How Will Congestion Pricing Impact L.A.?

Los Angeles is the latest city to consider congestion pricing to combat the traffic issues. While the idea is controversial, the fee could have the potential to increase land values that are currently burdened by congestion, according to Michael Manville, associate professor of urban planning at UCLA’s Luskin School of Public Affairs. Manville recently published research analyzing the impacts of congestion pricing.

“The general consensus about congestion pricing is that congestion is usually worst around the most valuable land, like dense urban areas where people are converging at peak times,” Manville tells GlobeSt.com. “That is a dis-amenity; it makes being there less desirable than it otherwise would be. You see that central areas of metropolitan regions are the most desirable areas of those regions are artificially devalued by the fact that we leave our roads free. If you were to price those roads and make them work better, that dis-amenity would no longer be capitalized into the land value, and you would see those sites become more valuable.”

Several cities have adopted congestion pricing models. New York recently adopted congestion pricing, and now Los Angeles is in the early stages of adoption. Increasing traffic has been the catalyst for congestion pricing, but cities are also looking at new ways to generate revenue. “Congestion is hard to measure, but it is reasonable to say that it is as bad as it has ever been in many of these metro areas. You can probably make a case that it is the worst that it has ever been,” says Manville. “I think that there is the realization in some corners of the transportation policy world that traditional approaches to reducing congestion won’t work. The other aspect is that a lot of metros need money and the normal go-tos for more revenue are tapped out. That was the impetus in Los Angeles and New York. Those two things have converged to make more and more cities think about congestion pricing.”

So far, Los Angeles is in the early stages of adoption, and it is too early to tell how the real estate community will respond. As of yet, they have not played a big role in the decision. “A lot of the business community in New York was in favor of this. Certainly, you have some firms that are very invested in congestion pricing,” says Manville. “In terms of the real estate industry, they have not played a large role, and that makes sense because we are certainly in preliminary stages of discussion.”

In some ways, however, Manville says that there may be benefits to businesses. “Almost anywhere a business locates, it is thinking about access to labor. Depending on where and how congestion pricing is implemented, you might see some places becoming more accessible, or what was a wildly unpredictable drive is now becoming more reliable,” he adds. “That does come at some cost to employees that choose to make that drive.”

Congestion pricing was proposed earlier this year for a district in West L.A.