A refund for sitting in traffic? Yes, that exists

Dallas is moving ahead with a toll system that will offer drivers a refund if they’re stuck sitting in traffic.

How much would you pay to drive on a road that promised traffic-free conditions and a rebate if that promise went unfulfilled? Drivers in Dallas, Texas are about to find out, as the city prepares to launch an ambitious toll system offering drivers a refund if they find themselves stuck in traffic.

Next month, officials will open a 3.2-mile portion of the LBJ Freeway toll lanes that will offer a simple promise to drivers: pay the toll and they will ensure traffic will be moving at least 50 mph. If congestion causes the speed of traffic to fall below 35 mph, every driver on the highway will receive a rebate for the toll they paid. The system’s operators say this is the first highway in the country to offer such a deal to drivers.

Officials overseeing the highway are confident they’ll be able to meet that promise, as they will constantly adjust prices to ensure the number of drivers won’t overwhelm the road’s capacity. During the busiest driving periods, the price of the toll could change as much as every few minutes – though once drivers enter the highway, they’ll “lock in” at a certain price.

When too many drivers want to enter the highway, the price of the toll will increase. During times of low demand, the toll will fall to a low base level, which in this case is 15 cents (US), but could eventually fall even further once the toll road matures.

This type of operation is known as dynamic tolling and is increasingly being used by transit officials across the United States. Washington D.C., Miami, Houston and Minneapolis are just some of the most recent cities to implement a dynamic tolling system.

To ease drivers into the concept of fluctuating toll prices, officials in Dallas have promised to put a cap on the amount drivers will have to pay during the first four weeks of operation. After that initial trial period and throughout the first six months, the minimum and maximum toll rates will change, but after that, there will be no cap on high (or low) tolls rates could go.

“This is all going to be based on the behaviour of the traffic,” Robert Hinkle, corporate affairs director for the developer overseeing the project, told the Dallas Morning News.

Financing for the $2.6 billion project is being led by Cintra, one of the largest private developers of transit infrastructure in the world – and one of the partners in Toronto’s Highway 407 concession. It is hoping the money it put forward to construct the new lanes will be earned back through tolls. The region’s taxpayers, under the current model, are taking less risk than if the city or state financed the highway outright.

One member of the Texas Transportation Commission says more projects like the one in Dallas that involve private partners are expected in the coming years, as local and state governments lack the funds needed to tackle congestion.

“Our needs have outstripped our resources,” he said.

Dallas is set to launch dynamic tolls on highways across the city – with December’s launch being just the first of many.

More importantly, the refund system could dramatically alter the relationship between drivers and officials overseeing our transportation networks. Under the current model, drivers have little say in ensuring that officials are held accountable for the way they operate highways. But in Dallas, the risk of sitting in traffic is transferred from drivers – who miss appointments, are late for work and spend less time with their family as a result of congestion – to toll operators.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). You can reach Brady by email at: bradyyauch (at) consumerpolicyinstitute.org or at (416) 964-9223 ext 236.

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