TECH WARS | Is Über Creating More Congestion in NYC?

Density is good, severe traffic congestion bad. Congestion wastes fuel, adds
 to pollution, lowers the quality of life, depresses retail sales and the economy.
Will anyone pay enough attention before we have a Godzilla of Gridlock? 

Über may force another look at the toll-free status of four bridges across the East River.

Traffic congestion is a costly problem for New York City residents, workers and visitors. An aspect of the Tragedy of the Commons, scarce public goods like roadways in dense cities run the risk of overuse without restrictions or pricing.

New York City has a sophisticated traffic control system to ensure that the main arteries are flowing freely. In Manhattan, that's north-south. Traffic lights in Manhattan can be shortened, through a central control system, to restrict traffic in the east-west direction.

However, some arteries are east-west - for example around the entrances to the bridges and tunnels. I have been noticing that in high-traffic periods, the east-west traffic heading for the West Side Highway or the Lincoln Tunnel is backing up onto the avenues (I see it on Ninth Avenue), creating gridlock.

Is congestion getting worse? That's my perception, despite huge resources invested in traffic police and traffic-light technology.

Could Über be adding to the problem? Something like Über was inevitable, putting passengers and drivers directly in touch. It puts to use private vehicles at peak periods to supplement NYC's yellow and green taxis and on-call limos. BUT the result is more use of the public roads, more congestion. Like the frog in the saucepan pan with the heat slowly rising, we don't notice what is happening until a crisis occurs - the frog is boiled to death, or (equivalently) we have a mile-long gridlock in Manhattan that takes hours to clear up.

Former Mayor Bloomberg tried to get congestion pricing introduced in 2007-08. A broad approach to traffic pricing and mitigation is provided in the 12 principles of the late Columbia University Professor William Vickrey. I posted them at http://tinyurl.com/29vz7n. Singapore and London have introduced congestion pricing that seems to work.

A new group in New York City has come up with a "Fair Tolling" plan to introduce incentives to direct traffic to routes that make more sense than existing ones. The principal shift seems to be imposing tolls on the four toll-free bridges across the East River. Sam Schwartz, former City of New York Traffic Commissioner,  sees a big problem in these toll-free bridges:

The term I'd borrow from my father is that we have a cockamamie system of charging people that makes absolutely no sense, and in fact encourages people to drive through our densest part of the city: Manhattan.

This coming Friday millions of workers are going to be heading out to their Memorial Day Weekend vacation at the same time. Many cars come out of garages and parking lots for the long weekend excursions. This is the first of the three biggest weekends of the summer. It could be a test of the existing system.

LAND VALUES, NYC | Bill Vickrey Lives

Prof. Bill Vickrey

The Federal Reserve Bank of New York has performed a service in showing that CoStar data can be used to generate estimates of land value over time and across an area.

The study (in the April/May 2008 issue of Current Issues in Economics and Finance, 14:3) is built around a computation by three Fed staff members (Andrew Haughwout, James Orr and David Bedoll) of average land values per square foot in New York City, excluding Staten Island, and ten New Jersey counties.

The average land value rises sharply from $47/sf in 1999 to $89/sf in 2001, then falls back after 9/11 because of questions about NYC’s future as a place to live or work.

Recovery set in quickly in 2003, with land values rising to $104/sf and soaring to $366/sf in 2006. As theory would predict, prices are highest in mid-Manhattan and fall off as a property is more distant from the center.

The report is interesting on many levels:
- The care that CoStar shows in collecting and verifying data makes it a useful new source of information on commercial property values.
- Property values increase five-fold increase in property from the post-9/11 dip in 2002, a remarkable achievement for which Mayor Bloomberg deserves significant credit – property values are an excellent hedonic index of the desirability of living or working in a particular city. One would like to have comparable data from other cities to see NYC’s relative performance.
- The data show how changes in overall building values primarily reflect changes in the underlying land, since buildings themselves depreciate over time. As more data of this type become available, it will become easier to show that taxes on land (“site”) value are fairer and more efficient than taxes on buildings. Land values do not depreciate in value like buildings and increases in these values are, in the thinking of Henry George, “unearned rent” relating to population growth and are therefore especially appropriate as a tax target.
- Over time, site values can be expected to grow steadily and are therefore a good basis for a tax system.
- Site value taxation was at the heart of recommendations for New York City presented at economic hearings before NYC Comptroller Liz Holtzman in 1993 by Columbia Professor William Vickrey, who was awarded the Nobel Prize in Economics in 1996 for his work on auctions and congestion pricing. Unfortunately, he died between the announcement of the award and its presentation in December, and Prof. Lowell Harriss went to Stockholm instead to accept it on Vickrey's behalf.

