Financing Options

Options For Funding Transportation Programs


TDM Encyclopedia

Victoria Transport Policy Institute


Updated 17 April 2017

This chapter describes various ways to fund transportation programs and evaluates the degree to which they support TDM objectives.




To be successful, transportation programs and projects require adequate funding. For example, a reliable new funding source may be needed to create a Transportation Management Association or implement Nonmotorized Transportation Plans.


Although there are many possible funding sources, some are particularly appropriate because they support other planning objectives such as traffic and parking congestion reduction, more accessible land use development, pollution reductions, and increased Equity. Below are common funding options:


·         Parking Pricing. Some jurisdictions and campuses dedicate public parking revenues to transportation programs.


·         Special Parking Taxes. Some jurisdictions impose special taxes on commercial parking transactions or on parking facilities (Litman, 2006).


·         Road Pricing. Some communities use road tolls and congestion fees to fund transportation programs, including roadway facilities, transit improvements and TDM programs.


·         Fuel Tax Increases and Surcharges. Some jurisdictions dedicate a portion of fuel tax revenues to special transportation programs (such as dedicating 1% of fuel tax revenues to nonmotorized facilities), or impose an optional, additional fuel tax for local transportation programs.


·         Carbon Taxes. These are special taxes based on fossil fuel carbon content, and therefore a tax on carbon dioxide emissions.


·         Dedicated local or regional sales taxes. This may require a public referendum.  


·         Payroll taxes. Some jurisdictions impose a special tax on employers to finance public transportation or other commuter services. For example, about half the costs of Portland, Oregon’s TriMet transit system if financed by a 0.72% payroll tax (ODOR 2010).


·         Transportation utility fees. This bills properties in proportion to their use, based on published trip generation rates (Junge and Levinson 2012).


·         Transportation Impact Fees. These are fees paid by developers based on the transportation costs imposed by their projects. For example, a developer may be required to pay for roadway improvements, public parking facilities (called in lieu fees), funding for a Transportation Management Association, walking and cycling improvements, or other programs that mitigate local traffic impacts.


·         Special Property Taxes. Some jurisdictions impose special property taxes in areas served by transportation programs and services, sometimes called a Local Improvement District or Land Value Capture (Smith and Gihring 2003; Wetzel 2006; CTOD 2008).


·         Vehicle impact mitigation fees. This is a fee on each vehicle registered in the region to pay for programs and projects that serve motorists and mitigate the negative impacts caused by vehicle traffic. 


·         Business or Employee Assessments. Some Transportation Management Associations and Commute Trip Reduction programs are funded by a special assessment on businesses in an area, based on floor area, revenues or number of employees.


·         Grants, such as foundation or government grants to help fund programs and facilities, such as school transportation safety education, and transit stations.


·         Require certain types of improvements on private properties (sidewalk installation and repairs, street trees, etc.) when real estate is sold (Shoup, 1996)


·         Special Funding For Transportation Problem Solving. Various federal, state, provincial and private funds may be available for transportation programs that address specific problems. For example, TDM programs may qualify for U.S. federal Congestion Mitigation and Air Quality (CMAQ) funding, and Canadian sustainable infrastructure grants. Other funding programs support energy conservation and emission reduction activities, nonmotorized facilities (public trails and streetscapes) and encouragement projects, school trip pedestrian safety, Smart Growth and urban redevelopment activities, mobility services for transportation disadvantaged people (low income, people with disabilities, children, elderly people, etc.), and various other planning objectives that TDM strategies often support.



The best funding options reflect these attributes:

·         Stable and predictable.

·         Considered Equitable.

·         Supports TDM objectives (reduces peak-period vehicle travel, encourages shifts to more efficient modes, supports Smart Growth, etc.).

·         Relatively easy to administrate.



Fees and taxes support TDM objectives if they are based on the amount of automobile travel that occurs, particularly variable fees that are higher for peak periods and locations, and lower for off-peak. This type of Pricing encourages motorists to reduce their peak-period driving, reducing traffic and parking congestion problems.


Table 1            How Well Different Fees Support TDM Objectives (Pricing Evaluation)


General Category




Time- and location-specific road and parking pricing

Variable Road Pricing, Parking Pricing (higher rates for peak periods and locations, lower rates for off-peak)

Second Best


Weight-Distance Fees, Mileage-based Emission Fees

Third Best

Fuel charges

Fuel Tax Increases and Surcharges

Fourth Best

Fixed vehicle fees

Motor vehicle fees, vehicle purchase taxes


Not charged specifically to motorists

General sales taxes, general property taxes, business taxes, employee fees and taxes.

This table compares the degree to which various transport funding options support TDM objectives. Fees that are higher under urban-peak conditions are best. General taxes and fees are worst.



In other words, if there is agreement that some new source of revenue is needed, it makes sense to structure the funding system to support other strategic planning objectives, such as encouraging more efficient travel patterns and land use development. If property taxes are used to fund transportation services, they can be structured to support Smart Growth land use planning objectives, for example, by having fees that reflect the higher cost of providing public services in dispersed locations (Smart Growth Planning Reforms), and by providing property tax discounts for households that do not own an automobile.


