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Chapter 5
Technical Issues


When HOT lanes are implemented at the corridor level, design issues are driven by whether or not existing lanes (HOV or general-purpose) can be converted to HOT use or if new lanes must be constructed. The physical design and construction of the lanes is very similar to that of any highway improvement. As with general-purpose lanes, the construction of HOT lanes involves utility coordination and relocation, the installation of drainage systems, earthwork, paving, the construction of ramps, overpasses and bridges, and adding appropriate signage and striping. In some cases new lanes can be built within the median of the existing highway. In others, new right-of-way may be needed. In either case, modifications to existing structures, signs, and barriers are likely.

As expected, the conversion of an existing general-purpose or HOV lane to HOT lane use is less complicated. The pavement is already in place, and it is likely that little or no additional widening or right-of-way acquisition would be necessary. However, in order to maintain premium traffic service levels and discourage toll violations, HOT lanes generally require access control.

Current HOT lane projects have used traditional highway design standards and HOV guidelines maintained by AASHTO, state DOTs, and local governments. As shown in Table 3, the basic cross-section requirements of HOT lanes are similar to those of general-purpose and HOV lanes. As with HOV lanes, when adequate right-of-way is available HOT lanes are often placed in the median of an existing highway. The development of additional lane capacity within existing highway corridors inevitably requires extensive retrofitting and it is not likely to be possible to achieve desired standards in all circumstances. When this is the case, tradeoffs need to be assessed on an individual basis.

Table 3.
HOT Lane Cross-section Standards

Cross-section Element Standard
Lane Width 12 feet, 3.6 meters
Shoulder Width (Right and Left)

10 feet, 3.0 meters preferable
2 feet, 0.6 meters minimum (dependent on number of lanes, type of operation, sight distance).

Separation Width (for non-barrier separated operation)

4 feet, 1.2 meters.

Sight Distance Standard stopping sight distance for facility type
Safety Considerations

Crash attenuation for exposed barrier ends

Transition treatments with HOV or general-purpose lanes

Adequate access opening lengths

The physical configuration and operation of HOT lane installations varies greatly and is driven by travel demand and physical constraints. HOT lanes are generally located in the median of a new or existing highway. They may involve single or double lanes operated on a reversible-flow basis or one or two lanes providing continual service in each direction. Typical cross-sections for these typical configurations are provided in the figures below.

Figure 6, 7, and 8 provide representative cross-sections for concurrent-flow and reversible-flow HOT lanes. These dimensions are reflected in guidance found in NCHRP 414, HOV Systems Manual and correspond to current practice for many HOV lane treatments nationwide. Figure 6 shows cross-sections for a single lane reversible HOT facility located in the median of an existing highway, such as the existing Katy Freeway HOT lane in Houston. Figure 7 provides similar information for a two-lane, reversible flow, median HOT facility similar to that found on the I-15 in San Diego. Finally, Figure 8 shows typical cross-sections for a four-lane concurrent flow HOT facility similar to the SR 91 in Orange County, California. Regardless of the number of lanes being considered, lane widths are typically 3.6m (12 feet) wide. Shoulder widths range from a desired width of 3.0 meters (10 feet) to 1.2 meters (4 feet). Shoulders suitable for use by enforcement officials generally require a width of 4.3 meters, or 14 feet.

Figure 6.
Median-Based One-Lane Reversible Flow HOT Cross-Sections

This figure depicts desirable and reduced cross-section dimensions for a median-based, one-lane, reversible flow HOT lane facility.

Figure 7.
Median-Based Two-Lane Reversible Flow HOT Cross-Sections

This figure depicts desirable and reduced cross-section dimensions for a median-based, two-lane, reversible flow HOT lane facility.

Figure 8.
Median-Based Concurrent Flow HOT Cross-Sections

This figure depicts desirable cross-section dimensions for a median-based, concurrent flow HOT lane facility with both enforcement shoulders and standard shoulders, as well as cross-section dimensions with reduced shoulders.

The design of most HOT lane projects is dominated by the issues of access to the HOT lane and the physical separation of the HOT lane from general-purpose lanes. The HOT lane facilities currently in operation in the United States utilize either concrete barrier or pylon separation and have single entry and exit points. Tolls are collected electronically at the access point. However, studies have been undertaken identifying ways to provide additional access points in intermediate locations. As shown in Figure 9, this would be accomplished using slip ramps equipped with tag readers located on gantries downstream of the access points. A variety of different buffer and weaving lane configurations would be possible. Figure 10 illustrates how intermediate access can be provided for a concurrent-flow HOT lane with ability to provide occupancy enforcement in the vicinity of each electronic tag reader site.

Figure 9.
Alternative HOT Lane Slip Ramp Configurations

This figure depicts HOT lane slip ramp configurations for a barrier-separated facility, a narrow buffer-separated facility, and a reduced narrow buffer-separated facility.

Figure 10.
HOT Lane Access, Electronic Toll Collection, and Enforcement Areas

This figure depicts a HOT lane access ramps and electronic toll collection equipment, with an enforcement area located downstream of the toll reader.

Useful HOV Resources

Given the extremely close overlap between the physical design of HOT and HOV lanes, those seeking detailed information on the physical design of HOT lanes are directed to take advantage of the wealth of existing information on HOV design.

There are several excellent resources providing detailed information on the design of managed lanes. Two of these are described below.

HOV Systems Manual, National Cooperative Highway Research Program (NCHRP) Report 414, Transportation Research Board, National Research Council, National Academy Press: Washington, D.C. 1998.

Chapter 6 of the NCHRP report addresses design issues for managed lanes built within existing highways and in separate rights of way. The manual discusses the design features of barrier separated, concurrent flow, and contraflow managed lanes, as well as multiple access treatment. Sample cross-sections, signing and pavements markings are presented.

Fuhs, Charles A., High Occupancy Vehicle Facilities: A Planning, Operation, and Design Manual, New York: Parsons Brinckerhoff, December 1990.

Also an industry standard, the Fuhs manual is organized in three main sections paralleling the decision making process for implementing managed lanes: planning, design, and operation. Among other areas, the design section provides comprehensive information on cross-section requirements for various configurations, enforcement, signing and pavement markings.

The following sections focus on these aspects of HOT lane projects, as they present issues that are not likely to arise during the design on general-purpose highway lanes. Discussions of specialized signage and toll plaza requirements are also provided.


As discussed above, HOT lanes can be provided in a variety of configurations. However, in all cases they must be separated from the general-purpose lanes. As with HOV lanes, this can be accomplished by using a painted stripe or buffer zone, or a physical barrier. Physical barriers are preferred for permanent HOT lane installations as they provide better access control and are more effective at reducing violations and maintaining premium traffic service. Since there are often high speed differentials between the general-purpose lanes and HOT lanes, physical barriers also help maintain safety by preventing potential violators from crossing the buffer into the HOT lanes and disrupting the traffic flows.

Tubular Markers
Tubular markers, pylons, or stanchions provide another separation option for HOT lanes. They consist of a series of painted lightweight plastic tubes approximately three feet in height placed at regular intervals. Because they rise vertically out of the pavement, they perform a greater psychological function than striping alone, but do not provide the physical protection of a continuous barrier. One of their primary advantages is that they require a narrower swath of right-of-way than continuous barriers and, therefore, are less expensive to install.

Tubular markers do not entirely eliminate cross over traffic, but they reduce violations to an acceptable level. One primary advantage to the markers is that they do not add to right-of-way requirements. They also allow emergency and maintenance vehicles to drive over them to take advantage of the higher travel speeds in the HOT lane. However, the cost of regular (daily) maintenance must be weighted against those of other separation methods.

