Transportation Taxes – Place Tolls on Lake Shore Drive

 Revenue: $87.5 million

Lake Shore Drive (LSD) is a 15.83 mile road running along the Chicago lakefront from Marquette Drive on the south to Hollywood Avenue on the north.[1]  LSD is one of Chicago’s major highways offering access to such major attractions as the Magnificent Mile, the Loop, the Museum Campus, Soldier Field, and the Museum of Science and Industry.  According to data from the Illinois Department of Transportation (IDOT), data from a recent traffic count on LSD found that 143,660 vehicles travel past a point on LSD just south of downtown and 172,000 vehicles travel past a point approximately a mile north of downtown.[2]  Assuming significant overlap in these two figures, assume 200,000 vehicles travel on LSD daily.

Under this option, the City would place tolls on LSD at each entrance and exit point.

To maintain traffic flow, the City could install open road tolling using the same technology as the State’s I-Pass System.  The toll would be based on the distance traveled on LSD with a full trip from the south or north end to downtown costing $5 and shorter trips costing a lesser amount.

Assuming that 200,000 vehicles travel on LSD daily and the average trip fee is $2.50, the daily revenue would be $500,000, with resulting annual revenue of $182.5 million.

This revenue would be offset by the capital costs of implementing and operating the LSD toll system.  The most significant capital cost would be the installation of the access point structures.  Each entrance and exit ramp will require a structure, called a gantry, equipped with a camera and an electronic transmitter to monitor traffic flow.  There are 26 access points to LSD.  At most access points, there are entrance and exit ramps for both southbound and northbound traffic, which would necessitate four gantries.  However, there are a number of access points with only one or two ramps.  Assuming, on average, three gantries per access point are necessary, the City would have to construct 78 gantries.  Additionally, we assumed an average of 4 lanes of traffic per gantry.  Many access points would only require two lane gantries, but the large access points around downtown and at the northernmost and southernmost points of LSD would require significantly larger gantries.  Using a cost worksheet from the Federal Highway Administration, we estimated the capital costs as follows.[3]

Category

Cost

System-wide Gantry Costs

$139 million

Conduit, design and fiber optic install

$16 million

Dynamic message sign, structure, and controller

$6 million

Transportation Management Center

$2 million

Total

$163 million

  • Detailed Cost Worksheet (xls, csv)

The upfront capital cost of $163 million can be converted to an annual expense by applying a discount rate to the costs and determining the useful life of the asset.  Assuming a discount rate of 6 percent and a 10-year useful life for the capital investments, the annualized capital cost of the LSD toll system would be approximately $22 million.

In-car transponders would be another significant cost for the LSD toll system.  In some systems, such as IDOT’s I-pass system, drivers bear the cost of the transponders.  If the City followed this model, the City’s transponder costs would be negligible.  Alternatively, the City could piggyback on IDOT’s I-pass system, which already operates as part of a regional, multi-state system, thereby substantially reducing the upfront costs to users and allowing users to have only one transponder in their vehicles.

The operating costs of running the toll system will be substantial.  A study by the Washington State Department of Transportation determined that the cost per transaction of a completely electronic toll system in Orange County, California was $.46.[4]  For the toll system described in this option, there would be twice as many transactions as number of vehicles traveling on LSD as there would be a transaction to capture where each vehicle entered and one to capture where it exited, as the fee would be based on how long a distance the vehicle traveled on LSD.  Thus, with an estimate of 200,000 vehicles traveling on LSD daily there would be 146 million transactions a year.  Assuming that the cost per transaction for the LSD toll system was $.50 this would cost the City $73 million a year.

Combining the estimated annual operating costs of $73 million and the annualized capital cost of $22 million yields a total annual cost of $95 million for the LSD toll system.  Thus, the net revenue from tolling LSD would be $87.5 million.

Proponents might argue that tolling LSD would reduce traffic congestion and make drivers pay for the burden that congestion places on the City.  Reduced traffic would also likely reduce carbon emissions in City.  Additionally, tolls on LSD would likely influence more people to take public transportation, thus increasing public transportation revenues.

 

Opponents might argue that this would significantly increase traffic congestion on arterial roads near LSD, thus increasing congestion in the City. Tolling LSD would also necessitate a significant upfront capital investment that could be subject to cost overruns.

 

Discussion and Additional Questions

Similar to the congestion pricing option above, one should know what public transportation enhancements the City would make before deciding whether or not to place tolls on LSD.

Additionally, there are a number of statistics about the City’s vehicle traffic that would help one better estimate the revenue impacts of implementing congestion pricing.  These include:

  • How many vehicles travel on LSD daily?
    • What is the breakdown of these vehicles among different categories: taxicabs, emergency vehicles, etc.?
  • What would the spillover effects of the tolls be on the City’s arterial roads that run parallel to LSD?
  • How much would traffic on LSD decline in response to tolls?

Finally, similar to the congestion pricing option above, the choice of $5 for the fee in this option is somewhat arbitrary.  An important consideration in implementing tolls on LSD is deciding what the fee should be and when it should be applied.  Some questions might include:

Should the fee be fixed or variable depending on traffic volume or times of day?

  • Should it be charged on the weekends?
  • What impact would different fee structures have on revenue and traffic volume?

 Budget Details

Fund: Corporate Fund, 0100 Type of Revenue:   Transportation Taxes
This appropriation can be found on page 16 of the 2011 Annual Appropriation Ordinance.

http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetOrdinance.pdf

 


[2] Illinois Department of Transportation. Getting Around Illinois Mapping Tool. Traffic Count Data.

http://www.gettingaroundillinois.com/mapviewer.aspx?mt=aadt

[3] Federal Highway Administration. “Value Pricing Pilot Program Planning and Decision Making Tools.” Cost worksheet available here: http://ops.fhwa.dot.gov/tolling_pricing/value_pricing/tools/index.htm

OIG-modified worksheet available at: http://chicagoinspectorgeneral.org/major-initiatives/budget-options/

[4] Washington State Department of Transportation. “Comparative Analysis of Toll Facility Operational Costs.” February 22, 2007. pg. 9. http://www.thenewspaper.com/rlc/docs/2008/07-wsdotoll.pdf