Some people may consider it unfair to charge motorists for programs that benefit users of other modes, such as Transit Improvements and Walking and Cycling Encouragement Programs, but this criticism is generally inappropriate since motorists only pay about half of total roadway costs (Henchmen 2013) and benefit from reduced congestion and increased safety when other travelers shift to alternative modes, and because motor vehicle use imposes various External Costs. Such funding can therefore be considered part of traffic impact mitigation and compensation.



Public Versus Private Ownership

There is sometimes a choice between public or private ownership of transportation facilities and services, which affect their funding and other planning factors. Public owned facilities and services tend to rely on tax funding, while privately owned facilities and services tends to rely more on user fees, but there are many variations; private facilities and services often receive public resources in the form of free or underpriced land, direct financial subsidies, and tax exemptions, while public facilities and services can have user fees.


There are advantages and disadvantages to both public and private ownership and operation of transportation infrastructure and services. Public ownership often allows cheaper financing through public bonds, and tends to increase public accountability and integration with other planning decisions, leading to facilities and services that better support overall community objectives. Privatization (private ownership) and contracting of services can allow more focused planning decisions (public facilities and services are often expected to address broader community goals, which adds costs and constraints), and may avoid restrictive planning and labor rules. Proponents of privatization argue that it increases service efficiency, but experience indicates mixed results (Morris 2006). For example, public transit service privatization often reduces costs per transit vehicle-mile or passenger-mile, providing fiscal savings to governments, but this often result from reduced service quality which leads to reduced ridership, increasing other economic costs such as traffic congestion and road and parking facility costs (Grayling 2001; Scholl 2006). Private highways funded by tolls frequently require public subsidy and restrictions on competition (GAO 2004), and toll rates have sometimes increased faster than originally promised in order to provide sufficient return on investment (for example, tolls increased substantially after Highway 407 in Ontario was sold to a private firm). In the past, many toll road planners exaggerated demand and potential revenues, resulting in financial failure, which has made toll road financing difficult (Vassallo and Sánchez-Soliño (2007).


Effective privatization and contracting therefore require that public agencies retain control over key planning decisions, and that service quality be a primary performance feature. For example, if transit services are privatized or contracted out to private firms, it is important that such services be integrated and comprehensive, rather than allowing private service providers to only provide services where it is most profitable. It is helpful to arrange bidding so private service providers compete on service quality and ridership goals, not simply on minimum cost.



Best Practices

Below are recommendations for effective implementation of new transportation taxes, based on interviews with various parking officials:


·         The tax base should be broad and well defined. A broad tax base spreads the financial burden and does not give certain groups a competitive advantage. It is considered most equitable if it applies to publicly-owned as well as private agencies and facilities.


·         Exemptions must be well defined and understood by all affected parties. For example, if a parking tax does not apply to churches and hospitals, these must be carefully defined.


·         Enforcement must be effective, practical and given sufficient priority.


·         Taxes and fees should be structured for efficient compliance and auditing.


·         Work with stakeholders to develop efficient and fair regulations, administrative procedures and enforcement policies.


·         Carefully assess the travel and economic impacts of a tax. Establish an evaluation program, with before-and-after analysis, to determine the impacts a tax has on local business activity, vehicle traffic, etc.



The Price of Parking on a Great Street

By Donald Shoup, Parking Today (, February 2009


How can curb parking contribute to making a street great? A city can (1) charge performance-based prices for curb parking and (2) return the revenue to the metered districts to pay for added public services. With these two policies, curb parking will help to create great streets, improve transportation, and increase the economic vitality of cities.


Performance Parking Prices
Performance-based prices can balance the varying demand for parking with the fixed supply of curb spaces.


We can call this balance between demand and supply the "Goldilocks principle" of parking prices: the price is too high if many spaces are vacant, and too low if no spaces are vacant. When a few vacant spaces are available everywhere, the prices are just right. After the city adjusts prices to yield one or two vacant spaces in every block (about 85 percent occupancy), everyone will see that curb parking is readily available. In addition, no one can say that performance parking prices will drive customers away if almost all curb spaces are occupied. Prices that produce an occupancy rate of about 85 percent can be called "performance-based" for three reasons. First, curb parking will perform efficiently. The spaces will be well used but readily available. Second, the transportation system will perform efficiently. Cruising for underpriced curb parking will not congest traffic, waste fuel, and pollute the air. Third, the economy will perform efficiently. The price of parking will be higher when demand is higher, and this higher price will encourage rapid parking turnover. Drivers will park, buy something, and leave quickly so that other drivers can use the spaces. Cities can achieve all these goals by setting curb parking prices to yield about an 85 percent occupancy rate.


Local Revenue Return

Performance prices for curb parking can yield ample public revenue. If the city returns this revenue to pay for added public spending on the metered streets, citizens are more likely to support the performance prices. The added funds can pay to clean and maintain the sidewalks, plant trees, improve lighting, bury overhead utility wires, remove graffiti, and provide other public improvements.


Put yourself in the shoes of a merchant in an older business district where curb parking is free and customers complain about a parking shortage. Suppose the city installs meters and begins to charge prices that produce a few vacancies. Everyone who wants to shop in the district can park quickly, and the city spends the meter money to clean the sidewalks and provide security. These added public services make the business district a place where people want to be, rather than merely a place where anyone can park free if they can find a space. Returning the meter revenue generated by the district to the district for the district's own use can help to convince merchants and property owners to support performance prices for curb parking.


