Exploring a Downtown Congestion Fee for Chicago

February 22, 2019

The following blog post explores the idea of a downtown congestion fee and the factors that would need to be considered if Chicago were to impose such a fee. The Civic Federation does not take a position on any type of congestion pricing or whether it should be implemented in Chicago. This blog post is intended for informational purposes only.

According to the Federal Highway Administration, there are four types of congestion pricing strategies:

1. Variably priced lanes: variable toll rates on separated lanes within a highway, such as express toll lanes or high occupancy toll lanes;
2. Variable tolls on entire roadways: tolls placed on both toll roads and bridges, as well as on existing toll-free facilities during rush hours;
3. Cordon charges: either variable or fixed charges to drive within or into a congested area within a city; and
4. Area-wide charges: per-mile charges on all roads within an area that may vary by level of congestion.

This post will examine strategy #3: cordon charges. While congestion pricing on expressways has been discussed in the news and proposed by the Chicago Metropolitan Agency for Planning, there has not been much talk of a central-area congestion fee in Chicago. This post takes a look at congestion fees that have been implemented in other cities, issues that Chicago would need to consider and arguments for and against a central area congestion fee.

It should also be noted that a downtown congestion fee is not to be confused with a commuter tax, an idea that has been discussed during the mayoral campaign leading up to the Chicago municipal election on February 26, 2019. A commuter tax is a tax imposed on the wages of non-residents who work in one municipality but live elsewhere, whereas a cordon congestion charge is a tax imposed on vehicles traveling into or within a congested area.

Case Studies from Other Cities

Central city congestion-based fees have been implemented in cities around the world including London, Stockholm, Singapore, Durham, England and several cities in Italy. While congestion pricing has not been implemented by any cities in the U.S., New York City has proposed congestion pricing, San Francisco conducted a feasibility study and Los Angeles is currently considering a congestion charge as an infrastructure project funding source. The experiences of London and Stockholm are examined here.

London: London charges a per-day fee of £11.50 for vehicles to enter or travel within the congestion charge zone between the hours of 7 a.m. and 6 p.m. Monday through Friday. Individuals and companies can enroll in an auto pay option for a reduced charge of £10.50 for each day the vehicle travels within the congestion charge zone. An annual registration fee of £10.00 is also charged. Residents who live within the congestion charging zone are eligible to apply for a 90% discount on one vehicle. There are also discounts and exemptions for certain vehicles including taxicabs, buses and motorcycles. Private hire vehicles were originally exempt but will be charged the fee beginning on April 8, 2019. London also charges a daily £10.00 emissions charge (called the T-Charge) for vehicles that do not meet minimum emissions standards.

Results from the London Congestion Charge: Prior to implementation of the congestion charge, London experienced severe congestion with average traffic speeds slower than 8 miles per hour and Londoners lost an estimated £2-4 million per week in time due to congestion.[1] According to the Federal Highway Administration, the congestion charge, together with improvements in public transit financed with revenues from the charging system, led to a 15% reduction in traffic in central London. The majority of prior vehicle users transferred to using public transit, travel delays were reduced by 30% and excess waiting time on buses fell by around one-third.[2]

Stockholm: Stockholm first implemented a cordon congestion charge in 2006 as a seven-month trial with little political or popular support. However, following the trial period, 52% of voters through a referendum voted in favor of keeping the congestion charges in place. Stockholm’s system consists of 18 charging points of entry into the cordon area around the inner city. Stockholm’s topography allows for these specific charging points because of the City’s waterways and bridges. The cost for passing a charging point in either direction, coming in or going out, is between 1€ and 2€. The rates vary based on the time of day, with higher rates for higher volume travel times and a maximum amount charged per vehicle per day of 6€.[3]

Results from the Stockholm Congestion Charge: Since implementation of the cordon charge, traffic across the cordon area has been reduced by approximately 20%.[4] Travel times improved, with delays on major arterials falling by one-third during the morning peak period and by one-half during the afternoon peak period.[5] The reduced congestion increased reliability of travel times. It also resulted in a decrease in air pollutants between 10% and 14% in the inner city and a decrease in carbon dioxide emissions from traffic of 2-3% within the whole metropolitan area.[6]

Considerations for Implementing a Congestion Fee

There are a number of factors the City of Chicago would need to consider if it were to implement a central area congestion fee, including the following.