Vickrey’s ideas faced practical implementation problems 15 years ago. Today, the obstacles are more political than practical. If New York City evolves toward a rational system, it will follow more of Vickrey’s recommendations. It was part of his genius to know that technology would in due course catch up to his brain. The New York Fed has helped move this process along.

NYC | Congestion Pricing

Traffic congestion is a costly problem for New York City residents, workers and visitors. The problem originates from inadequate pricing mechanisms for the use of roadways and railways in NYC. It is an aspect of the Tragedy of the Commons.

A new report on Alternatives to Traffic Congestion Mitigation in the Manhattan CBD, by the Committee to Keep NYC Congestion Tax Free, provides a list of alternative ways to use pricing to reduce congestion in Manhattan's three CBDs. The list is good and the opening up of options to the committee looking at these issues is even better.

A broad approach to congestion pricing and mitigation is provided in Professor William Vickrey's 12 Principles posted at http://tinyurl.com/29vz7n. Vickrey recommended maximizing use of railway tracks by upgrading signal systems to permit shorter headways between subways and using a skip-stop system for local trains to shorten travel times for most travelers with a minimum of inconvenience to a few travelers.

Congestion Pricing and Parking Fees Are Linked

NYC Mayor Bloomberg's Traffic Congestion Mitigation Committee met on September 25 and the connection between parking and congestion pricing was immediately put on the table. The meeting was reported on by the NY Sun and Gotham Gazette. The Committee, which expects to hold forums in all five boroughs and Nassau and Westchester counties before wrapping up by January 31 next year, was informed that average speeds in Manhattan's three central business districts drop the speeds as slow as 6-10 mph.

Assemblywoman Vivian Cook, a committee member, worried that parts of her district in Queens could be heavily used for parking by those avoiding the congestion charges and taking subways into Manhattan. The director of NYC's Long-Term Planning and Sustainability Office, Rohit Aggarwala, responded that this problem could be remedied with a review of parking permits and meters in the area.

Her concern and the City's response show the far-sightedness of the late Columbia Professor William Vickrey, whose 1992 plan (http://preview.tinyurl.com/yv33ed) to address congestion in NYC linked congestion pricing to a review of parking permits and fees.

Congestion Pricing

There is wide agreement about the high costs of congestion in big American cities. What should be done about it?

On the side of inertia is the former Executive Director of the Port Authority of New York, George J. Marlin (no relation). In a July blog he says he was once approached by some good-government Manhattanites about introducing peak-pricing tolls on the Hudson River bridge and tunnel crossings. The idea is that tolls would rise at peak hours and fall during off-peak hours, just as they do for commuter train tickets. Marlin dismayed his visitors by advising them that peak-hour pricing is just another tax and he was against it. But if tolls are reduced in non-peak hours to offset the higher revenue from peak-hour tolls, the new pricing can be revenue-neutral. The two people who commented on Marlin's blog - Ed Unneland and Erik Engquist - both agreed with the goo-goos that peak-hour pricing might be better than the alternatives.

I spoke in favor of congestion pricing twice in July - once before a public hearing of Manhattan Community Boards 4, 5 and 6 and once before a hearing of the Borough President of Manhattan, Scott Stringer. I noted that congestion is a symptom of popularity and therefore a good thing up to a point. In the 19th century, smokestacks were proudly shown on British city postcards as evidence of their prosperity. Better to be congested than to have boarded-up and deserted buildings downtown, as do some upstate NY cities. Hostility to the City’s congestion pricing plan in Albany might stem from upstate congestion envy. Traffic congestion also keeps down the speed of cars to levels where fatalities are less likely in the event of an accident.

The problems with congestion become very serious when traffic slows to speeds of 20 mph or slower. This wastes gas, increases pollution and creates serious stress for people stuck in traffic. Worse, it is dangerous because ambulances, fire engines and police cars can't get through to where they are needed.