Suppose also that curb parking remains free in other business districts. Everyone complains about the shortage of parking, and drivers congest traffic and pollute the air while they search for curb parking. The city has no meter revenue to clean the sidewalks and provide other amenities. In which district would you want to have a business?


Performance prices will improve curb parking by creating a few vacancies, the added meter revenue will pay to improve public services, and these added public services will create political support for performance prices.


Parking Increment Finance

Most cities put their parking meter revenue into the city's general fund. How can a city return meter revenue to business districts without shortchanging the general fund? The city can return only the subsequent increment in meter revenue-the amount above and beyond the existing meter revenue-that arises after the city begins to charge performance prices. We can call this arrangement parking increment finance.


Parking increment finance closely resembles tax increment finance, a popular way to pay for public investment in districts in need of revitalization. Local redevelopment agencies receive the increment in property tax revenue that results from the increased property values in the redevelopment districts. Similarly, business districts can receive the increment in parking meter revenue that results from performance parking prices.


More meters, higher rates, and longer hours of operation will provide money to pay for added public services. These added public services will promote business activity in the district, and the increased demand for parking will further increase meter revenue.


Performance Parking Prices in Practice

Some cities have begun to charge performance prices for curb parking and return the meter revenue to its source. Redwood City, California, sets meter rates to achieve an 85 percent occupancy rate for curb parking downtown; the rates differ both by location and time of day, depending on demand. The city returns the revenue to the metered district to pay for public parking structures, police protection, and cleaner sidewalks.


Merchants and property owners all supported the new policy when they learned the meter revenue would pay for added public services in the downtown business district, and the city council adopted it unanimously. Performance prices create a few curb vacancies so visitors can easily find a space, the added meter revenue pays to improve public services, and these added public services create political support for the performance prices.


Most cities keep their meter rates constant throughout the day and let occupancy rates vary in response to demand. Instead, cities can vary their meter prices to keep occupancy constant at about 85 percent. The goal is to balance supply and demand everywhere, all the time. Most cities also limit the length of stay at meters so long-term parkers won't monopolize the underpriced curb spaces. But after Redwood City adjusted meter rates to guarantee the availability of curb spaces, it removed the time limits at meters.


This unlimited-time policy has turned out to be popular with drivers who can now park for as long as they are willing to pay. The demand-determined meter rates create turnover at the most convenient curb spaces, and long-term parkers tend to choose the cheaper spaces in off-street lots.

Other cities have also begun to adjust their meter rates to ensure the availability of curb parking. The U.S. Department of Transportation has awarded grants to Chicago, Los Angeles, and San Francisco to test performance prices for curb parking, and Washington, D.C., has already started them. Pasadena and San Diego return meter revenues to enhance public services in the metered districts.


Any city can use a pilot program to test Goldilocks parking prices for curb parking. All the city has to do is allow any business district that requests a pilot program to have one. It won't cost the city anything, because the meters pay for themselves. Dirty and unsafe streets will never be great, so the city can initially use the meter revenue to pay for clean-and-safe programs.


Many communities may value clean and safe sidewalks more highly than free but overcrowded curb parking. After the community is clean and safe, the parking revenue can pay for urban amenities such as street trees, underground utilities, and public transit improvements. Parking on a great street may not be free, but it will be convenient and worth the price.

*           *          *          *


For additional reading on this topic log on to, click on "magazine", search articles, and enter "Shoup". You will find various articles, links and references.


Donald Shoup, FAICP, is professor of urban planning at the University of California, Los Angeles. He has written many books and articles on parking, including The High Cost of Free Parking (Planners Press, 2005), which explains the theory and practice of parking management. He can be reached at


This article was adapted from a chapter in Planetizen Contemporary Debates in Urban Planning, edited by Abhijeet Chavan, Christian Peralta, and Christopher Steins. Washington, DC: Island Press, 2007, pp. 52-56.


Sidebar: Redwood City's Parking Ordinance

To accomplish the goal of managing the supply of parking and to make it reasonably available when and where needed, a target occupancy rate of eighty-five percent (85%) is hereby established.


The Parking Manager shall survey the average occupancy for each parking area in the Downtown Meter Zone that has parking meters. Based on the survey results, the Parking Manager shall adjust the rates up or down in twenty-five cent ($0.25) intervals to seek to achieve the target occupancy rate.


Revenues generated from on-street and off-street parking within the Downtown Meter Zone boundaries shall be accounted for separately from other City funds and may be used only within or for the benefit of the Downtown Core Meter Zone.



Examples and Case Studies

AECOM (2012) provides detailed evaluations of various transportation funding options.


