Managing Transportation Demand

In years past, transportation planners would look at projections for population growth and land use changes in their communities and use that information to estimate the future demand for roads. Then they’d draw up construction plans to meet that demand.

But that approach won’t serve anymore. For one thing, Americans’ appetite for driving has far outpaced population growth: since 1980, the number of miles Americans drive each year has grown three times faster than the U.S. population. While transportation demand models can account for the additional driving, policymakers have begun to question the wisdom of reflexively meeting the demand by simply building more roads. Instead, they have looked for ways to address the problem from the demand side, for a number of reasons.

For one thing, simply building more and more new roads is expensive. Inflation in the construction industry has been steeper over the years than inflation in the economy as a whole, thanks to increased demand for materials like concrete and steel from rapidly growing economies such as India and China. At the same time, many towns and states are facing a maintenance backlog that is also squeezing their transportation budgets. The federal government can help with some major transportation projects, but much of the burden for road building falls on state and local governments. While state and local governments can fund roads with fuel taxes and toll revenue, when these funds are short they may look to other sources such as property taxes, and other levies on real estate such as transportation impact fees charged to new construction.

Also, in many communities there is simply not that much space to build new roads or add new lanes. True, eminent domain could be used to take needed land from private property owners, but that is politically unpopular and usually a last resort. Even if communities do find the money and the land for new roads, in many cases it doesn’t fix their problem, as new capacity is often consumed quickly through an occurrence that planners refer to as “induced demand,” for example when drivers take trips they’d otherwise forgo if the roads were crowded (see “Good Transportation Policy Must Plan for Induced Demand”).

But simply tolerating the current situation is out of the question. Congestion and delay on the roadways degrade the quality of life in our communities. Because REALTORS ® are committed to protecting and improving quality of life, we support efforts to find creative solutions to traffic congestion.

Transportation Demand Management (TDM) is the term given to programs, policies, and strategies to reduce demand for car travel in urban regions and corridors. TDM measures help bring the supply/demand relationship back into better balance, thereby reducing costs for public infrastructure and transportation service.

In practice, TDM measures fall into six broad categories: mode shift, time shift, ride sharing, virtual travel, pricing, and support measures.

Mode Shift Measures

One of the primary strategies to reduce vehicular travel, especially in peak travel periods, is to increase transit ridership. In many urban areas, it is also possible to shift vehicle trips to walking and bicycling. The potential market for transit trips tends to be in the five- to 25-mile range (and longer), while the primary market for bike trips is one to five miles, and for walking, two miles or less. In many urban areas, some of the transit market will originate at park ‘n ride lots, so the impact on vehicular travel is not as great as where people can walk or bike to transit.

Transit service improvements. These include improvements in fixed routes, scheduled public transit service such as expanded route coverage, increased service frequency, extended service hours, increased system capacity, and increased corridor speeds. Implementation of high capacity transit (rail and bus rapid transit) also offers the potential to elevate property values and spur development and redevelopment around stations.

Shuttles. Special shuttles (vans and small buses) can be operated by employers to bring employees to work, by resorts or hotels to help guests get around, or by downtowns and activity centers to create a “park once” environment where people do not drive for short trips within the area. All of these have the effect of decreasing vehicular travel.

Pedestrian and bicycle infrastructure. Where convenient and safe walking and bicycling environments and facilities are provided, walking and bicycling increase, with associated decreases in motor vehicle travel. About one-fourth of motor vehicle trips in the United States are less than a mile in length, so the potential impacts are significant. Increasing walking and biking activity brings additional potential benefits in the form of improved public health. Other benefits accrue from the fact that short vehicle trips have a disproportionate impact on air quality, carbon emissions, and traffic congestion. Finally, shifting short trips to nonmotorized circulation frees capacity on street networks for longer trips, including commuter travel.

For employers, providing convenient, secure bike parking and showers and lockers at the work site can significantly increase bicycle commuting. Many downtowns and destination areas have inadequate or inconvenient bicycle parking and correcting this deficiency can relieve some demand for auto parking, especially all-day employee parking.