Cordon Area Boundaries: The City would need to determine the boundaries of the central cordon area where the congestion fee would be charged. The City of Chicago’s 2009 Central Area Action Plan defined the central area of Chicago as including the following neighborhoods: Central Loop, South Loop, Near South, Chinatown, River South, Southwest Loop, West Loop, Near West, River North, Streeterville, Near North and Cabrini Green Area. The congestion charge area could include some or all of these neighborhoods, or the central Loop only.

Public Opinion: In the experience of other cities that have implemented cordon congestion charges, public opinion of these charges typically started off very low, but improved significantly after education and awareness campaigns and seeing the results of their implementation. The City of Chicago would need to educate residents, businesses and commuters about how the congestion charge would be implemented and what impact it would have on residents, workers and City government.

Implementation and Operating Cost: The City would need to consider the cost associated with management of the congestion charge, including but not limited to capital start-up costs, tolling technology and sensors, signage, public awareness and communication efforts, administration and enforcement. The City of Chicago Inspector General’s 2012 Savings and Revenue Options report estimated that the City would need to pay an upfront capital cost of $300 million, annualized to $40 million per year, plus approximately $100 million in operating costs annually.[7]

Revenue Usage to Improve Public Transit: In order to generate enough support for a new charge of this kind, the City would need to articulate a clear plan for how the congestion fee revenue would be used. Because the purpose of a congestion fee is to reduce the number of drivers and encourage the use of alternate transportation modes such as public transit, the revenue from the fee should be used for improving public transit, and specifically the frequency and reliability of rail and bus services.  As more people switch to public transit to avoid paying the congestion charge, the City of Chicago would need to consider how well equipped the regional transit agencies (CTA, Metra and Pace) are to handle increased volume and make the necessary investments to absorb more riders and improve travel times.

Exemptions and Discounts: The City of Chicago would need to determine how to handle charging residents who live within the central area and determine which types of vehicles might be exempt from the fee or receive a discount. For example, London exempts taxicabs, buses and motorcycles from its congestion fee and provides a discount for certain vehicles for people with disabilities. Residents within the London congestion charge zone qualify for a 90% discount from the charge.

Needed Statistics: The most recent public data available from a 2009 Chicago Plan Commission report provides figures from 2000 about the number of trips into and out of the City of Chicago’s central area. According to that report, over 578,000 people traveled into the central area of Chicago in 2000, and approximately 227,000 of those trips were via motor vehicles. The City needs updated statistics about the number of people traveling into and out of the neighborhoods that make up the central area by transit mode and how many of each type of vehicle travels into the central area daily.

Daily Charges: The City would need to determine the fee price and structure including the following factors:

• What fee should be charged?
• Should the fee be a fixed rate like that of London’s or variable pricing tiers based on traffic volume or times of day like Stockholm’s?
• What impact would different fee structures have on revenue and traffic volume?
• What types of vehicles should be charged the fee?
• Should the fee be charged for both entrances into and exits from the central area?
• Should the fee be charged on the weekends?
• What relationship, if any, should the fee have to the fares for public transportation in the region?

Pros and Cons of Cordon Congestion Fees

Supporters argue that congestion fees have been proven to reduce traffic, improve travel times and improve air quality. Cordon area congestion pricing could result in more people turning to public transit rather than vehicle usage for trips into the central area, which could benefit the CTA, Metra and Pace with increased ridership and revenue. The City of Chicago could benefit from revenue from the congestion charge that could then be used to maintain roads and improve public transit systems. A 2012 City of Chicago Inspector General report on savings and revenue options for the City of Chicago estimated that the net revenue from congestion pricing would potentially be $210 million after accounting for annual costs, assuming the rate charged would be $5 per day and assuming a 20% reduction in vehicle trips to the central area after implementation of the charge.[8]

Opponents of congestion pricing argue that a congestion fee is unfair to low-income residents traveling downtown or to residents who live in the central area. Business and retail owners oppose the possibility that congestion pricing leads to fewer shoppers in the city center, though analysis of the London congestion charge shows no change in retail activity due to the congestion charge, apart from larger external economic factors and consumer trends.[9] Another argument against the idea is the cost of implementation, which would require significant capital start-up costs for technology including sensors or cameras on the roads and in-car transponders to track vehicle movement in the central area. According to the Inspector General report, the operating costs for running a congestion pricing system range from 20% of gross revenue in Singapore to 35% of gross revenue based on a New York City proposal.[10]