London Congestion Pricing (

Since 17 February 2003 the city of London has charged a £5 daily fee for driving private vehicles in an eight square mile central area during weekdays as a way to reduce traffic congestion and raise revenues for transport improvements. An automated system checks vehicles entering the charging zone against a database of motorists who have paid the fee. Despite considerable controversy the program was implemented without major problems, and has substantially reduced traffic congestion, improved bus and taxi service, and is generating revenues. Vehicle traffic speeds have increased, bus transit service has improved, while accidents and air pollution have declined in the city center. Public acceptance has grown and there is now support to expand the program to other parts of London. In 2004 Mayor Livingstone was reelected, largely due to the success of the congestion pricing program. This is the first congestion pricing program in a major European city, and its success suggests that congestion pricing may become more politically feasible elsewhere.



Parking Levies (

Three Australian cities have levies on non-residential urban parking, intended to encourage use of alternative modes and fund transport facilities and services:

·         In Sydney, a Parking Space Levy of AU$800 annual per stall is currently applied to parking in the central business district (CBD), and AU$400 per stall at other business districts. The levy applies to all privately owned, non-residential, off-street parking. It is prorated for parking facilities that are only used occasionally, such as church parking lots; property owners must maintain daily records indicating how often such space is used. The levy raises more than AU$40 million annually, which is dedicated to transportation projects and cannot be used for operating expenses.

·         In Perth, parking suppliers within the CBD and surrounding area must pay a Parking Licence Fee, which has different rates for short-term and long-term use facilities (DPI 2002). Owners only pay for the number of parking spaces that are actually in use, and may shift a space from one category to another (from “in use” to “out of use”) and pay a prorated amount if appropriate for part of a year. When first introduced in 1999, the levy was set at $AU70 per space, and has been raised to AU$155 for short-stay parking and AU$180 for commuter-orientated parking. Businesses with five parking stalls or less are exempted from the charge. The levy raises about AU$8.2 million annually.

·         In Melbourne, a Long Stay Car Park Levy will be charged to designated long-stay and permanently leased parking spaces in CBD commercial car parks. The levy is intended to encourage car park owners to convert long-stay spaces into short-stay spaces, creating more parking options for shoppers and visitors. Planners estimate that the levy will apply to about 48,000 of 70,000 total CBC off-street parking spaces.



Perth and Sydney have similar tax collection procedures. The state government’s revenue collection agency sends a parking license application to all non-residential property owners within the designated area. Property owners are required to return the completed application indicating all parking spaces on their property, including land used for motor vehicle parking even if parking spaces are not marked out. In Sydney, for example, where an unmarked area is used for parking, the number of spaces is determined by dividing the total area, by 25.2 square meters, which takes into account parking spaces and access lanes. Owners are sent an annual assessment based on this application. In Perth, the parking license holder is responsible for ensuring that the number of vehicles parked anywhere within the boundary of their property is within the number licensed. The licensing and payment of the levy for on-street parking is the responsibility of local government which meets this requirement from the revenue generated from their on-street parking operations. Table 2 compares features of Sydney and Perth levies.


Table 2            Parking Levy Comparison (Enoch, 2001 and other sources)






Parking Space Levy

Parking Licence Fee

Long Stay Car Park Levy

First Implemented




Annual Levy

Central CBC: $800
Other business districts: $400

Short stay: $155
Long stay/commuter: $180

$400 annually in 2006

$800 annually in 2007

Annual revenues generated

AU$40 million

AU$8.2 million

$19 million first year

$39 million second year

Use of revenues

Transport facilities

Downtown transit services

CBD transport improvements







Not exempt


Residential use




Casual Parking (part time use)

Pro-rated by use

No reduction


Publicly-owned parking facilities


Not exempt


Potential parking spaces, not currently used

Not exempt



Small businesses (5 parking stalls or less)

Not exempt



Disabled persons parking




Loading zones – including taxi and bus bays




Community service/ emergency service spaces




Spaces for service vehicles (e.g., repairs)




Car sales and service spaces




This table compares the per-space parking levies in Sydney, Perth and Melbourne Australia.



Perth officials consulted extensively with stakeholders prior to the levy’s introduction. As a result, there was an approximately 98% compliance rate the first year. When first applied in 1999, there were about 58,000 stalls, of which about 4,000 were exempt on usage grounds and 2,000 because they are owned by small businesses. This was about 10% fewer than recorded in a 1998 survey, indicating that the levy reduced downtown parking supply. Most of the eliminated spaces were situated near the edge of the levy area and remote from the areas of high parking demand (Enoch, 2001). Some businesses decommissioned spaces to meet the five stalls or less exemption, and some long-stay parking was converted to short-stay use, increasing parking availability and turnover.



Stormwater Fees

Stormwater fees are special charges applied to impervious surfaces (pavement and buildings) to fund stormwater management systems (drain systems, treatment facilities, etc.). Such fees range from about $5 to $20 per 1,000 square feet, or about $1-7 annually per off-street parking space, as indicated in the table below.


Table 3            Stormwater Fees (PCW 2002)





Per 1000

Sq. ft. (Annual)

Per Parking Space (Annual)

Chaple Hill, NC

$39 annual 2,000 sq. ft.



City of Oviedo Stormwater Utility, FL

$4.00 per month per ERU



Columbia Country Stormwater Utility, GA

$1.75 monthly per 2,000 sq. ft.



Kitsap County, WA

$47.50 per 4,200 sq. ft.



Raleigh, NC

$4 monthly per 2,260 sq. ft.



Spokane Country Stormwater Utility, WA

$10 annual fee per ERU.