Based on the experience of HOV programs in California, 20-foot spacing between pylons is recommended.11 In addition, it is also recommended that a minimum 18-inch striped buffer zone be provided on each side of the pylon. This approach has been used on the SR 91 Express Lanes, where a double yellow line separates the outer general- purpose lane from the pylons and inner yellow line and outer white line are used on the HOT lane side of the markers (Figure 11).12

Figure 11.
Tubular markers on SR 91

This photograph shows the tubular markers used to separate the Express HOT Lanes from the general purpose lanes on the SR-91 in Orange County, California.

There are three types of tubular marker systems currently used by DOTs around the United States:

Mountable Curb Markers
Mountable curb markers feature a 10- to 12-inch-wide, four-inch-high curb that supports vertical round or flat markers with reflective sheeting. The markers themselves are reboundable and bounce back into place if they have been hit. The markers do not damage vehicles crossing them, but do make a loud banging noise. The mountable curb markers are designed to enable emergency vehicle access and to stand up under winter conditions. Although mountable curb markers are used by many highway departments to maintain traffic around construction sites, they have not been widely tested in high speed lane separation situations.

Retractable Markers
In addition, automatically retractable marker systems are available, such as found on the I-5 in San Clemente, California and on the New York Thruway near Albany. The retractable pylons utilize flexible channelizing posts housed in self-contained cartridges recessed in the roadway and can be raised or lowered from a remote location as needed. One advantage of the retractable technology is that the pylons could be lowered during snow removal operations or to provide access for emergency vehicles. However, at a cost of $25,000 for eight units they are expensive. They also require minor excavation at each post and the installation of electrical wiring beneath the roadway.

Maintenance Issues
There are maintenance issues associated with all types of pylons. Experience shows that the displacement rate for traditional pylons is roughly 10 percent every 60 to 90 days, which means that all units would need to be replaced every year. Although generally durable, the adhesive-mounted plastic pylons can only be hit a certain number of times before they cease to bounce back up. They can also be hit with such force that the units dislodge from the pavement, pulling out pieces of asphalt with them. The New York Thruway Authority has used pre-drilled holes in the pavement to attach pylons in an effort to prevent pavement damage, but found the loss ratio to be the same as for the glued units.

Similarly, the mountable curb pylons are often damaged on impact, but their replacement rate is 10 to 15 percent per year, which is less than for adhesive-mounted pylons. Because the mountable curb pylons have a much better success rate in this area, there would be fewer replacement and maintenance concerns. For both types, the plastic pylons tend to turn black in color from the tires of vehicles that strike them. The cost of the traditional pylons is approximately $60 per unit. Therefore, depending on spacing and frequency of replacement, both the capital and maintenance costs are high for tubular barriers. Moreover, retractable pylons require considerable maintenance to remove debris and provide for their operability. As with other systems they require replacement after a number of hits at a slightly greater cost (due to their design).

Snow removal is also an issue in many locations and presents two problems when pylons are used. As the snow is plowed, it is pushed into the adjacent lane because of the lack of a physical barrier. This means that the adjacent lane is not properly cleared. Also, snow removal equipment often damages pylons, either by plowing snow onto the posts or by hitting them.

Continuous Barriers
Continuous concrete barriers, such as Jersey barriers or movable barrier Systems, are a more permanent and durable type of barrier and have been used for separation on a number of managed lane facilities around the country (Figure 12). They are also preferable from enforcement and traffic service perspectives as they prevent unauthorized vehicles from entering the managed lanes. In addition, they provide enhanced safety and are essential if reversible flow operations are being contemplated.

Figure 12.
Concrete barrier on I-394 reversible lanes, Minneapolis

This photograph shows the concrete barriers used to separate the reversible-flow, median-based HOV lanes from the general purpose lanes on the I-394 in Minneapolis, Minnesota.

On the negative side, the presence of continuous barriers is likely to increase response time for emergency vehicles and may hinder emergency response operations in the HOT lane. Concrete barriers can also complicate snow removal, unless sufficient storage reservoirs are provided in the shoulder. Exposed barrier ends at access points should also be buffered to protect motorists.

The installation of concrete barriers usually requires roadway modifications, as ample shoulders are needed. Based on AASHTO standards, a minimum four-foot shoulder is required between the HOT lane and the barrier, while a 10 foot shoulder is preferred between the general-purpose lane and the barrier.13 Including the barrier itself, a total width of 18 feet (12’ lane width + 4’ shoulder + 2’ barrier) is recommended between a barrier-separated HOT lane and the adjacent general-purpose lanes. Figure 12 shows the concrete barriers separating HOT lanes on I-394 in Minnesota, together with the associated striping and shoulders. Because of their right-of-way requirements, continuous concrete barriers are more costly to build than other separation options. However, maintenance costs are low in comparison.


Access to a HOT lane facility, and the extent to which it is controlled, is a fundamental issue in designing and operating any HOT lane project. There are important cost, operational, safety and enforcement trade offs associated with the different levels of access control. As described below, there are two general approaches to providing access to managed lanes: restricted at-grade access, and grade-separated access.

Restricted At-grade Access
Restricted at-grade access to either striped or barrier separated HOT lanes is provided by slip ramps leading to openings in the barriers or stripes. The slip ramps provide acceleration and deceleration space for vehicles moving in or out of the HOT lanes which can be used together with barrier openings to provide acceleration/deceleration lanes in the merge area. Slip ramps, or some variation thereof, currently provide access to many HOV managed lane and general highway facilities around the United States, such as the HOV lanes in Los Angeles and Orange County, California, shown in Figures 13 and 14. I-5 provides an HOV lane in each direction and restricts access across a four-foot buffer area. The I-405 provides one HOV lane in each direction and access is similarly limited to breaks in that buffer.

Figure 13.
I-15 HOV lanes with slip ramp, Orange County, California

This photograph shows a slip ramp leading to the I-15 HOV lanes in Orange County, California.

Figure 14.
I-405 slip ramp and at-grade access, Orange County, California

This photograph shows an at-grade slip ramp leading to an HOV lane on the I-405 in Orange County, California.This photograph shows an elevated drop ramp providing egress from a barrier separated, median-based HOV lane facility.

Acceleration/deceleration lanes are provided in the example in Figure 14. The locations of the barrier openings and slip ramps needs to be closely coordinated with highway entrance and exit ramps and allow adequate room for motorists to complete weaving movements when moving between the general-purpose and HOT lanes and an entrance or exit ramp. Caltrans recommends a buffer/barrier opening of at least 1300 feet, and a weaving distance of at least 1,000 feet per lane between the upstream and downstream ramps and the opening.14 For planning purposes a buffer opening of 1500 feet with a weaving distance of 1000’ per lane between the ramps and opening may be used. When determining the locations of slip ramps, local topography, lines of sight, and operating characteristics of adjacent lanes need to be taken into consideration.

Restricted at-grade access to a striped or barrier-separated HOT lane is a cost effective approach to providing controlled access to the HOT lane facility. Together, slip ramps and barrier/striping openings control access and egress to and from the managed lane, minimize traffic service impacts in the managed lane, and control weaving movements on the parallel highway. While they limit the need for expensive ramp structures, slip ramps require additional pavement area, and can require modifications to existing bridges and sign structures. Because access is limited to certain locations upstream and downstream of interchange ramps, there is the potential for bottlenecks to form near access points. As a result, in areas of heavy weaving between the HOT lanes and interchange ramps, where multi-lane HOT treatments are envisioned, grade-separated access may be desirable based on traffic engineering analysis of the demand and roadway geometric.