Urban design. Much of suburban America was built under zoning provisions that require separation of uses. Consequently, residential areas built since World War II have few or no embedded retail, service, institutional, or employment land uses, while most commercial land use has no embedded residential component. The result is that access to destinations requires motor vehicle travel. It is possible through mixed use zoning, transit-oriented development and other urban design strategies to reduce vehicular trips significantly. In addition to traffic alleviation, this reduces parking demand, generating significant savings. The most essential element in modern urban design is providing a high-quality walking environment. This not only produces transportation benefits, but adds value to property and generates other public benefits, including improved public health.

Time Shift Measures

In most metropolitan regions, a significant amount of total daily travel occurs during peak travel periods, usually between 7 a.m. and 9 a.m. and again between 3 p.m. and 7 p.m. Highways and streets operate at lower efficiency when flooded with traffic, so there is strong justification for trying to “spread the peak” by shifting some travel out of these congestion time periods. Most time shift techniques are either pricing measures (discussed below) or work schedule measures focused on major employers, discussed here.

Flex time or staggered shifts. Flex time and staggered shifts have been common practice at large employers since the 1970s. While such measures probably have little impact at a regional scale, they can be quite beneficial in specific corridors where the impact of one or more major employers is large. By staggering arrival and departure times, larger companies (as well as universities and other traffic-intensive destinations) can reduce peak period congestion at nearby intersections, with significant benefit to the general public as well as to their employees.

Compressed work weeks. Compressed work weeks (e.g., four 10-hour days, or nine days on/five days off) are also common and have the dual effect of shifting some commuting out of peak periods and reducing the amount of commuting. Theoretically, a “four tens” schedule practiced by all employees (on different days) would reduce commute travel to that employer by 20 percent. Again the benefits will be more significant at the corridor and intersection level than they will be regionally.

Special events management. Sports venues, concert facilities, fairgrounds, and special events that generate intensive traffic over short time periods have access to a variety of tools for reducing peak traffic. In addition to event scheduling, these include encouraging guests to arrive early and/or delay departure by providing pre- or postevent programming.

Ride Sharing Measures

These programs encourage ride sharing through carpools and vanpools. The measures are focused on commuters and are administered by employers, Transportation Management Associations (see below), or local or regional public agencies.

Ride-matching services. Ride-matching programs help commuters find others who work near them, live near them and are interested in participating in carpools or vanpools. A commuter database can be used to match origins, destinations, and schedules. Carpooling offers benefits to employees by reducing the household costs of commuting. Employers benefit from reduced parking demand at the job site. The public benefits from reduced traffic in commute corridors. Carpooling measures have the lowest per-mile cost of any category of TDM and consequently generate the highest net value per dollar invested.

Vanpools. Vanpools allow groups of people to share a ride between home (or a meeting location) and work (or other common destination). Vehicles may be provided by one of the vanpool participants, by a public or private support program, or by an employer. Vanpools have special value and appeal for those who work far from home.

Preferential parking. Providing vanpool and carpool parking closer to the work site or in a preferred location (e.g., covered parking) not only encourages participation in ride share programs but also raises the visibility and status of these programs.

Virtual Travel Measures

The development of the Internet and associated digital systems has opened up new ways for people to avoid certain trips entirely. The first two measures described below--telecommuting and virtual meetings--are sometimes combined under the title “telework.”

Telecommuting. Telecommuting had its origins as an employment practice in the 1950s, long before desktop PCs and the Internet were available. For workers in knowledge and service sectors, telecommuting offers significant potential benefits in reduced travel and the opportunity to reduce auto ownership. For employers, telecommuting offers some potential to reduce commute traffic and parking demand. For some years there has been interest in “telecommute” centers or “remote office” buildings where employees can have access to the equipment and services of a regular office worksite at a location close to where they live. While some of these do exist--either entirely for a single company or as multicompany shared facilities--they have not been as popular as originally expected.

Virtual meetings. Most companies and employers make at least some use of virtual meetings, from simple teleconferencing to advanced interactive “webinars” and videoconferencing systems. These techniques reduce local and regional travel, which can be beneficial in metropolitan regions with crowded highways. But they have the greatest impact on long distance travel, reducing business expenses for air travel and per diem travel costs. In many cities, for-hire videoconference and Web-based meeting facilities have been developed to provide smaller companies with access to these systems.