Wilmington, NC

$4.75 monthly per 2,500 sq. ft.



Yakima, WA

$50 annual per 3,600 sq. ft.



“Equivalent Run-off Unit” or ERU = 3,200 square foot impervious surface.



Financing Sustainable Urban Transportation (Diaz and Bongardt 2013) 

The study, Financing Sustainable Urban Transport – International Review of National Urban transport Policies and Programmes presents an analysis of a variety of financing and planning practices world-wide in order to help decision-makers identify suitable elements for their local context. It presents insights into financing arrangements for urban transport in eight countries: Brazil, Colombia, France, Germany, India, Mexico, The United Kingdom and the United States of America.



Road Tax Discount for Car-Free Households (

The City of Austin, Texas has an innovative way of financing transportation infrastructure which rewards households that reduce their vehicle ownership (Austin City Code Chapter 14-10). City utility bills include a “Transportation User Fee” (TUF) which averages $30 to $40 (US) annually for a typical household. This charge is based on the average number of daily motor vehicle trips made per property, reflecting its size and use. For example, single-family development is estimated to generate 40 motor vehicle trips per acre per day, condominium residential use and townhouse residential use generate approximately 60 motor vehicle trips per acre per day, and offices generate approximately 180 motor vehicle trips per acre per day. The city provides exemptions to residential properties with occupants that do not own or regularly use a private motor vehicle for transportation, or if they are 65 years of age or older.



Land Value Capture (Smith and Gihring 2003; CTOD 2008: Lari 2009)

Value capture refers to special property taxes and public private partnerships that recover some or all public investment costs that increase property values, such as transportation facilities and other infrastructure improvements, and programs that improve local security and environmental quality. This allows highway projects and transit services to be funded in part by the additional value they provide. For example, the Washington Metropolitan Area Transit Association has purchased vacant land near planned rail stations, and has mounted 66 joint development projects since 1976 which had generated $129 million in revenue by 2002, an amount expected to double by 2007. Stations had attracted $30 billion in private investment by 2000: Between 1980 and 1990 40% of the region’s office and retail space was built within walking distance, and between 1990 and 2000, another 20% was constructed. As a result, the transit agency and local governments have received a return on their investments.



Sustainable Transport Finance Practices (

K. Sakamoto, H Dalkmann and D Palmer (2010) recommend that funding to be reoriented towards sustainable transport by applying the following strategies:

·         Analyze the impacts of financing decisions taken by relevant stakeholders on sustainability.

·         Shift existing resources towards a sustainable direction.

·         Add and increase funding for those areas where resources are lacking.

·         Pay for the full costs of transport including environmental depreciation.



TMA Funding (

The North Natomas Transportation Management Association (NNTMA) is funded through a special tax provided by residents, businesses and developers, called a Community Facilities District (CFD). An annual report is prepared each year that includes the tax roll for the CFD. The Public Works Special Districts Office produces an annual report which provides a background of the CFD, current status of land uses within the district, maximum special taxes for each CFD parcel, and the calculation of that fiscal year’s special tax levy. The current levy is $18 per year per single-family unit, $14 per year per multi-family unit, $0.03 per square foot for industrial, $0.06 per square foot for office, $0.10 per square foot for retail, and $200 per acre for sports complex uses. The North Natomas Transit Fee, a development impact fee that pays for transit services, including the formation costs of the TMA, will cover the administration costs of the CFD for the first five years of the TMA’s operation.



Sustainable Transportation Funding (Ardila-Gomez and Ortegon-Sanchez 2016)

Many developing country cities experience an urban transport underfunding trap in which they lack revenue to implement transportation improvements that will provide long-term savings and benefits. This gap is exacerbated by the implicit subsidies for private car travel, which represent a minority of travel and users, but impose a major portion of congestion, sprawl, accidents, and pollution costs. Using an analytical framework based on the concept of "Who Benefits Pays," 24 financing instruments are assessed in terms of their social, economic and environmental impacts, and their ability to fund urban transport capital investments, operational expenses, and maintenance. In particular, for capital investments, a combination of grants –from multiple levels of government– and loans together with investments through public private partnerships could finance large projects that benefit society. Property taxes emerge as a key financing instrument for capital, operation, and maintenance expenses. By choosing the most appropriate mix of financing instruments and focusing on wise investments, cities can design comprehensive financing for all types of urban transport projects, using multi-level innovative revenue sources that promote efficient pricing schemes, increase overall revenue, strengthen sustainable transport, and cover capital investments, operation, and maintenance for all parts of a public transport system, "from the sidewalk to the subway."



Old Pasadena Parking Revenue (Kolozsvari and Shoup 2003)

To help address downtown parking problems the city of Pasadena, California proposed pricing on-street spaces to increase parking turnover and make parking available to customers. Many local merchants initially opposed the idea. As a compromise, city officials agreed to dedicate all revenues to improving downtown public facilities and services. In 1993 a Parking Meter Zone (PMZ) was established within which parking was priced and revenues were invested. With this proviso, the merchants agreed to the proposal. They began to see parking meters in a new way: as a way to fund projects and services that directly benefit their customers and businesses. Because parking had previously been unpriced, the city lost no general fund revenue. In fact, the city gained overtime fine revenue.