Grade-Separated Access
Conventional wisdom in highway engineering holds that the greatest efficiency, safety, and capacity are achieved when conflicting movements are grade separated. Grade-separated access for HOT lanes greatly reduces weaving and merging movements for vehicles entering or exiting a facility. In addition, the ramps provide acceleration and deceleration areas, which allow high-speed merges and diverges. Grade-separated options include median drop ramps from overpasses or direct freeway-to-freeway connections, such as those shown in Figures 15 and 16. Layouts for these examples and others can be found in the aforementioned HOV guides.

Figure 15.
Elevated HOV drop ramp

This photograph shows an elevated drop ramp providing egress from a barrier separated, median-based HOV lane facility.

Figure 16.
Grade separated HOV to highway flyover ramps

This photograph shows grade separated flyover ramps leading from an HOV facility to a nearby highway.

Access and egress to and from HOT lanes should be designed to minimize conflicts with mainline general-purpose traffic. As with other highway facilities, HOT access and egress ramps should meet AASHTO design standards.

Accurate, informative signs are essential in explaining operational procedures of HOT lane facilities and ensuring safe access and egress from the managed lanes. HOT lane signs should provide motorists with information on:

In addition, motorists need to be given adequate time to decide whether or not to use the HOT facility, and then be able to access the facility safely. This requires that the proper information be provided so that motorists are able to make informed, real-time decisions whether or not to use the facility.

General information, such as the address and telephone number of the customer service center and website should also be conveyed (Figure 17).

Figure 17.
SR 91 signage

This photograph shows signage used to direct motorists to the SR 91 Express Lanes in Orange County, California.

Signage for HOT lanes should generally adhere to the standards prescribed for HOV facilities in the Federal Manual on Uniform Traffic Control Devices (MUTCD) Section 2B-49 and 50.

Access and Egress Signage
Good signage is critical in directing motorists to access and egress locations on barrier-separated facilities. In order to access interchanges, the corresponding buffer opening must be placed several thousand feet upstream of the exit ramp. Drivers need to be directed to the buffer openings providing access to their desired interchange. Figure 18 illustrates the sequence of signs that lead a HOT lane driver from the facility to a general-purpose lane exit. In this particular case, the driver would merge on to the general-purpose lanes at an opening two miles upstream of the Montrose Road interchange. The driver would then merge towards the desired exit ramp, following signs on the general-purpose lane located approximately one mile north of the Montrose Road exit ramps. The locations of the appropriate buffer openings for each interchange must be communicated clearly to HOT lane users.

Figure 18.
Buffer location signing

This diagram depicts signage that would direct HOT lane traffic to a buffer location where they would merge into general purpose lanes and then exit the highway facility.

This diagram depicts signage that would direct HOT lane traffic to a buffer location where they would merge into general purpose lanes and then exit the highway facility.

Tolling Signage
HOT lane signage systems must also provide motorists with information on toll levels. Good signage is particularly important when variable tolls are involved. These can involve either time-of-day tolls or a dynamic pricing system that changes price according to the level of congestion in the parallel general-purpose lanes and the availability of excess capacity on the managed lane(s).

When this is the case, variable message signs (VMS) are the best way to provide motorists with accurate and current information. Variable message signs can also provide motorists with other information, such as general travel conditions, and enforcement polities.15 When variable or dynamic pricing is used, at least one and preferably two, variable message signs should be placed before all entrance points to the HOT lane in order to provide drivers with the basic information they need in order to determine whether or not they will use the HOT lane. These signs operate in parallel and are usually controlled from an operations or traffic control center. Variable message signs are currently used on the SR 91 Express Lanes and on the on I-15 in San Diego (Figure 19).

Figure 19.
I-15 variable message sign

This photograph shows a variable message sign used to conveying the real-time information on toll levels on the I-15 FasTrak in San Diego, California.

Enforcement Areas

HOT facilities should also include locations from which enforcement agencies can monitor traffic and identify any unauthorized vehicles. In order to see occupants properly during the hours of darkness or inclement weather, lighting is required at the observation points for officers. The enforcement areas should be large enough to accommodate the need to accelerate to the speed limit before entering traffic to stop a violator. They should be wide enough to accommodate safe enforcement action and may be located near tolling points, allowing officers to monitor traffic as it enters the facility and provide a visual deterrent to would be offenders (Figure 20). Barrier-separated facilities will require less enforcement presence than would be required for a roadway that is not physically separated. The primary reason that facilities for on site enforcement are recommended near the access points is that current technologies – both video and thermal – cannot accurately discern the number of occupants in large numbers of vehicles traveling at highway speeds. Moreover, the presence of an officer is a useful deterrent for misuse by those who want to abuse the system. Enforcement issues are addressed in further detail in Section 6.3.

Figure 20.
I-15 police car

This photograph shows a police car in an enforcement area near the entrance to the I-15 FasTrak in San Diego, California.


HOT lanes involve significant technology components that often far exceed those of general-purpose highway expansions. They require fully automated electronic toll collection (ETC) systems and some also include real-time traffic surveillance and variably priced electronic toll collection systems. These sophisticated systems allow tolls to be collected in an efficient matter, enable real-time toll pricing, maintain premium travel conditions on the HOT lanes, and communicate cost and travel information to motorists.

The following sections provide information on the various technical systems needed for HOT lane projects.

Electronic Toll Collection

Each of the three operating HOT lane facilities in the United States and over 250 other tolled facilities across the country utilize electronic toll collection (ETC). ETC enables motorists to pay tolls without cash transactions at a tollbooth and enter and exit toll facilities at normal highway speeds.

ETC systems rely on a number of individual components each of which are linked to a lane controller (a micro processor) that controls and coordinates their activities. The following components are needed.

The Lane Controller
The lane controller coordinates the activities of all equipment in a single lane and generates the transactions assigned to individual customers. The lane controller also stores a list of valid tags so it can validate the information from the AVI. A larger plaza (local) computer collects transaction information from the lane controllers at each toll collection point and then communicates it to an Agency Central Host Computer. The latter collects and consolidates information from all toll collection points in the system, transmits the list of valid tags to each lane controller for AVI validation, and prepares audit reports from each tolling point.

Generally there is one lane controller for each travel lane. These, in turn, are linked with a central host computer. Depending on the data transmission requirements, linkages are generally provided by leased T-1 telephone lines or a fiber optic system. The lane controller is capable of receiving messages and control signals, transmitting messages and generating and sending appropriate control signals to effectively interface with a central computer and the lane subsystems.

The lane controller must contain sufficient memory to store the toll tables, staff ID information and all the AVI/ETC lists of valid and invalid transponders sent to the lane from the central computer. The lane controller also performs equipment status checks as part of the normal processing of transactions, with alarm failures reported to the operator.

In the event of a communications failure with the central computer, the lane controller should generally be capable of storing transaction data for a minimum of thirty days. The lane controller should also be able to operate in a stand-alone mode for the same period of time.

Automatic Vehicle Identification Systems
Automatic Vehicle Identification (AVI) technology features a radio frequency device called a transponder, located in the vehicle that transmits a unique identity to an antenna located on a gantry above each lane to be tolled. The antenna is linked by coaxial cable to a reader located in an adjacent roadside cabinet. The reader interprets the information received from the transponder devices and sends it to the lane controller, which determines if the vehicle is carrying a valid transponder, verifies the vehicle classification, and generates the appropriate toll transaction.

