke another round of transportation-land use interactions. In this section, these potential impacts are reviewed.

Traveler Responses

The introduction of congestion pricing is likely to elicit a variety of traveler responses, only some of which are likely to have significant impacts on urban form. Moreover, the effect will be different depending on the traveler's income and the importance the traveler places on particular trips, as well as the degree of flexibility or constraint the traveler faces, including coordination requirements both at home and at work. Some travelers whose time is worth more to them than the congestion charges will find that the generalized cost of travel has dropped for them - they will be better off. This group includes both current travelers and those who are now deterred from making particular trips because the peak-period (congested) time costs are too high. (This latter group would include certain high-income travelers and others of more modest income with regard to high-value trips such as airport access.) These travelers not only will be able to continue pre-congestion-pricing travel behavior, but also may make more or longer trips, or both, in response to the improved level of service.

Other travelers will find that it is not worth it to them to pay the price for a particular trip. They may find that they have no choice but to make the trip anyway if the travel choice is highly constrained or the alternatives are unacceptable. Or they may be able to continue their current level of trip making by finding a way to offset the charges, using a different (less congested or unpriced) route, switching modes, or making the trip at a less congested (less costly) time. Alternatively, they may change their trip frequency, their destination choice, or even their location choice to avoid the charges. These travel options are summarized in the accompanying text box.

Not all these options are likely to affect land use significantly. For example, a change in the time of travel, all else being equal, is unlikely to affect land use at all (one can imagine some instances in which congestion levels along an arterial make a difference in the attractiveness of a shopping destination, or where hours of operation could be affected by travel and traffic shifts, but in general the impacts surely would be minor). In contrast, changes in destination choice and trip frequency resulting from transportation congestion pricing could affect the relative competitiveness of different areas, which in turn may lead to changes in businesses' choices of whether or where to locate, expand, or move.

Impacts will also vary by trip purpose; that is, shopping trips are more price-elastic than work trips and so may be affected more (to the extent that they are affected at all, i.e., to the extent that they occur during the peak in congested areas).[1] Impacts and responses will further vary by level of congestion; for example, it is hard to shift trips out of the peak if that peak lasts several hours and easier if it lasts an hour or less.

Finally, impacts will also vary by whether congestion pricing is used only on one or a few facilities or is widespread (hence whether a route choice option is available), by whether the price varies across facilities (less shifting of locations should occur if the price variation is low), by whether there are competitive transportation alternatives, by whether there are competitive alternative destinations, and undoubtedly by many other factors.

Options Available to Travelers Faced With Congestion Charges No change in travel behavior or activities: pay charges; continue previous pattern Increase trip making, level of activities, or both: pay charges; increase trip making to affected destinations because congestion charges make it easier to travel (possible without new infrastructure investments because of congestion relief; impact probably larger if revenues are invested in new infrastructure in affected corridors as some have proposed) Reduce the overall costs of automobile use to offset the congestion charges without changing travel behavior or activities: Seek free parking or parking subsidy (if parking currently is priced) Use a more fuel-efficient vehicle Keep vehicles longer, replace vehicle with a more modest vehicle, and so forth Change travel behavior without changing level of trip making or activities: Avoid charges by deferring trips to uncongested periods Avoid charges by using alternative routes with lower (or no) price  Share costs (rideshare) (if carpools travel free, as they would in some proposals, this option would permit charges to be avoided) Switch to another mode with lower cost (e.g., use transit) Reduce trip making, level of activities, or both: lower trip frequency, for example, work at home, shop less often but buy more per trip, shop by mail/phone/electronics, chain together trips Change location of activities: Avoid charges by changes in trip destination (e.g., shop at a location accessible without driving on a priced, or high-priced, facility; change jobs) Avoid charges by changing trip origin, move household location

The important point is that both high-income and modest-income travelers call respond to congestion pricing in a variety of ways, some of which may reduce activity at particular destinations, others of which would have little or no effect, and still others of which could increase the activity level.