The city formed a PMZ advisory board consisting of business and property owners, which recommended parking policies and set spending priorities for the meter revenues. This approach of connecting parking revenues directly to added public services and keeping it under local control help guarantee the program’s success. Investments included new street furniture and trees, more police patrols, better street lighting, more street and sidewalk cleaning, pedestrian facility improvements and marketing (including production of area maps showing local attractions and parking facilities). To highlight these benefits to motorists, each parking meter has a small sticker which reads, Your Meter Money Will Make A Difference: Signage, Lighting, Benches, Paving.


This created a “virtuous cycle” in which parking revenue funded community improvements that attracted more visitors which increased the parking revenue, allowing further improvements. This resulted in extensive redevelopment of buildings, new businesses and residential development. Parking is no longer a problem for customers, who can almost always find a convenient space. Local sales tax revenues have increased far faster than in other shopping districts with lower parking rates, and nearby malls that offer free customer parking. This indicates that charging market rate parking (i.e., prices that result in 85-90% peak-period utilization rates) with revenues dedicated to local improvements can be an effective ways to support urban redevelopment.



Urban Transportation Funding Options

The report, Sustainable Urban Transport Financing from the Sidewalk to the Subway : Capital, Operations, and Maintenance Financing (Ardila-Gomez and Ortegon-Sanchez 2016), published by the World Bank, evaluates 24 potential urban transportation funding options in terms of their advantages, disadvantages and fairness (beneficiaries pay). The table below summarizes these options.


Table 4            Potential Funding Options (Ardila-Gomez and Ortegon-Sanchez 2016)

General benefit instruments

Direct benefit instruments

Indirect benefit instruments

General public beneficiaries

Direct Beneficiaries (users, drivers, passengers)

Indirect beneficiaries (firms, land and property owners, developers)

·  Public transport subsidies Property taxes

·  National and international grants and loans

·  Climate-related financial instruments

·  Global Environment Facility (GEF)

·  Clean Technology Fund

·  Clean Development Mechanism (CDM)

·  Public–Private Partnerships (PPPs) for public transport

·  Parking charges

·  Road pricing

·  Congestion charges

·  Fuel taxes and surcharges

·  Vehicle taxation

·  Farebox revenue

·  PPPs for urban roads

·  Advertising

·  Employer contributions

·  Added value capture mechanisms

·  Land-value taxes/betterment levies

·  Tax increment financing

·  Special assessment

·  Transportation utility fees

·  Land asset management

·  Developer exactions

·  Development impact fees

·  Negotiated exactions

·  Joint developments

·  Air rights

This table evaluates various urban transportation funding options in terms of beneficiaries.



Public Transit Funding Options (Allen 2010; CODATU 2009)

A report by the International Association of Public Transport describes the economic, social and environmental value of public transportation, and various ways to finance public transit improvements:



Toronto Transit Funding Options (TBoT)

The Toronto Board of Trade sponsored, a program to promote public transit service improvements in order to increase the city’s economic competitiveness and development. As part of this project the Board commissioned a study, The Move Ahead: Funding “The Big Move” which identified various options for funding transit service improvements. This study identified and evaluated various options according to the following criteria:

  • Projected revenue generation
  • Technical feasibility (demonstrated through successful use in other jurisdictions)
  • Predictability, sustainability and durability of the revenue generation
  • Administrative cost and complexity
  • Impact on consumer behavior (i.e. extent that the tool encourages commuters to reduce congestion through car-pooling or other measures that remove cars from the road)
  • Social equity and fairness



It considered the following funding options:

  1. Parking surcharge
  2. Regional sales taxes
  3. Gas tax
  4. Vehicle kilometer fee
  5. Road pricing – tolls
  6. Road pricing – congestion pricing
  7. National transit strategy
  8. Predictable long-term senior government funding
  9. Infrastructure bonds
  10. Employer payroll tax
  11. Tax incremental financing
  12. Land value enhancement
  13. High-occupancy tolls
  14. Vehicle registration fee
  15. Utility levy
  16. Full cost recovery transit fares


A subsequent study identified possible funding options for specific Toronto subway projects (KPMG 2011).



Norwegian Cordon Tolls (

Norway has Road Pricing in three of its urban centers: Trondheim, Oslo, and Bergen. In 1991, Trondheim—Norway’s third largest city with a population of 140,000—implemented a “toll ring” that surrounds the city’s downtown area. The toll ring has 12 toll stations and uses a total of 35 lanes. Each tollbooth operates with an electronic card system, used by 80% of drivers entering the city. The other 20% use coin machines or magnetic strip cards, which exist at all twelve booths. Rates range from U.S. $0.62 to $1.56, with a peak charge between 6:00 a.m. and 10:00 a.m. As a result of this pricing, inbound traffic has declined by 10% during toll periods while non-toll period traffic has increased by 9%. Weekday bus travel has increased by 7%. Revenues are being used for road infrastructure, public transit, and pedestrian and bicycle facilities.



