Will Congestion Pricing Come To Your City? To Ann Arbor?

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Pick any major city and you're certain to find lots of traffic. Big city traffic is how you flow in and out of most cities, it's a threat to life and limb when crossing streets and since it's often a molasses-like mass of belching vehicles, big-city traffic is the surest way to enrich local cab drivers when going crosstown, uptown or nowhere at all.

It now turns out that New York's Mayor Michael Bloomberg -- a guy who takes the subway to work -- wants to reduce Manhattan traffic in his fair city by instituting what's called "congestion pricing." The idea is to charge $8 a day for auto users who want entry into the heart of Manhattan, thereby reducing vehicular traffic volume, cutting pollution and raising money which can be used to better public transit.

One study by the Global Strategy Group, a political polling organization, shows that if you charged $8 per day per car for access to the city from 60th Street south to the Bowery at the tip of Manhattan, then traffic would be cut by 50 percent.

Another 10 percent of those surveyed said they would neither drive nor use mass transit, which means they would work at home. However, 17 percent said they would have to drive regardless of the charge because public transport was not realistically available to them.

Is congestion pricing a solution to the nation's crowded cities? It is a magical cure that would raise money for local governments while cutting pollution?

Actually, congestion pricing already exists in both London and Stockholm, and the programs are said to be hugely popular. (The program in London costs £8 daily, more than $16 in U.S. currency.)

The electronic pass programs now used in many states to collect highway tolls without stopping traffic could also be used for a congestion pricing program: If you commute you would get a transponder for your car. Once you pass a detector at a given access point your account would be charged for the day. At the end of the month your total bill for access to the city would be paid automatically by credit card. If you did not have a transponder, then you would have to move through a toll plaza and pay in cash. (In Israel, Highway 6 is all electronic -- there are no toll plazas and you can only enter with a transponder.)

Congestion pricing would produce a number of winners:

If you owned an apartment inside the congestion zone, unit values would rise because there would be less pollution, reduced noise and no cost to enter the area.

If you lived in an area with easy public access to downtown then property values would go up. As an example, Astoria in the borough of Queens is 15 minutes from mid-town Manhattan by train.

Congestion pricing would encourage more people to car pool, thus cutting the impact of the daily fee while getting more cars off the road.

There would be exceptions for cabs, buses and delivery vehicles.

Less traffic would speed the flow of vehicles into the city, in itself a result that would reduce pollution.

There is a security aspect to congestion pricing in the sense that vehicles with transponders can be tracked. Think of the commercial systems which allow you to press a button for roadside help or if you're locked out of a car.

While congestion pricing has its benefits and has proved to be successful, it also has some drawbacks.

First, congestion pricing is a financial burden. The cost of commuting is a big deal to most drivers and making it more expensive is essentially elitist: If you operate a hedge fund, an extra $8 a day is irrelevant; if you're a computer programmer working in a downtown office tower, then an extra $1,600 or so a year in after-tax costs is a visible and real expense.

Second, having ripped up trolley car rails in most areas, congestion pricing would condemn many people to costly and unreliable public transit systems. Commutes in many cases would be longer and would still require cars to get to and from transit access points.

Third, if large numbers of people in a given area needed to commute but the area had poor public transportation, home values would drop because there would be higher driving costs.
Will congestion pricing come to your city? Despite some drawbacks, it's an idea which is likely to be adopted in a number of major metro areas -- think of New York, San Francisco and Washington as places to start. With improved public transport you could certainly see congestion pricing in other major metro areas.

Alas, the art of dodging traffic will never be the same if congestion pricing becomes real, a loss for the more athletic and fun-loving among us.

Written by Peter G. Miller

Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 90 newspapers, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at peter@ourbroker.com.

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