Teleshopping. Home delivery of pizza was only the beginning. Most cities now have grocery stores, drycleaners, and other businesses that will accept Internet or telephone orders and make home deliveries. While this can reduce trips, it also offers benefits to people with limited access to transportation and people who cannot or do not drive.

Pricing Measures

Most travel in the United States is discretionary. In other words, many trips are nonessential and can be rescheduled or avoided entirely. In fact, commuting to work represents less than one-fourth of daily travel. Much of the growth in traffic over the past 50 years has been in response to roadway expansion, and 80 percent of this growth has been in noncommute travel.

Parking pricing. Parking is expensive to build and maintain, yet most parking is free to the user. Imposing or increasing parking costs is an effective tool for reducing driving. Although controversial, parking pricing can increase non-auto mode shares for downtowns and other destination areas. Employers can impose parking fees in a cost-neutral way by also offering an equivalent “cash-out” option for those who choose not to drive.

Employer transportation allowance. Transportation allowances are employer benefits that companies provide for all employees, including those who drive alone, to defray the costs of travel. Allowances can provide a positive economic incentive to shift from driving alone to ride sharing, transit, or commute techniques, because employees whose travel cost is less than the allowance are allowed to pocket the difference. This is generally coupled with a parking cash-out (described above).

Transportation allowances of up to $120 per month ($230 for March-December 2009) are nontaxable benefits for employees but can be expensed by employers.

Congestion pricing. Congestion pricing is the practice of charging motorists higher tolls to use freeways, bridges, or tunnels during peak travel periods. Toll prices are varied strategically to reduce traffic in congested corridors or at congested times of day. The dynamics of traffic congestion are such that small increases or decreases in traffic on congested facilities have a large impact on speeds and flow. Variable tolls can be based on real-time traffic data to maintain targeted levels of service.

Mileage fees. Recently there have been proposals for “VMT fees” to replace all or part of the “gas taxes” assessed by the federal and state governments. Such a fee would be a “road use fee” based on actual vehicle miles of travel (VMT) by each vehicle, rather than on gallons of fuel purchased. The concept is that a GPS transponder installed in each vehicle would keep track of miles driven and would exchange that data with the fuel pump when a vehicle is refueled. A fee based on miles driven would be assessed instead of fuel taxes, or in addition to whatever fuel taxes remained in effect. If geographic data and time-of-travel data were collected, this method of taxation would allow fees to be set differently for travel in peak congestion periods or for travel in specific corridors. Although the state of Oregon has tested a VMT fee and there are some state annual mileage fees for heavy trucks, no such system is currently in use in the United States for general motor vehicle travel.

Support Measures

There are a wide variety of programs and strategies that do not necessarily reduce vehicular travel directly, but encourage the use of measures in the first five categories or increase the magnitude of their impact.

High Occupancy Vehicle (HOV) lanes. HOV lanes provide time advantages in congested corridors for people who carpool, vanpool, or take bus transit. In many corridors, the effectiveness of HOV lanes can be further increased by providing commuter parking lots close to interchanges.

Car sharing. Car-share programs are becoming common in larger urban areas. They are a type of car rental where members of the program rent vehicles for a short period of time (often by the hour). Urban car sharing is often promoted as an alternative to owning a car where transit, walking, and bicycling can be used for most trips and a car is only needed for out of town trips, moving large items, or special occasions. Car sharing can also be used as an alternative to owning multiple vehicles for households with more than one driver.

Transit passes. Transit passes may be offered through employers, universities, neighborhoods, or other groups. Various related benefits, including access to parking and guaranteed rides home (see below) can be bundled into the pass. In addition to encouraging transit ridership, passes are an effective employee recruitment and retention tool, and employer costs are tax deductible up to prescribed limits.

Transportation Management Associations (TMAs) and Organizations (TMOs). These are nonprofit organizations that promote the more efficient use of transportation and parking resources in a particular area and help commuters take advantage of TDM programs. TMAs are usually public-private partnerships consisting of a group of employers in a specific district or corridor with local or regional government support. TMAs work with their members to provide information and education on commuting alternatives and may coordinate the actual delivery of TDM programs, such as the sale or distribution of transit passes.