Time is money, so we are already paying a tax for congestion - in unpredictable and inefficient ways. One person understood this many years ago, Bill Vickrey, a Columbia professor whom I got to know through the City Club of New York when we were both active members. Bill received the Nobel Prize in Economics in 1996 and looked forward to the increased influence the award would give to his policy prescriptions. Alas, he died within a few days after the announcement of his award, in a car on his way up to a conference of like-minded economists.

Bill was keenly interested in giving advice to policymakers in the City and testified at an economic hearing I organized in 1992 as Chief Economist to the City Comptroller, Liz Holtzman. A summary of his 12 principles of congestion pricing is posted at http://tinyurl.com/29vz7n. More of his principles are technologically manageable now than when they were first proposed, and all of them promote an efficient city. When people said that the MTA can't handle the additional burden on the subway system created by those who leave their cars at home or park outside the city, Bill Vickrey answered that the signal system could be upgraded to permit shorter headways between subways and that a skip-stop system for the local trains would shorten travel time without great inconvenience.

The City of New York has won a $354 million grant to implement some of the recommendations for congestion pricing. A State commission is also reviewing other proposals to reduce City congestion and pollution. Their work is important because the existing free-for-all cannot continue. I hope the City and State will take into account the ideas of Bill Vickrey early on in their thinking and implement what is administratively feasible.

CONGESTION PRICING | Federal $ for Plan Is Good Value

The U.S. Department of Transportation did the right thing and promised (provided legislators support the Mayor's plan) a $354 million grant to New York City, out of $1.1 billion earmarked for reducing traffic and promoting mass transit. Since Manhattan is the densest and most congested place in the United States, it would have been peculiar if NYC had been left out, even if a gridlocked Albany was slow to give the plan immediate support. The grant will provide help primarily for mass transit improvements, with a small amount for installing systems to charge drivers entering congested parts within Manhattan (New York Times, August 14 and 15, 2007).

However, the Federal money does not pay for the cost of installing systems to charge vehicles for coming into Manhattan. Some of that infrastructure may already be in place through the existing EZ Pass system at bridge and tunnel entrances, but hundreds of millions of additional installations and software will be needed. Newspaper accounts suggest that the Mayor could look for corporate support to make up the difference. CityEconomist wonders if Homeland Security could chip in to ensure that every entrance to Manhattan is monitored.

Also, Transportation Secretary Mary E. Peters pointedly made the grant contingent on legislators approving the Mayor's congestion pricing plan in some form this fall. "I share the mayor's confidence that the support will be there," she said. The City Council leadership has supported the Mayor's plan but Albany has been slow to respond to it.

The Manhattan congestion pricing plan would be the first in the United States, although it is well established in London and is spreading to other UK cities. It is also in place in Singapore. Nobel Prizewinner William Vickrey proposed congestion pricing for NYC as early as 1992 in economic hearings held by the City Comptroller Liz Holtzman (see Testimony on Congestion Pricing); he felt strongly that on-street parking regulations and fees should be considered strategically at the same time.

While the mayor’s plan has extensive support among people who see congestion pricing as inevitable given the long delays caused by gridlock in Manhattan, it has been opposed on the following kinds of grounds: (1) the charge will simply make driving easier for the wealthy and will be a severe burden for small businesses or low-income drivers (but: the number of bicyclists has doubled in London since congestion pricing has been introduced), (2) it will discriminate against the other four boroughs and will add tolls where none exist now (but: it will allow easier travel in Manhattan and may encourage new economic activity in the other boroughs), and (3) deliveries will be more expensive to make (but: the existing mess is already very expensive in time and parking fees). The CityEconomist perspective is that New York City's streets are a scarce resource that must be allocated in some way or they will become useless for anyone wanting to get anywhere promptly.

Some of the details of the Mayor's plan are subject to debate. For example, parking lots on one side of 86th Street are inside the congestion zone and on the other side are outside of it. The flat fee of $8 for cars and $21 for trucks is an issue - the late Prof. Vickrey recommended toll systems that would charge a fee that reflects actual congestion. However, these details can be addressed by a planned 17-member commission, yet to be appointed. The commission will have the responsibility to propose changes to the plan – within the overall objective of reducing traffic congestion by 6 percent.