After years of discussions, congestion pricing in New York City may finally be a reality. It will be the first plan of its kind in the United States and could go into effect as early as spring 2024. Congestion pricing is a controversial concept that will undoubtedly have major consequences for anyone who drives into Manhattan daily. So, here is a look at everything you need to know about NYC's congestion pricing plan so you can prepare.
What is Congestion Pricing?
Congestion pricing refers to a system of charging fees to drivers who wish to enter a busy commercial area in some type of vehicle, such as a car, bus, motorcycle, or taxi. The policy is intended to reduce traffic in areas with intense gridlock by creating an economic barrier to entry. It's also meant to reduce carbon emissions, increase public safety, and raise money to finance other services such as public transportation. However, many are skeptical as to whether or not congestion pricing is effective at reducing traffic or if it simply places an unnecessary economic burden on drivers.
How Does NYC's Congestion Pricing Work?
Late last year, the Metropolitan Transit Authority (MTA) voted to approve a proposal by the Traffic Mobility Review Board that outlined a plan for congestion pricing in NYC with details such as the cost of the tolls, the timeline of implementation, and who will receive credits. The MTA's congestion pricing plan will impact all vehicles entering Manhattan's Central Business District, specifically the area below 60th Street. However, the thoroughfares that run along the border, including FDR Drive and the West Side Highway, will not be impacted unless drivers exit to drive into Manhattan.
The following vehicles will pay an NYC congestion tax:
- Cars: $15
- Small trucks: $24
- Large trucks: $36
- Motorcycles: $7.50
- Taxis: $1.25 per ride
- Rideshare apps: $2.50 per ride
Drivers will pay the Manhattan congestion toll on top of the existing tolls already in place when accessing specific roadways. You will only have to pay the fee when entering the congestion area but not when exiting, and it's only required a maximum of once per day. So, if you live in Manhattan, you won't have to pay the toll on 60th Street just to drive around the block. Plus, if you enter and exit the city multiple times in a day, you won't keep racking up fees.
What Are the NYC Congestion Pricing Hours?
According to the current plan, the full daytime rates for congestion pricing will go into effect between 5 am and 9 pm on weekdays and from 9 am until 9 pm on weekends. However, the board has also recommended a reduced rate in the off-hours. That would mean that from 9 pm to 5 am on weekdays and 9 pm to 9 am on weekends, drivers would pay 25% of the standard rate (cars would pay $3.75 instead of $15, etc.)
When Does Congestion Pricing Start in New York City?
Congestion pricing could go into effect as early as June 2024. Now that the MTA has approved the plan, there will be four public hearings in February and March, followed by a final vote in April. So, if the plan goes through without any major objections, it will be in effect by the end of the spring. However, delays are likely as officials and residents sort out the logistics.
Are There Any Exemptions to New York City Congestion Tax?
Many groups are seeking exemptions from NYC's new tolls. However, the existing plan only names a few. Specialized government vehicles, such as snowplows, and emergency vehicles, such as police cars and ambulances, don't have to pay the toll.
Low-income drivers earning less than $50,000 annually may apply for 50% off the daytime rate. However, it will only go into effect after the first ten trips in a month.
Drivers can also get a "crossing credit" when using any of the four tunnels to enter Manhattan. So if you already pay to use the Lincoln, Holland, Queens-Midtown, or Brooklyn-Battery tunnels, you can get a discount on the daytime rate. The cross credit is good for $5 per ride for passenger vehicles, $2.50 for motorcycles, $12 for small trucks, and $20 for large trucks.
What Are the Intended Benefits of the NYC Congestion Plan?
The MTA estimates that the Manhattan congestion fee will discourage some drivers from entering the CBD, thereby improving the flow of traffic and helping the environment. They estimate that it will reduce the number of vehicles entering the area by 17%, which equates to over 150,000 vehicles. The plan also states that the reduction in traffic will drastically reduce carbon emissions, leading to less pollution and better air quality.
The MTA believes congestion pricing will generate about $15 billion, which will be used to improve and update the public transportation system. By law, the congestion pricing plan must generate at least $1 billion, which would be allocated to the MTA. They would then sell bonds to generate the $15 billion needed to modernize subways and buses.