Guaranteed Ride Home (GRH). Usually GRH programs are tied to transit passes, employee transportation allowances, or other similar TDM measures. They provide access to a free or subsidized ride home in the event of an illness, a family emergency, or another unforeseen event. The ride is usually provided by taxi, although some programs involve company vehicles or rental cars. The potential need for access to a personal car is a major disincentive to carpooling, riding public transit, and other commute-related TDM measures, so a GRH element in TDM programs can have significant impact. In actual practice the ride home is not used very often by employees, so the cost per employee for well-administered programs is low.

Special events, promotions and TDM marketing. Most TDM programs--whether administered by employers, TMAs, or public agencies--include a marketing element that among other things schedules annual “bike-to-work” days, fairs, and other events designed to increase awareness of alternatives to driving alone. TMAs often publish newsletters and often serve as clearinghouses for information about new transit routes, changes in parking prices, transportation allowances, and related benefits.

Program reporting. Successful TDM programs require ongoing monitoring and reporting of program participation and results. Benchmarks and objectives should be identified and reporting should be timely, frank, and transparent.


Examples and Resources

City TDM Program--GO Boulder

The City of Boulder’s “Great Options” TDM program was established in 1990 and has served as a model for many other city TDM programs around the United States. GO Boulder is part of the City’s Transportation Division in the Department of Public Works. Read about the City’s TDM program priorities and strategies.

Denver Regional Transportation District (RTD) Eco Pass Program

The Denver region’s transit agency (RTD) initiated its innovative Eco Pass program in the early 1990s as a regional TDM measure, at the urging of the City of Boulder and with the support of the Denver Regional Council of Governments. The Eco Pass is an annual photo ID transit pass purchased by employers for their employees.

The City of Boulder has aggressively supported the Eco Pass program through its GO Boulder office (see above). Learn more about Boulder’s Eco Pass efforts.

RTD is also one of the nation’s leading transit agencies and is currently engaged in implementation of the FasTracks rail transit network.

Seattle Regional Commute Trip Reduction Program

(Note: The following text uses direct quotes from the website cited below.)

In 1991, the Washington State Legislature passed the Commute Trip Reduction (CTR) Law requiring employers to work with employees to reduce the number and length of drive-alone commute trips made to the worksite. The CTR Law (RCW 70.94.524 - 551) was adopted in 1991 as part of the Washington Clean Air Act. The purpose of the law is to reduce air pollution, traffic congestion, and energy consumption. Motor vehicles generate more than 50 percent of all air pollution in Washington.

The law requires major employers (those with over 100 employees) to develop and implement commute trip reduction programs. The programs must be designed to meet the commute trip reduction goals set for the employer’s commute trip reduction zone. The employer must submit an annual employer program report to the local jurisdiction for review and approval. Every two years, employers must conduct employee commute surveys or supply equivalent data showing their progress toward the commute trip reduction goals. If an employer does not meet the reduction goals, the jurisdiction can require the employer to modify its program.

Read more about this program.

This website provides information about the Washington state law creating the program as well as program performance. A number of related websites also can be accessed from this page.

King County, Washington “AIMs High” Performance Management Reporting

King County is an urban county in the Puget Sound region encompassing a number of cities, including Seattle. King County’s Office of Strategic Planning and Performance Management reports its “Annual Indicators and Measures” which include several mobility and demand management measures.

Lloyd District Transportation Management Association (LDTMA)

The Lloyd District is an area of office employers, retail businesses, and a convention center located across the Willamette River from downtown Portland. The Lloyd District is directly served by the MAX line of the Tri-Met light rail transit network. LDTMA represents an excellent example of a progressive TMA embedded within a city and region that also have strong TDM programs.

Other Resources and Information

Publication 15-B, Employer’s Tax Guide to Fringe Benefits, is available from the IRS and describes current taxing provisions relative to employer transportation benefits programs, including parking cash-out, transit passes, and transportation allowances.

The Victoria Transport Policy Institute, a research and advo.cacy organization, maintains a website that includes a useful “Online TDM Encyclopedia."

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.