Use of the Revenues

As noted earlier, use of the revenues from congestion pricing strategies could have important implications for urban form, in some cases as large as or larger than those directly resulting from the price. For example, if revenues are used to build new infrastructure. the potential for land use-development impact from that new investment would have to be investigated. The specific type of infrastructure chosen would make a substantial difference in these land use impacts as well: widening a bottleneck on the priced facility would be far different from building a rail transit alternative or mitigating the traffic impact on a parallel arterial. Use of the revenues to compensate those most heavily affected (e.g., via a reduction of transportation taxes or a commute allowance) would have substantially less land use impact, as would using the revenues to fund air pollution reduction, noise reduction. safety improvements, and so forth, or simply placing the revenues in a general fund. Again, the impacts on urban form would be highly dependent on the specific expenditure plans.

It should be anticipated that numerous claims will be made on the revenues, some by people and in places that are perceived to be disadvantaged by congestion pricing. For example, owners of businesses in centers that might otherwise suffer (or perceive) increased costs of accessibility due to pricing may lay claim to revenues to otherwise improve their access: in this vein the Bay Area Economic Forum has proposed that revenues be spent in the corridor of origin. Similarly, arguing that the impact on their businesses could be disproportionately negative, trucking interests have indicated that they would seek a dispensation or substantial discount from congestion pricing, at least until enough experience has accumulated to support an evaluation of whether they can capture compensating travel time savings. The politics of implementation may make it necessary to accommodate such positions even if their economic justification as a general proposition is lacking. At the same time, economically justifiable investments that make it possible for vehicle miles traveled to increase may be opposed by environmentalists or others. Hence the politics of revenue use is likely to be highly complex and not easily predictable.

Summary

Transportation congestion pricing may affect urban form via changes in travel behavior, particularly changes in trip generation rates and trip destination choices, as well as through longer-term location decisions. Moreover, the potential for affecting urban form will vary with the ways in which pricing revenues are used. in particular, whether and what kind of infrastructure investments are pursued.

Potential Response of Business and Local Government to Congestion Pricing

Just as travelers have a number of options in their response to congestion pricing, both business and local government could respond to congestion pricing strategies in a variety of ways, some of them including land use policies. To explore what responses might be forthcoming, interviews were conducted with a small sample of elected officials, senior planning staff, business representatives, and development interests in the San Francisco Bay Area. Because congestion pricing has been fairly widely discussed in the Bay Area, all those interviewed were familiar with the concept and its many formulations. Four scenarios were discussed involving congestion pricing on different types of facilities and with alternative routes:

1.  Specific "gateway" facilities with no significant alternative routes (for example. the San Francisco-Oakland Bay Bridge),
   
2. Targeted limited-access facilities with comparable facilities not subject to congestion pricing (for example, Route 101 and 1-280 on the San Francisco peninsula),
   
3.  Targeted limited-access facilities with alternative routes via surface streets (arterials) (for example, I-80 and San Pablo Avenue along the East Bay shore),
   
4.  All facilities as necessary (both limited-access facilities and surface streets may be priced).
   

In each case the respondent was asked what impacts might be anticipated and what his or her organization might do in response if such a congestion pricing strategy were implemented rather than whether he or she agreed that congestion pricing was necessary or desirable. Costs in the scenarios were approximately $0.08/mi to $0.10/mi ($0.05/km to $0.06/km) except for the Bay Bridge, for which a toll of $3 to $5 was assumed.[2]

Altogether, 18 interviews were completed.[3] Seven of those interviewed were representatives of businesses: two small business owners, one in downtown San Francisco and the other in Emeryville; a representative of a large business headquartered in downtown San Francisco; a representative of a manufacturing concern in South San Francisco; a representative of the trucking industry; and two representatives of retail businesses. Five more were with local elected officials, and five were local agency staff in planning and redevelopment departments. In addition, a representative of a union representing blue collar manufacturing employees in San Francisco and south San Francisco was interviewed. Although this sample obviously cannot support statistical analysis, the findings of the interviews, summarized below, are nevertheless revealing of some of the land use issues that may arise with congestion pricing proposals.

Potential Business Responses

A consistent reaction to the congestion pricing scenario involving only the Bay Bridge was that it would not affect a very large share of anyone firm's employees (estimates of the share of employees coming from the East Bay ranged from 5 to 30 percent, some of whom cross the bay on another bridge or commute by transit; estimates of Bay Bridge users ranged from 2 to 10 percent[4]). Therefore, the respondents reasoned, few firms would find it necessary to do much to counter the effects of congestion pricing as an overall policy response. If congestion pricing were more widely implemented (i.e., on many facilities rather than on only one or two), respondents believed that it would be more likely to have an impact on location decisions and land uses, in particular on marginal uses in outmoded facilities.