Automatic Vehicle Classification Systems
Automatic Vehicle Classification (AVC) sensors are located at the tolling point and verify the vehicle’s classification so that the proper toll can be charged. Classification is typically based on the vehicle’s profile and number of axles. If there is a discrepancy between the observed classification and that recorded on the transponder, then the matter is sorted out according to established protocols, or sent to a violations processing center for further action.

AVC systems can include any or all of the following components:

Detector loops and loop detector amplifiers are imbedded in the pavement and used to detect and classify the type of vehicles passing over them. The loops are linked to the lane controller and can be used individually to count traffic, to trigger the violation enforcement cameras or in tandem to measure vehicle speeds.

Infrared light curtains are installed in pairs to sense the separation between two vehicles passing through a lane, as well as height depending on the number of beams deployed. The information passed on to the lane controller is used in conjunction with the loop detectors to support the correct grouping of axles and to identify large trucks or vehicles pulling trailers. When used in conjunction with radar, a vehicle can be tracked through the toll transaction, its speed registered and a profile developed in concert with an infrared curtain or overhead/sign scanner/separator.

Treadles are a pressure sensitive devices inserted in the pavement designed for directional counting of vehicle axles passing over them. Each treadle operates with a treadle interface board mounted inside the lane controller. The treadle consists of two pieces, a frame and a body with removable bars or stripes (sensors). These sensors are used as inputs to the lane controller via the input board to provide information on axle count and vehicle direction of travel, depending on the order in which the stripes are hit.

Vehicle separators/profilers can be located on a gantry or at the side of a lane. They perform functions similar to the light curtains. The class of vehicles is determined based on the profile of the passing vehicle.

Video Enforcement Systems
Video enforcement systems are used to capture rear and/or front images of all vehicles that do not carry a valid transponder, as well as those with an observed discrepancy between the classification of tag and the vehicle in which it is located. Video enforcement equipment includes a controller computer, an interface to the lane controller, camera(s) mounted on the gantry above each lane, and high intensity lighting. High-resolution cameras with automatic aperture settings and field of view are used to capture images of the rear and/or front of the vehicle.

ETC Issues
There are variations on typical ETC system configurations. In New York and New Jersey, for example, the recently implemented Regional Consortium system on the New Jersey Turnpike, utilizes a Type 2 Read/Write Tag that stores toll information. Upon entering the Turnpike, data on the point of entry and time is written to the tag. The system reads the tag upon exiting and computes and deducts the toll from the customer’s account.

As electronic toll collection and other intelligent transportation technologies continue to emerge, new technologies may come to play a role in the enforcement of variable pricing in the future. However, until technologies such as thermal or video imaging are refined and can determine vehicle occupancies accurately, ETC will remain the most effective and accurate means of collecting tolls, and visual enforcement will be the most fool proof.

System integration is a complicated process. Most agencies hire specialists either to integrate the technology into their existing toll environment or develop a new toll system.

Detection Equipment Options

Typically, the antennas are mounted overhead on a sign gantry, existing overpass (bridges), or on dedicated gantries. On some variable pricing facilities, such as the 407 in Toronto, SR 91 in Orange County, California, and I-15 in San Diego, overhead gantries support the AVI antennas at various intervals along the roadway.

Alternatively, side-mounted antennas are available but not commonly used for tolling purpose. One advantage to side mounted antennas is that they are easier to access for maintenance or repair than overhead or in-pavement detectors. The single biggest disadvantage is that side-mounted antennas are prone to cross reads i.e. reading tags in vehicles that may be in adjacent general-purpose lanes.

In-pavement detectors have been used in some areas, most commonly in warm climates. This approach is often problematic in that it can require comparatively long lane closures during installation and repair. In-pavement detectors also require that transponder tags be mounted below vehicles or on the front license plate. This type of installation is difficult for vehicle owners and could force them to seek professional assistance. This level of inconvenience is not prudent if market penetration is sought. In addition, with plate mounted transponders are more likely to be stolen or damaged, and they cannot be easily transferred from one vehicle to another.

Given these placement factors, it is recommended that detection equipment be placed overhead and, where feasible, be mounted on existing structures. However, the structure must be substantial enough to exhibit minimal movement under design wind loads. This requirement is due to the sensitivity of VES cameras, lighting and the AVI antenna. A typical installation for single lane HOT would require two (2) antennas (one over the 10-12’ lane and another over the shoulder (if greater than 4’ in width), and two (2) VES cameras and high intensity lights (a set) - with one set for rear plate capture and another for front plate coverage.

ITS Technology

Free flow travel and more reliable travel times are essential to the success of HOT lane projects. HOT lanes utilize ITS technologies to monitor travel conditions, and communicate information to motorists. In certain cases travel conditions are also used to establish real-time variably priced tolls. The following ITS components are likely to be needed for most HOT lane applications:

Variable Message Sign (VMS)
The VMS can be located on the gantry at the pay point to provide direction to patrons or upstream of the HOT lane access points to convey the variable toll rate, operating regulations, and information on travel conditions. The VMS includes the controller and associated equipment, sign attachment hardware and control cabling from the lane controller to the sign.

Lane Use Signal (LUS)
The LUS would become necessary on a facility if more than one lane is used for its operation thereby properly identifying the appropriate lane to use for various hours of the day or during peak periods. One LUS would be located above each lane attached to the gantry at the payment location. Each LUS has a one-way, one-section head. The signal is capable of displaying two messages, a red ”X” and a green down arrow. The signal consists of a data interface to the lane controller.

Closed Circuit Television (CCTV) System
A CCTV video monitoring and security system can provide continuous monitoring of traffic operation along the length of a facility. In addition, it can be used to monitor areas where money and/or tags are handled, as well as building entry doors and storage areas. Video and loop detectors placed along the roadway can be used to monitor corridor-wide operations, identify incidents, dispatch a response team, and monitor the incident through recovery.

Traffic Volume and Speed Monitoring Subsystem
This subsystem was discussed above as part of the use of loop, radar or video detectors in the Vehicle Classification System and/or CCTV sections.

Other ITS tools such as overhead and side firing radar/microwave, speed/volume detectors such as Remote Traffic Microwave Sensor and travel advisory radio can also play an important role in managing the operation of variably priced HOT facilities.

Since free flow travel and reliable travel times are essential to the success of HOT lane projects, ITS technologies allow HOT lane operators to quickly identify, respond and monitor incident recovery; providing variable messages on the road for changing conditions; and using advisory radio to inform drivers about changing conditions.

Travel Demand Forecasting, Pricing, and Financing

In any feasibility assessment of a proposed HOT facility, travel demand forecasts, possible pricing structures, and financing strategies all play a role and are closely interrelated. This section discusses how these processes overlap and highlights those aspects that are unique to HOT lanes.
HOT lane initiatives share some aspects of both toll road and HOV lane initiatives. As managed lanes, they provide priority treatment for high-occupancy vehicles and, as tolled facilities, they provide premium service for paying motorists. One of the unique aspects of HOT lane planning is that demand levels for the managed lanes must be forecasted for both HOV and SOV buy-in vehicles under a variety of pricing and occupancy requirement regimens. This exercise serves a dual purpose.

While planning for other kinds of transportation improvements may use these technical analyses independently, in planning for and assessing HOT lane proposals, the relationship between the cost of access to the HOT facility and its utilization levels is key. HOT lane user fees may vary in real time based on travel congestion in the parallel general-purpose lanes. Determining the elasticity of demand for the HOT lane involves analysis of:

In most locations, there is limited empirical data that can be used to assess these relationships, forcing modelers to utilize behavioral and attitudinal surveys, as well as historic data from existing HOT lane facilities, such as the SR 91 and I-15.