Outcomes of Congestion Pricing in Other Countries
The NYC congestion pricing plan will be the first policy of its kind in the US. However, other countries have already experimented with the concept. Singapore was the first country to enact congestion pricing in 1975 and has been perfecting its approach. Other high-traffic cities, including London, Stockholm, Milan, and Gothenburg, have followed suit. Here is a look at how the system has worked out in those countries.
Singapore
Starting in 1975, Singapore began charging a fee for entering its central business district, and the policy has been in effect ever since. In 1998, they began using an electronic tolling system to ensure drivers complied with the law. All vehicles in the country feature electronic units that register the fees.
Congestion pricing has been effective in improving the flow of traffic in Singapore. However, the added tolls aren't the only reason for the improvement. For instance, to own a vehicle in Singapore, you must apply for a certificate of entitlement.
These certificates are limited and, therefore, rare and often expensive. In 2023, it costs $106,000 to purchase a certificate that is only valid for ten years. So, only the wealthiest citizens can afford to own a car, which is likely the primary cause behind the reduction in gridlock, not congestion pricing.
Stockholm
Stockholm also implemented a congestion pricing policy in its central business district in 2006 with a 6-month pilot program. At the time of its implementation, two-thirds of voters opposed the plan.
However, as soon as it went into effect, traffic decreased by 20%, and public transportation usage increased by 3.5%. Once the pilot program was over, two-thirds of residents voted in favor of congestion pricing, and the policy has been in place ever since.
Congestion pricing brings in about $92 million per year, which the city uses to invest in bike lanes, subways, light rails, and highways. So, in Stockholm, the policy has largely been effective, and most residents accept it as a normal cost of driving.
London
London launched a congestion pricing plan in 2003 in its CBD, an 8 square mile area about the same size as the intended zone in New York. The city saw an immediate drop off in traffic, and the number of vehicles decreased by 15%, while traffic delays dropped by 30%.
However, the effects proved to be short-lived. While the number of personal vehicles stayed low, the streets became clogged by taxis, Ubers, and delivery trucks instead. Congestion soon returned, forcing the city to raise the congestion fee. Today, drivers pay $18.95 to enter the congestion zone, which is three times more than when the plan first started. As a result, congestion remains an issue, yet drivers are still paying the increased fee.
Potential Effects of Congestion Pricing in NYC
While the MTA has high hopes that congestion pricing in New York City will reduce traffic and raise billions of dollars for the city, the reality may not be as optimistic. Of all the cities that have implemented congestion pricing, New York is most similar to London. So, it wouldn't be surprising if any potential benefits of the policy are short-lived, yet it results in unintended negative consequences for residents.
Undivided founder Mukul Lalchandani believes that the NYC congestion pricing plan will only widen the gap between the haves and the have-nots. For those with the means, the fee will only be a small nuisance tacked onto their EZ pass. But it will be a significant burden for those struggling to make ends meet. If you live in a transportation desert in one of the outer boroughs or another state and travel into the city for work, it could seriously impact your take-home pay.
You already have to pay a range of different tolls just to enter and leave the city. Mukul pays about $12 per trip into Manhattan and $7 just to leave. Imagine paying $15 every workday - an additional $300 per month. It's even more for large vehicles, like mom-and-pop delivery trucks that make deliveries daily.
They say it will reduce the amount of traffic by 150,000 vehicles, but that will barely make a dent in the congestion. Plus, they aren't planning on offering discounts for electric vehicles, which would make the most sense if they were trying to reduce pollution and save the environment.
"Let's face it The MTA is over-bloated" Mukul says, "and for the 20 years I lived there, they never did anything on time. The reason people don't use public transportation is because it isn't good. From homicides to dirty, smelly cabins to inconsistent schedules that randomly skip stops, why would they expect most people to use it? I think they should fix those problems first, make people excited to use public transit, and then consider expanding. I don't believe that congestion pricing will solve any of these major issues."
Concerned about the impacts of congestion pricing on housing prices? Check out our YouTube channel for more content on congestion pricing and how it will impact home prices. You should also reach out to our team if you’re considering buying a home in New York City in the near future and need more advice.