It was recognized that for businesses most directly affected by congestion pricing, the size of the labor market could shrink unless higher wages were paid to offset the transportation cost premium. For those who hire numerous low- to moderate-income workers, this was seen as potentially making the businesses noncompetitive; employees of higher-income workers saw this as much less of an issue. But many other factors were thought to make the impact on lower-wage workers a smaller reason for concern than it might have appeared at first glance; for example, low-to moderate-income workers generally are more likely to live nearby, commute by walking or transit, and so on.

Several respondents suggested that case-by-case adjustments for individuals who are adversely affected might be necessary or appropriate. For example, employees facing an expensive commute who either lack reasonable transportation alternatives or cannot make use of such alternatives for some reason (e.g., the need to transport children on the way to and from work) might be allowed to

• Change work start and end times to avoid the peak,
• Change to a different shift (manufacturing jobs), or
• Work at home some or even most of the time.

Two of the employers thought that to avoid their becoming excessively entangled in their employees' travel decisions, congestion pricing might lead them to implement a commute allowance to replace current parking and transit subsidies. One speculated that it might be necessary to raise the current parking subsidy in order to offset the added costs of tolls.

Respondents acknowledged that transportation is only one factor in business location decisions, and its importance varies with characteristics of the business; for many, taxes, crime rates, and the general business climate and image of a location are more important considerations. However, the respondents also noted that a number of businesses are located in places that are suboptimal under current conditions, in buildings that are outmoded, in labor markets that are costly, and so forth. Higher transportation prices due to congestion pricing could be the final straw for these businesses, forcing them to look for another location or even to close their businesses altogether. Most respondents believed that the impact would be greatest on industrial and retail uses rather than office employment, which they saw as already relatively footloose.

Companies that are adversely affected may not move initially because the costs of moving at that time may be too high. But the same firms may choose to expand elsewhere, relocate, or both, after the useful life of facilities is used up or a long-term lease expires. Hence some congestion pricing impacts may lag implementation by years.

One business representative with many highly paid workers believed that congestion pricing would be a major benefit, producing time savings for travelers, less stress, greater scheduling flexibility, and higher productivity. He argued that congestion has deterred some firms from locating in places like downtown San Francisco and that congestion relief due to pricing should remove a barrier to these firms, stimulating growth. He also argued that the revenues from congestion pricing, if used to improve congested facilities or to provide good commute alternatives to those who are priced off, could result in an overall improvement in accessibility of the priced areas.[5] He saw the loss of certain marginal firms as inevitable and overall positive for the region, despite the likely hardship for some individuals.

The impact of congestion pricing on trucking was deemed a major concern. It was acknowledged that truckers are likely to find that congestion reduction more than offsets the congestion price, or they may be able to avoid peak-hour charges by careful scheduling. Nevertheless, most business representatives believed that they would see congestion prices passed on through trucking fees. Large businesses could avoid paying truckers' congestion charges by scheduling deliveries and pickups to avoid peak hours and peak prices; however, smaller businesses (and truckers) have less flexibility in scheduling, and truckers offering just-in-time services may find peak-period travel unavoidable. The "lack of options" argument appears to be a persuasive one; for this reason, the majority of the respondents believed that truckers would seek exemptions from pricing and would likely be granted such exemptions, regardless of the benefits they would also be capturing.

Potential Local Government Responses

Just as private actors may attempt to counteract real or perceived declines in accessibility (increases in general costs), shrinkage of markets, or both, by using a variety of strategies, local governments can be expected to take action to protect their tax bases and constituencies. Among the means to do so that are commonly available to local government (depending on individual state laws) are land use regulations, redevelopment powers, the ability to create special districts, and the authority to tax and spend.

For example, for a central business district perceived to be adversely affected by road pricing, local government or businesses might decide to provide free parking to offset the cost of the road price. Or, if it is assumed that many of those affected will switch to transit, a convenient circulator bus or transit shuttle might be provided. Ina deregulated ground transportation environment this might stimulate van and jitney services, but in the far more common restricted-entry situations, a shuttle probably would entail either government financing or funding through an assessment district or business association.