Travel Demand Forecasting for HOT Lane Projects

Travel demand models are mathematical tools that are used to forecast roadway and transit travel based on projected population levels, land use trends and expected roadway and transit characteristics such as cost and travel time. Based on a traditional four-step model, the process involves the creation of travel demand or “trip tables” which identify the demand for mobility between different origin and destination pairs and then an assignment model which distributes those trips on to the travel network by mode based on the location, capacity and travel characteristics of its different components. Models vary in their size and complexity. Complex multi-modal models often involve a collection of sub-models each addressing specific modes or types of trips.

Travel demand models can be adapted to assess HOT lane projects with toll strategies that vary with the time of day and vehicle occupancy. Estimating traffic demand for a HOT lane facility must address both the general demand for mobility as well as the willingness of motorists to pay for improved travel conditions.

In addition, HOT lanes are often implemented in concert with, or in addition to, HOV facilities. If this is the case HOV behavior must also be considered when preparing HOT travel demand forecasts. Demand for an HOV facility – either involving the introduction of new lane(s) on an existing facility, or the conversion of an existing general-purpose lane(s) – is typically estimated based upon the time savings the facility would afford. There are a number of readily available sketch planning tools, such as FHWA’s HOV Demand Estimation Model, that are used to prepare conceptual estimates for HOV facilities. These models, discussed further in Section 5.4.2, can also be enhanced to assess the effects of the costs and travel time savings issues associated with potential HOT lane projects.

At a minimum, demand assessments must consider the HOT lane travel time differential to estimate the value of time savings afforded by the HOT lane, as it is likely that motorists will chose the HOT lane if the time savings value exceeds the out-of-pocket cost required to achieve the savings.

Deciding to use a HOT lane

The decision whether or not to use a HOT lane is based largely on the value of time. The literature related to the value of travel time is extensive, and there are many “rules of thumb” that have evolved from this literature. The most common approach is to value travel time at some percentage of area-specific average wage rates. Work trips may be valued at close to the full rate, while off-peak non-work trips are valued at less.

The accuracy of this is difficult to validate. Moreover, the value of any individual’s time will vary by that person’s income (higher income individuals will “value” time more highly than low income travelers), and the average wage rate fails to reflect this. In addition, the value of time for specific individuals may change depending on the situation at hand – whether one is late for a commitment or making a discretionary trip. Similarly, some motorists may choose the HOT lane even if the time savings fall short of the out-of-pocket cost because the HOT travel time is predictable, while that associated with the free alternative is not. For example, experience on the SR 91 in Orange County has shown that lower income wage earners whose job security requires timely arrival at work may be likely to utilize the HOT lane rather than risk delays on the general-purpose lanes that could lead to tardiness affecting their job security.

The best approach for valuing HOT lane travel time savings is through stated preference surveys.

The array of factors affecting travel demand for HOT lanes is provided below in Table 4.

Behavioral Surveys
Given the limited experience with HOT lanes in most locations, additional stated and/or revealed preference survey research may be required to refine model assumptions, particularly those related to value of time, toll elasticities of demand, and cost trade-off decisions – all of which affect mode and route choices.

When demand estimation methods at a “sketch planning” level are employed, it may still be advisable to conduct survey market research through mail-back surveys, intercept and interview techniques, focus groups, etc. to learn more about the travel patterns, demographics, willingness to pay, and other decision trade-off factors of travelers. “Stated preference” survey questions posing particular choices with various out-of-pocket and time costs associated with them can help clarify the conditions for which various groups of travelers would choose to use the HOT lane facility, including estimating various toll elasticities of demand. Ultimately the objective is to determine the market share of existing and potential travel that could be captured under various HOT lane pricing schemes.

Table 4.
HOT Lane Demand Factors

Categories Demand Factors
Price of HOT lane Service

Toll or out-of-pocket cost

Pricing structure as a function of time of day, vehicle occupancy, prevailing traffic levels on alternative facilities, etc. – affects usage decisions including mode choice / carpooling attractiveness

HOT lane travel time cost (value of time _ travel time, summed across vehicle occupants)

HOT lane route vehicle operating cost perceived by user

“Membership cost” – the out of pocket, inconvenience, and/or opportunity cost of making the user eligible to use the facility (includes AVI tags for electronic tolling, account deposit, setup fees, etc.)

Cost of Alternative “Free” Service

Expected congestion time cost of using a parallel or alternate “free” route as perceived by the user (value of time _ travel time, summed across vehicle occupants)

Additional time cost associated with the congestion-related uncertainty of using a parallel free facility (inconvenience and frustration arising from the variation between the expected travel time before use and the actual “true” travel time after use)

Free route vehicle operating cost perceived by user

Travel Characteristics

Trip purpose – affects value of time, and thus willingness to pay out of pocket costs

Vehicle occupancy – affects willingness to pay via the net time savings value for the vehicle, and may impact the HOT lane price for the vehicle

Trip frequency – may affect willingness to buy into the HOT lane concept (obtain an account and AVI equipment or becoming a HOT lane “member”)

User Characteristics

Risk profile of users (risk averse / risk neutral / risk receptive) – relates to willingness to pay for travel time reliability

Disposable income and other demographic user characteristics – affects value of time and risk aversion in both predictable and unpredictable ways

Regardless of whether sophisticated modeling methods or sketch planning techniques are used, it is not possible to model the full variation of behavior encountered among travelers, particularly with the many elements of uncertainty that exist, and incomplete information at the time travel decisions are made. This suggests that any HOT lane demand forecasts should be presented as a range of volumes over a specified time interval (i.e., per peak hour, peak period, weekday, year) rather than absolute volumes.

HOT Lane Pricing and Travel Demand

As with any user fee-based transportation system, toll rates have a direct effect on the demand for a HOT lane facility. The precise effect of pricing strategies differs from setting to setting and is governed by issues such as trip purpose, income levels, and congestion levels on parallel routes. An effective pricing strategy is used in concert with vehicle-occupancy requirements for HOVs to manage demand on the HOT lanes to ensure that adequate residual capacity is retained in order to maintain premium travel conditions on the managed lanes. This is achieved by charging a premium for utilizing the HOT lanes during peak demand periods – determined either by time-of-day, as with the SR 91, or, as with the I-15, on a real-time basis based on congestion levels on the parallel lanes.

Pricing hierarchies can be calibrated once facilities become operational in order to achieve the desired result. However, when projects are still in the planning stage these effects can only be modeled. The studies associated with the State Route 14 in Los Angeles County, California illustrate the dynamics involved in different pricing and operating scenarios.16 The following pricing and operational strategies were considered:

Table 5 shows how the different scenarios affected the demand in the peak direction at one particular location.

Table 5.
Sample HOT Demand Levels

Alternative Vehicular Demand on SR 14 HOT lanes in the AM Peak Period between Escondido Canyon Road and Crown Valley Road
HOT2+ $0.10/mile

2233 (1179 toll, 1054 free)

HOT3+ $0.10/mile

2101 (1730 toll, 372 free)

HOT2+ $0.20/mile

1731 (520 toll, 1211 free)

The SR 14 study showed that with a two-person HOV occupancy requirement there was a fairly even split between tolled vehicles and free vehicles on the HOT lanes. When the occupancy restriction was increased to HOV3, there was a drop in the overall demand for the HOT lane of about 10 percent, and a marked increase in the number of tolled vehicles using the facility, as fewer vehicles were eligible to use the HOT lane at no cost. When the occupancy restriction was kept at HOV2 and the SOV toll was increased to $0.20, there was a 22 percent decrease in the overall demand for the HOT lane due to a marked decrease in the number of tolled vehicles, as the cost of the trip exceeded the expected benefit for many of the SOV drivers.