German Government Approves Tolls for Trucks

In August 2001 the German cabinet has approved plans drawn up by transport minister Kurt Bodewig that will introduce tolls on trucks using roadways beginning in 2003. Vehicles over 12 tons would be required to pay euros 0.14-0.19 (0.12-0.16 US dollars) per kilometer, with variation depending on exhaust emissions and axles. The intent of the plan is to shift the financing of road use away from the general taxpayer and onto heavy road users. The toll rate was established by computing the costs of the extra wear and tear on roads and maintenance costs incurred by trucks. Revenue from the tolls will be used for further transport investment, including an anti-congestion program. Nature conservation group Nabu applauded the plan but urged the government to consider putting the revenue into something other than road building. (ENDS Environment Daily, August 16, 2001) For more information see the German transport ministry website at



References And Resources For More Information


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AECOM (2012), Detailed Case Studies of Selected Revenue Tools, Metrolinx (; at


Heather Allen (2010), Public Transport – The Smart, Green Solution: Financing Public Transport, 5th Regional EST Forum in Asia (; at


APTA (2009), Voters Vote for Public Transportation, American Public Transportation Association (; at


Arturo Ardila-Gomez and Adriana Ortegon-Sanchez (2016), Sustainable Urban Transport Financing from the Sidewalk to the Subway: Capital, Operations, and Maintenance Financing, World Bank (; at  


Phineas Baxandall, (2007), Finding Solutions to Fund Transit Combining Accountability & New Resources For World-Class Public Transportation, U.S. PIRG (


Edward Beimborn and Robert Puentes (2003), Highways and Transit: Leveling the Playing Field in Federal Transportation Policy, Brookings Institute (


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CCAP (2014), Using Financial Mechanisms in the Development of NAMAS i n Colombia, Chile and Kenya, Center for Clean Air Policy (; at


CODATU (2009), Who Pays What for Urban Transport? Handbook of Good Practices, Cooperation for Urban Mobility in the Developing World (; at


Congestion Mitigation and Air Quality (CMAQ) Improvement Program Website ( provides information on special funding for transportation improvements that reduce traffic congestion and air pollution.


CTOD (2008), Capturing the Value of Transit, Center for Transit-Oriented Development, Reconnecting America (; at


Rodrigo Diaz and Daniel Bongardt (2013), Financing Sustainable Urban Transport - International Review of National Urban transport Policies and Programmes, Sustainable Transport in China (, GIZ and Embarq; at


DPI (2002), Licensed Parking in Perth: A Guide for Commercial Property Owners, Department of Planning and Infrastructure, Government of Western Australia (


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European Transport Pricing Initiatives ( includes various efforts to develop more fair and efficient pricing. Specific European transportation pricing projects are described below:


CAPRI ( is disseminating research on transportation pricing.


CUPID (Co-ordinating Urban Pricing Integrated Demonstrations), European Transport Pricing Initiative, Project No. GRD1-1999-10958, European Commission, Competitive and Sustainable Growth Programme (, November, 2001. 


IMPRINT ( is an effort to promote implementation of fair and efficient transport pricing.



GAO (2004), Highways and Transit: Private Sector Sponsorship Of And Investment In Major Projects Has Been Limited, General Accounting Office, GAO-04-419 (


Thomas A. Gihring (2009), The Value Capture Approach To Stimulating Transit Oriented Development And Financing Transit Station Area Improvements, Victoria Transport Policy Institute (; at


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GIZ (2013), Financing Sustainable Urban Transport – International Review of National Urban Transport Policies and Programmes, GIZ and Embarq (; at


Tony Grayling (2001), Any More Fares? Delivering Better Bus Services, Institute for Public Policy Research (


Peter J. Haas and Katherine Estrada (2011), Revisiting Factors Associated with the Success of Ballot Initiatives with a Substantial Rail Transit Component, Mineta Transportation Institute (; at


Chris Hale (2011), Evolving Futures for Australian and International Passenger Rail, Australasian Transport Research Forum 28 - 30 September 2011, Adelaide, Australia (


Joseph Henchman (2013), Gasoline Taxes and Tolls Pay for Only a Third of State & Local Road Spending, The Tax Foundation (; at


Edward Huang, Henry Lee, Grant Lovellette and Jose Gomez-Ibanez (2010), Transportation Revenue Options: Infrastructure, Emissions, and Congestion, Belfer Center, Harvard Kennedy School (; at


IBI (2000), Transit-Supportive Parking Policies: North American Experience and Model Policies for Municipalities, Canadian Urban Transit Association (


ICLEI (2005), Hidden Subsidies for Urban Car Transportation: Public Funds for Private Transport, Directorate General for Environment, European Commission; at


Independent Evaluation Group (2007), Evaluation of Bank Support for Road Funds: For Evaluation of World Bank Assistance to the Transport Sector, 1995 – 2005, World Bank (


Innovative Finance for Surface Transportation ( is an Internet based clearinghouse providing information on innovations in road pricing and user fees.