Attempts to offset perceived negative impacts of transportation congestion pricing are more likely in areas that have experienced difficulties in business retention and attraction (and among businesses that have experienced labor shortages or customer losses). City officials believe that in a strong real estate market very little organized public or private response might be generated, on the assumption that there will be plenty of takers for available space (or jobs, or goods and services) even if some are pushed out by the impact of congestion pricing. In a weak market, however, local business people would almost certainly seek help to offset pricing impacts, and local officials would be sympathetic to their concerns and likely would look for ways to be of assistance.

City officials also expressed concerns about pricing strategies that would lead to increased traffic on arterials under their control, for example, traffic diverted from a priced limited-access facility. They would expect to be compensated for the added costs of handling such traffic and, in some situations, for additional traffic mitigation, especially if residences or retail uses abutted the affected streets. Off-street parking to replace removed on street spaces, improved transit services and stops, improved sidewalks, trees and other landscaping, and better signalization might be demanded by localities should traffic diversion occur. On the other hand, there were mixed reactions to the possibility that traffic levels might decline on parallel arterials. Some believed that this would be an improvement; others worried that reduced traffic could cut down business activity.

With regard to possibilities for increased development, local government officials were somewhat skeptical. They noted that current land use regulations often limit market responses to transportation system changes, in some cases for very long periods. They acknowledged that some increases in density or changes in use could occur under current zoning through increased occupancy rates, shifts to higher-intensity allowable uses, and so on, but cautioned that in many areas, higher density and change in use may be substantially limited by restrictions on height, bulk, or use; by other development regulations; or simply by delays encountered in areas where development proposals often arouse strong political opposition.

Several of the respondents noted that their responses to congestion pricing were unlikely to be justified from an economic perspective and indeed that in some cases their responses were internally inconsistent. They nevertheless argued that proponents of congestion pricing would need to make the benefits visible and widespread in order to secure the allies they would need for implementation of pricing strategies.

Summary

Overall, both businesses and local officials indicate that they would pursue strategies that could compensate for the effects of congestion pricing. Some of these strategies appear likely to be beneficial; others could be counterproductive. Almost all would be designed to preserve jobs and amenities thought to be threatened by the pricing strategies.

Conclusions: What Would Effects on Urban Form Be?

Currently, some travelers presumably would be willing to pay more to travel than they currently do; some presumably are being priced off the system by congestion (travel time) rather than dollar costs. Other travelers are using the roadways, making certain trips, and indeed living and working where they do in large part because travel costs as little as it does; at least some of these individuals would not be willing - or able - to pay more.

Given this heterogeneity in the travel markets and the evidence that there is considerable differentiation in traveler characteristics within particular travel corridors, it is difficult to say unambiguously and generally how pricing might affect urban form. Although in general, policies that increase the cost of transportation to an employment center would simultaneously y raise land prices and concentrate development there, many other factors must be considered, including the presence of specialized subcenters, land use regulations that retard market-driven changes, and the slowness of response in land use changes even when government policy does not discourage them (e.g., obsolete uses persist at sites for decades, even when land use changes would be highly profitable).

Although increased economic and social differentiation of places could be one outcome of transportation congestion pricing, such changes could be greatly slowed by resistant government policies or, for that matter, resistance to change on the part of the private sector. Exploratory interviews conducted for this study, although limited in scope and extent, indicate that both government and business would be likely, at least in the short to medium run. to take action to offset perceived adverse impacts resulting from higher transportation prices. Such actions might range from providing travel allowances to increasing the subsidy for parking, shifting work schedules to avoid the peak periods, and subsidizing certain land uses or businesses. Impacts on urban form would be moderated by such inteventions.

Acknowledgements

Development of this paper was supported in part by the University of California Transportation Center. Portions of the paper draw upon work by Garrison and Deakin (1991).

Notes

[1] Note that regional averages of peak travel by trip purpose probably are not relevant since congestion varies by corridor; evidence from the Bay Area indicates that the share of discretionary travel during the peak is lower than average in highly congested corridors.

[2] The Bay Bridge, 8 mi (13 km) long including approaches, currently is tolled westbound only.

[3] Two other persons declined to be interviewed, even on a confidential basis, because they believe the topic is highly sensitive and the possibilities for misunderstandings are great. Eight of those interviewed asked that their comments not be for attribution. Because of such concerns, none of the respondents are identified except by general job title.

[4] These estimates are roughly compatible with Bay Area travel data.

[5] Most others discounted this possibility. seeing it as "theoretically possible. but not likely in practice."

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