Although they differed somewhat, the results of the SR 14 model showed similar demand trends at other locations along the corridor. This level of variance suggests that at the planning stage forecasts should include sensitivity analysis to show the likely range in revenue and utilization figures in order for planners to make prudent assumptions, particularly when financing relies on projected revenues and the potential profitability of the HOT lanes.

A Sketch Planning Methodology for Estimating HOT Lane Revenue

This section provides a sketch planning methodology which can be useful in preparing revenue forecasts that typically play a critical role in initial feasibility assessments of HOT lanes and other surface transportation investments. This approach is less rigorous than a full-fledged “investment-grade” revenue forecast but can still provide helpful information to decision makers. Figure 21 provides a conceptual sketch planning methodology to estimate HOT lane traffic and revenues which may be adapted by agencies or their consultants.

Figure 21.
HOT Lane Revenue Estimate: Sketch Planning Process

This flow diagram outlines the steps involved in a sketch planning process to estimate HOT lane revenues.

The sketch planning model incorporates various situations that may face the analyst, for example:

The methodology presented in Figure 21 mirrors the actual operation of a HOT lane and the pricing regime that might be in place. First, peak traffic on the general-purpose lane is measured, and LOS determined. Utilizing this information, peak period congestion delays can be estimated, and the cost of those delays quantified based on hourly values of travel time. Then, based on the available capacity in the HOV lane (after “free” HOV vehicles are accounted for), SOV users are “shifted” to the HOT lane, just up to the point where free flow conditions can be maintained in the HOT lane. The HOT lane toll is modeled based on the degree of congestion in the general-purpose lane, and the cost of that congestion to SOV users. HOT lane revenues are then estimated after accounting for market penetration of electronic toll collection accounts.

In a more complex, but perhaps more realistic version of this, HOT lane tolls are repeatedly set to reflect the income distribution of SOV drivers in the general-purpose lane. Those SOV users at the top of the income distribution – who place the highest value on time – are shifted first, and a test is made to determine whether there is any remaining capacity in the HOT lane. This iterative process is repeated, and tolls set progressively downward, until an equilibrium condition in the HOT lane is reached. This process determines an “optimal toll” – a process that mirrors a real world dynamic tolling process.

Although there are a number of cases of under-estimates, experience around the country with toll roads and transit systems indicates that demand projections and revenue forecasts are more likely to err on the high side. Overestimates of revenue potential can result in unexpected public expenditures or even project default. Therefore, it is preferable to build-in conservative assumptions regarding travel demand characteristics and the underlying economic conditions that drive travel demand forecasts. Such assumptions are questioned as a matter of course in the due diligence reviews that private lenders require when they finance infrastructure projects. Similarly rating agencies focus closely on forecasting assumptions when rating project bonds. However, there may be a particular risk of overestimating utilization and revenue levels when these types of financing mechanisms are not being used.

Financing HOT Lane Project

Potential Sources of HOT Lane Financing
There are many different strategies that may be pursued to finance HOT lane projects. All projects are unique in this regard and there is no single approach that will be universally appropriate. The SR 91 in California was financed on a limited recourse basis with a private developer borrowing the necessary funds from capital market sources and is repaying its debt from toll revenues. Sponsored by the local MPO, the I-15 in San Diego involved the conversion of an existing HOV facility. The HOV lanes had initially been constructed using transit monies and local transit providers supported the HOT conversion because the MPO agreed to dedicate the majority of the resulting toll revenues to support local transit improvements. Funding for the conversion of the facility was provided by the FHWA Value Pricing Pilot Program. Table 6 summarizes financial details associated with these two facilities. Additional information on the financing approaches for these particular projects, among others, is provided together with background and context information in Chapter 7.

Table 6.
Financial Details of the SR 91 and I-15

SR 91 Express Lanes

Orange County, California)


A four-lane, privately-owned and operated toll facility built in the median of a 16 km section of the 91 Riverside Freeway, a pre-existing Caltrans facility. Entry and exit are restricted to the facility’s two endpoints.


Orange County Transportation Authority

(facility construction and ETC equipment)
$130 million
Type of Finance $65 million in 14-year variable rate bank loans
$35 million in longer term loans (24 years)
$20 million private equity
$ 9 million subordinated debt to OCTA to purchase previously-completed engineering and environmental work
Tolling Structure As of January 2, 2001, tolls on the Express Lanes varied between $0.75 and $4.75, with HOVs receiving a 50 % reduction.
I-15 FasTrack
Location San Diego, California
Description An eight-mile, preexisting two-lane HOV facility constructed in the I-15 median with FTA monies. The lanes were subsequently converted to HOT operations and provide one-way peak-period service to HOVs and paying SOV motorists: southbound in the morning and northbound in the evening. Entry and exit are restricted to the facility’s two endpoints. Carpools of two or more, buses, and motorcycles travel free, while SOVs must pay a fee. Toll revenues support transit service in the corridor.
Sponsor/Partners SANDAG
Caltrans (California Department of Transportation)
California Highway Patrol (provides enforcement)
Metropolitan Transit Development Board
Federal Highway Administration
Federal Transit Administration
Cost (ETC equipment) $9.95 million
Type of Finance $7.96 million FHWA Value pricing Pilot Program grant
$1.99 million local matching funds
$230,000 Federal Transit Administration
Tolling Structure Dynamic tolling. Generally, the toll ranges between $0.50 to $4.00, depending on current traffic conditions, however tolls may be raised up to $8.00 when traffic congestion is severe. Toll rates are adjusted every 12 minutes in response to real-time traffic volumes.

The following discussion identifies a range of possible funding sources and techniques that could be pursued for other HOT lane projects.

1. Federal Demonstration Funds
The Transportation Equity Act for the 21st Century (TEA-21) permits the U.S. Department of Transportation's FHWA to enter into cooperative agreements with up to 15 State or local governments or other public authorities to establish, maintain, and monitor value pricing projects of which HOT lanes are one category. Any value pricing project included under these local programs may involve the use of tolls on the Interstate System. A maximum of $7 million was authorized for fiscal year (FY) 1999, and $11 million for each of FYs 2000 through 2003 to be made available to carry out the requirements of the Value Pricing Pilot Program. The Federal matching share for local programs is 80 percent. Funds allocated by the Secretary to a State under this Section will remain available for obligation by the State for a period of 3 years after the last day of the fiscal year for which the funds are authorized.

2. State Funds
In locations where there are no prohibitions against using state monies to construct a toll facility, state transportation funds may be used to support construction of HOT lane facilities. State Infrastructure Banks (SIBs) are one of the most logical sources of state support for HOT lane projects.17 SIBs are revolving funds that function much like a private bank and can offer a range of loans and other credit assistance enhancements to public and private sponsors of highway or transit projects. SIBs can provide loans – at or below-market rates – loan guarantees, standby lines of credit, letters of credit, certificates of participation, debt service reserve funds, bond insurance, and other forms of non-grant assistance.

SIB support may be used to attract private, local, and additional state financial resources, leveraging a small amount of SIB assistance into a larger dollar investment. Alternatively, SIB capital can be used as collateral to borrow in the bond market or to establish a guaranteed reserve fund. Loan demand, timing of needs, and debt financing considerations are factors to be considered by states in evaluating a leveraged SIB approach.