IPIRG (2007), Finding Solutions To Fund Transit: Combining Accountability & New Resources for World-Class Public Transportation, Illinois Public Interest Research Group (


ITF (2013), Funding Urban Transportation: A Case Study Compendium, International Transport Forum (;


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Charles Komanoff and Brian Ketchem (2003), The Hours: Time Savings from Tolling The East River Bridges, Bridge Tolls Advocacy Project (


KPMG (2011), Sheppard Subway Extensions: Analysis of Funding Options, Toronto Transit Infrastructure Limited and the City of Toronto, (; at


Adeel Lari, et al. (2009), Value Capture for Transportation Finance, Center for Transportation Studies University of Minnesota (; at


Todd Litman (1996), “Using Road Pricing Revenue: Economic Efficiency and Equity Considerations,” Transportation Research Record 1558, Transportation Research Board (, pp. 24-28; at  


Todd Litman (2002), “Evaluating Transportation Equity,” World Transport Policy & Practice (, Volume 8, No. 2, Summer, pp. 50-65; revised version at


Todd Litman (2003), London Congestion Pricing: Implications for Other Cities, Victoria Transport Policy Institute (; at


Todd Litman (2006), Parking Taxes: Evaluating Options and Impacts, Victoria Transport Policy Institute (; at


Todd Litman (2008), Carbon Taxes: Tax What You Burn, Not What You Earn, Victoria Transport Policy Institute (; at


Todd Litman (2009), “Evaluating Carbon Taxes As An Energy Conservation And Emission Reduction Strategy,” Transportation Research Record 2139, Transportation Research Board (, pp. 125-132; summary at


Todd Litman (2010), Raise My Taxes, Please! Evaluating Household Savings From High Quality Public Transit Service, VTPI (; at


Todd Litman (2010), Parking Pricing Implementation Guidelines: How More Efficient Pricing Can Help Solve Parking Problems, Increase Revenue, And Achieve Other Planning Objectives, Victoria Transport Policy Institute (; at


Todd Litman (2010), Contrasting Visions of Urban Transport: Critique of “Fixing Transit: The Case For Privatization”, Victoria Transport Policy Institute (; at

Todd Litman (2014), “Evaluating Public Transportation Local Funding Options,” Journal of Public Transportation, Vol. 17, No. 1, pp. 43-74 (; more complete version at


Oliver Mietzsch (2010), Non-Fiscal Instruments of Public Transit Infrastructure Funding: Experiences in the United States and Lessons for German Cities, KSV-Verlag ( ; at


Eric Morris (2006), “How Privitization Became a Train Wreck,” ACCESS 28, (, Spring, pp. 18-25.


NSTIFC (2009), Paying Our Way: A New Framework Transportation Finance, Final Report of the National Surface Transportation Infrastructure Financing Commission (; at


ODOR (2010), Mass Transit District Payroll/Excise Tax, Oregon Department of Revenue (; at


OSR (2000), Parking Space Levy, Office of State Revenue, NSW Treasury (


Sasha Page, Bill Bishop and Waiching Wong (2016), Guide to Value Capture Financing for Public Transportation Projects, TCRP Research Report 190, Transportation Cooperative Research Program (; at


PCW (2002), Some Existing Water District Funding Sources, Legislative and Regulatory Issues Technical Advisory Committee, Project Clean Water (


John E. Petersen (2008), “Planning and Financing The Washington Metropolitan Area Transit Authority,” Managing And Financing Urban Public Transport Systems An International Perspective, Local Government and Public Service Reform Initiative, Open Society Institute ( 


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SACG (1999), Transportation Funding Handbook, Sacramento Area Council of Governments (


Ko Sakamoto (2010), Financing Sustainable Urban Transport, GTZ Sourcebook Module, Sustainable Urban Transport Project  ( Asia and the German Technical Cooperation (; at


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Donald Shoup (1996), “Regulation At The Point Of Sale,” Journal of the American Planning Association (, Vol. 62, No. 3, Summer, pp. 354-372; at


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Jeffery J. Smith and Thomas A. Gihring (2003), Financing Transit Systems Through Value Capture: An Annotated Bibliography, Geonomy Society (; also at


STPP (2006), A Guide to Transportation Opportunities in You Community, Surface Transportation Policy Partnership (; at


TBoT (2010), The Move Ahead: Funding “The Big Move”, Toronto Board of Trade (; at


TransLink (2012), TransLink Funding Options


José M. Vassallo and Antonio Sánchez-Soliño (2007), “Subordinated Public Participation Loans for Financing Toll Highway Concessions in Spain,” Transportation Research Record 1996, Transportation Research Board (, pp. 1-8.


Asha Weinstein and Jennifer Dill (2007), “How to Pay for Transportation? A Survey of Public Preferences,” Transport Policy (, Vol. 14, No. 4, July , pp. 346-356; previous version at


Asha Weinstein Agrawal and Hilary Nixon (2014), What Do Americans Think About Federal Tax Options To Support Public Transit, Highways, And Local Streets And Roads? Results From Year Five Of A National Survey, Mineta Transportation Institute (; at


Asha Weinstein Agrawal (2015), What Do Americans Think about Public Transit? A Review of U.S. Public Opinion Polling Survey Questions, Mineta Transportation Institute (; at


Dave Wetzel (2006), “Innovative Ways of Financing Public Transport,” World Transport Policy & Practices, Vol. 12, No. 1 (, pp. 40-46; at


Shahid Yusuf (2016), Developing a Common Narrative on Urban Accessibility: A Fiscal / Finance Perspective, Brookings Institution (; at

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