Most SIBs were established using Federal-aid grants and local match funds as seed money. As loans or other credit assistance are repaid, a SIB's initial capital is replenished and can be used to support new projects. Therefore the resources available to many SIBs are likely to be constrained. However, as of mid-2002 additional Federal funding for SIBs in California, Florida, Missouri, Rhode Island, and Texas provide significant new resources for SIB loans and credit enhancements in those states. Among other facilities, SIB funding has been used to support the construction of the Pocahontas Parkway in Virginia and Butler Regional Highway in Ohio.

3. Local Sales Tax Initiatives
With shrinking federal and state budgets, local initiatives have been used successfully to fund transportation improvements. But a key to this type of funding mechanism is outlining what will be built with the money before the legislation goes to a vote so that citizens will know what they are getting. In the case of a HOT lane, the revenue allocation plan would also need to be spelled out before the initiative is taken to the voters so that the funds can be accounted for. People are less likely to vote to tax themselves if they feel that the money is going to go into a black hole of bureaucracy, so definition of the projects on which the money will be spent and strict accountability for the funds after they are collected is of paramount importance from the outset.

Sales taxes, while they have the potential for significant revenue generation, are also highly sensitive to economic cycles. Currently, many transportation agencies that rely extensively on this source are experiencing funding gaps, as the economy has slowed to near-recession conditions, and in response to the terrorist attacks.

Other sources of local transportation finance are also available and have been utilized; these include motor fuel taxes, motor vehicle registration taxes, commuter taxes, tax increment financing, and other forms of special assessment.

4. Bonds/Private Financing
Debt financing through the sale of bonds leveraging future toll revenues is a common approach for financing toll roads. Bond options include 1) taxable toll-revenue bonds, which are the only kind private sector sponsors can issue – private bonds were used to finance the SR 91 Express Lanes – and 2) tax-exempt toll revenue bonds issued by state toll agencies, public authorities, or special-purpose 63-20 public-benefit corporations. The fact that public agencies have access to tax-exempt financing lowers their borrowing costs as well as the revenues required to repay bond obligations. Debt service costs for private issuers is generally higher than for public agencies and are likely to require proportionally larger revenue streams to cover debt payments. Shareholder equity is also an important component of private bond financings.

5. Innovative Financing Programs
Given that they generate dedicated and independent revenue streams, HOT lanes also lend themselves well to a number of innovative finance programs established by the US Department of Transportation. The following are particularly well suited to HOT lane projects.18

Section 129 Loans
Section 129 of Title 23 U.S.C. allows Federal participation in state loans to a public or private entity supporting the construction of toll highways and other non-tolled projects with other dedicated revenue sources, such as excise taxes, sales taxes, real property taxes, motor vehicle taxes, incremental property taxes, or other beneficiary fees.

There are no Federal requirements that apply to how a state selects a public or private entity. Rather, this selection process is governed by state law, and it is the state's responsibility to ensure that the recipient uses the loan for the specified purposes. Assuming that a project meets the test for eligibility, a loan can be made at any time. The Federal-aid loan may be for any amount, provided the maximum Federal share (typically 80 percent) of the total eligible project costs is not exceeded.

States have the flexibility to negotiate interest rates and other terms of Section 129 loans and the loans can be combined with other flexible match and advanced construction programs. The President George Bush Turnpike, a toll road connecting Dallas with its expanding northern suburbs, was the first highway facility to be financed with Section 129 loans.

The Transportation Infrastructure Finance and Innovation Act (TIFIA) credit program offers three types of financial assistance that could be used to support HOT lanes:

TIFIA project sponsors may be public or private entities, including state and local governments, special purpose authorities, transportation improvement districts, and private firms or consortia. However, the overall amount of Federal credit assistance may not exceed 33 percent of total project costs. TIFIA assistance involves a competitive Federal application process. Project must meet threshold criteria to qualify, and estimated eligible costs must be at least $100 million or 50 percent of the state’s annual Federal-aid highway apportionments, whichever is less, or at least $30 million for Intelligent Transportation Systems (ITS) projects. Project must also be supported in whole or part by user charges or other non-Federal dedicated funding sources and included in the state's Transportation Plan. If individual HOT lane projects do not meet these minimum threshold criteria, they could still be eligible for TIFIA assistance if they were integrated with other larger regional improvements under a Record of Decision.

These financing and credit enhancement tools may also be combined or used in innovative ways with other more traditional funding sources.

Other Technical Analyses and Approvals

Preparing HOT Lane Cost Estimates

The estimation of HOT lane capital investment and ongoing operations and maintenance (O&M) costs during the planning stage is useful for several reasons. Reasonably accurate and detailed cost estimates are needed to complete cost effectiveness and benefit-cost (economic feasibility) analyses.

Operating Costs
HOT lane operating costs include the following areas, some of which are not typically associated with “free” or non-priced roadways, including:

Capital Costs
Capital investment costs include all of those applicable to a typical roadway facility plus those associated with toll collection, traffic monitoring and other technology applications. The cost of converting an existing HOV lane to HOT operation is mostly attached to the implementation of the technology and the space needed to provide that technology in the form of electronic toll collection equipment, manual and video enforcement, static and dynamic signage, CCTV cameras, etc.

If an HOV facility is being considered as an interim step toward future HOT lane implementation, there are really no throwaway costs in the initial construction. The HOT operation infrastructure can and should be planned for as part of the initial HOV construction and put in place so that the highway does not need to be reconstructed a second time a few years after the HOV lane is implemented. Toll facilities would not be constructed, but much of the management infrastructure (loop detectors, cameras, communications, and utilities) can be constructed early and at marginal incremental cost. These facilities can also be used to operate the HOV lanes prior to HOT conversion.

If a newly opened HOV facility is being considered for HOT lane conversion without the benefit of any earlier planning, then there can be some “throw-away costs.” Pavement may need to be reconstructed to allow conduit to be installed under the lanes or shoulder. Median barriers may need to be replaced to accept additional signage. Drainage facilities may need to be modified to address an additional barrier (if one is installed). All of these issues can be addressed ahead of time if conversion is considered from the beginning. Of course, an HOV lane that has been in operation for ten or more years has already supplied many years of use and any changes that would be made to convert it to HOT operation should not be considered “throw-away.”

At the planning stage for a HOT lane project, particularly if a detailed financial model has not yet been developed to evaluate the project, it may be necessary to annualize the constant-dollar capital cost estimates for various HOT lane and non-priced alternatives to facilitate various comparisons. This is typically done using capital recovery factors that take appropriate project financial life and discount rate assumptions into account. It is appropriate to combine annualized capital costs with annual O&M costs to arrive at a total annual cost factor. This may be useful input to assessing a business operating objective, modeling demand under such an objective involving profit or cost recovery criteria, conducting cost-effectiveness comparisons, or evaluating economic feasibility using benefit-cost analyses.

Economic Evaluation

Economic analyses of HOT lane initiatives generate important information that compares the benefits afforded by the projects with the cost of building and operating them. Economic assessments are used by decision makers to compare the benefits and overall efficacy of investment projects of all types and identify those that provide the greatest benefits. They are often required by Federal agencies before disbursing grants and are also often included in environmental impact statements and major investment studies. In that they quantify the benefits of HOT lane projects in different ways, the information generated through economic analyses is also essential to public outreach efforts and in garnering political support.
Economic analyses focus on the calculation of a number of important indicators.

Benefit-Cost Ratio
The benefit-cost ratio (BCR) gives the ratio of a project’s present value benefits to its present value costs. In addition to being the most commonly recognized measure of economic feasibility, the BCR is useful for comparing projects of different scale or financial size since it assesses economic efficiency.

For consistency reasons, it is important to clarify which items will be classified as benefits, and which as costs, regardless of whether they are negative or positive dollar amounts, since this will affect the estimation of the benefit BCR, discussed further in the next section. Typically, all direct, indirect, and mitigation costs of constructing and implementing the project, and providing for its ongoing operations and maintenance, are labeled as costs and put in the denominator of the BCR, even if they represent cost savings relative to the basis of comparison. These cost items may include:

Other factors, whether user benefits, cost savings, eliminated costs, or even disbenefits, are labeled as benefits and flow to the numerator of the BCR. Typical HOT lane benefits may include, but are not limited to:

Evaluation Tools and Economic Feasibility Measures

Several available sketch planning and modeling tools may be tailored for evaluating HOT projects. The FHWA has developed several software packages, listed below, to help provide decision makers with useful information for comparing alternative transportation solutions. Regardless of the tool employed, reasonable results are dependent on using reasonable assumptions and relevant measures for quantifying and valuing benefits and costs. When using a software package, it is particularly important to understand and review the assumptions made within the software to ensure that they are appropriate for the project.

  • Sketch Planning Analysis Spreadsheet Model (SPASM) is a corridor sketch planning tool that shows economic efficiency information for cross-modal and demand management strategies. See http://www.fhwa.dot.gov/steam/spasm.htm
  • For more detailed corridor analysis and to facilitate systemwide analysis, the Surface Transportation Efficiency Analysis Model (STEAM) reports mobility and safety benefits by user-defined districts and an accessibility measure. The district reporting and accessibility features help to gauge the social impacts of transportation investments. http://www.fhwa.dot.gov/steam/index.htm
  • FHWA's Spreadsheet Model for Induced Travel Estimation (SMITE) accounts for new travel that may be induced by highway expansion over and above that which is simply diverted from other regional highways.
  • IMPACTS is a series of spreadsheets for screening-level evaluation of multi-modal corridor alternatives. Inputs are travel demand estimates by mode for each alternative. The impacts estimated include costs of implementation, induced travel demand, benefits including trip time and out-of-pocket cost changes such as fares, parking fees and tolls, other highway user costs such as accident costs, revenue transfers due to tolls, fares or parking fees, changes in fuel consumption and changes in emissions. http://www.fhwa.dot.gov/steam/impacts.htm

Net Present Value
The net present value criterion (NPV) gives the net benefit of a project in absolute present dollar terms. HOT project ‘A’ could have a higher NPV and yet a lower BCR than project ‘B’ if project ‘A’ is a larger scale project; however, in this example, project ‘B’ would be more cost-effective, generating more benefit for each dollar of cost.

Economic Rate of Return
The economic rate of return (ERR) sometimes referred to as the internal rate of return, gives the effective discount rate for which the project’s benefits would just equal its costs, in present value terms. In other words, it is the discount rate that yields a BCR of 1.0. An ERR significantly greater than the real discount rate indicates economic feasibility even with a modest margin of error in measurement of benefits and costs.

Environmental Approvals

Discretionary federal actions generally require review under the National Environmental Policy Act (NEPA). In completing these reviews, the lead agency evaluates the proposed action to determine whether it is included in a list of actions that have been predetermined not to result in significant environmental effects and may be categorically excluded from environmental review. Actions categorically excluded by FHWA are identified in 23 CFR Part 771.117. Part 771 specifically excludes "modernization of a highway by resurfacing, restoration, rehabilitation, reconstruction, adding shoulders, or adding auxiliary lanes (e.g., parking, weaving, turning, climbing)" from environmental review. Certain HOT lane projects could potentially fall under this exclusion, depending on the extent of new construction or other components of the proposed action.

Environmental reviews for HOT lane projects will include the same component analyses as other highway projects. However, unlike general-purpose highway improvements, HOT lane initiatives utilize occupancy requirements and user fees as tools to manage traffic flows. As such, they can be expected to have generally positive effects on the movement of traffic and traffic-driven environmental concerns, such as noise, air quality and energy consumption. In addition, given that HOT lane projects affect traffic conditions on managed and general-purpose lanes in different ways, the analysis of traffic-driven impacts will need to quantify the resulting impacts separately, and then assess the collective effects on the environment.

In the case of HOV conversions, different environmental scenarios can be envisioned. If occupancy requirements for free travel in the HOT lane facility remain the same as for the HOV lanes they replace, traffic service and travel speeds should improve on the HOT lane corridor. These changes would result in positive environmental affects and would not require detailed assessment. However, an increase in the occupancy requirement for free travel in the HOT lane could warrant environmental analysis, as it would have the potential to induce additional general-purpose lane trips, resulting in increased congestion and lower travel speeds.

Finally, it is important to recognize that prolonged environmental reviews have the potential to delay the implementation of highway projects, and increase their capital costs as a result of inflation during the ensuing period. Transportation officials should weigh the potential for such delays carefully, especially when considering developing HOT lane projects on a public-private partnership basis. Increased delay brings with it increased risk, thereby increasing financing costs. Together these factors can render an otherwise attractive investment opportunity unworkable for potential private sector partners.

Air Quality
One of the expected benefits of HOT lanes involves having more vehicles in the corridor moving at higher and more stable speeds. Generally speaking, this should result in a benefit (albeit small) in air quality, as faster moving vehicles generate less pollution. Slower, stop-and-go traffic – which would be expected with over-utilized general-purpose or HOV lanes – would produce more pollution. While air quality review may show an advantage for HOT lanes over general-purpose lanes (at least), that advantage is likely to be fairly small and may not provide a compelling argument on its own to justify the investment. However, in conjunction with other potential benefits, air quality improvements could be a factor in garnering support for HOT lane applications.

Unlike air quality, traffic-induced noise levels increase with speed. Depending on the location of the HOT lane – whether it is in the median of an existing highway, a separate alignment adjacent to the highway, or a former rail alignment, for example – and its effect on speeds, the resulting noise levels could be reduced, increased, or remain about the same. Construction of new lanes to the outside of existing lanes also could result in increased noise levels at nearby sensitive land uses. The potential for noise impacts should be assessed during the planning stage to determine the differences in the various configurations under study.

11 High Occupancy Vehicle Facilities: A Planning, Operation, and Design Manual, Parsons Brinckerhoff, 1990.

12 This is contrary to MUTCD striping requirements, which stipulate that yellow stripes should be used to separate flows in opposing directions and white stripes to separate those in the same direction.

13 AASHTO’s A Policy on Geometric Design of Highways and Streets (Chapter VIII, Freeways)

14 HOV Guidelines for Planning, Design, and Operations, Caltrans, July 1991.

15 HOT lane operators have contemplated displaying anticipated travel times savings together with toll levels in order to help motorists make the decision whether or not to use the HOT lane, but have generally decided against this, given that the actual time savings experienced by motorists could differ.

16 State Route 14 Corridor Improvement Alternatives Study, SCAG/Parsons Brinckerhoff, October 2000.

17 One of the most comprehensive sources of information on the SIB program is the FHWA State Infrastructure Bank Review, which is available on-line at http://www.fhwa.dot.gov/innovativefinance/sibreview/index.htm

18 Additional information on these innovative financing programs is available in the FHWA Innovative Finance Primer at http://www.fhwa.dot.gov/innovativefinance/ifp/index.htm; the NCHRP Innovative Finance Clearinghouse http://www.innovativefinance.org/, the FHWA Innovative Finance Website http://www.fhwa.dot.gov/innovativefinance/, and the TIFIA program Website http://tifia.fhwa.dot.gov/ .

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