vvEPA
United States
Environmental Protection
Agency
Air and Radiation
EPA420-S-98-003
July 1998
Office of Mobile Sources
TRAQTechnical Overview
Transportation Air Quality Center
Transportation Control Measures:
Commute Alternative Incentives
EPA's main strategy for addressing the contributions of motor vehicles
to our air quality problems has been to cut the tailpipe emissions for
every mile a vehicle travels. Air quality can also be improved by
changing the way motor vehicles are usedreducing total vehicle miles
traveled at the critical times and places, and reducing the use of highly
polluting operating modes. These alternative approaches, usually
termed Transportation Control Measures (TCMs), have an important
role as both mandatory and optional elements of state plans for
attaining the air quality goals specified in the Clean Air Act. TCMs
encompass a wide variety of goals and methods, from incentives for
increasing vehicle occupancy to shifts in the timing of commuting trips.
This document is one of a series that provides overviews of individual
TCM types, discussing their advantages, disadvantages, and the issues
involved in their implementation.
> Printed on Recycled Paper
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Alternative Incentives
Contents
O Background
@ Costs and Benefits
© Implementation
O Equity Issues
© Recent Examples
© Sources
6 On-line Resources
Commute alternative incentives are subsidies and other
incentives to encourage commuters to use alternatives to
driving alone to work. Alternatives to single occupant vehicle
(SOV) commutes serve to reduce vehicle miles of travel
(VMT) and congestion (and congestion-related emissions).
This transportation control measure (TCM) is implemented as
part of both employer-based transportation management
programs and state and local rideshare programs.
Employers play a critical role in many of the most
effective TCMs because of their influence over employee travel
behavior, work schedule, parking, compensation, and benefit
policies and practices. Strategies often developed or promoted
by employers include the following:
** Improved commute alternatives (such as carpooling, vanpooling, and increased
use of transit)
** Facility improvements to encourage the use of these alternatives
** On-site support services to ensure a smoothly operating program
Although these opportunities exist to provide commute alternatives to the SOV,
incentives are often necessary to overcome the cost or convenience advantages of SOVs and to
equalize the economic competition between the SOV and other transportation modes. Incentives
are especially needed to promote commute alternatives in suburban areas, where employment
destinations are widely scattered and parking on-site is generally provided free by the employer,
both of which favor SOV use. These incentives can include direct subsidies for transit use or
ridesharing, parking pricing systems that favor HOVs, and guaranteed ride home programs. The
most effective employer programs frequently promote a variety of commute alternatives, while at
the same time offering incentives to increase the use of these alternatives.
State, regional, and local rideshare incentives have been developed to encourage
commuters to use alternatives to driving alone to work and to encourage employers to provide in-
house programs that promote ridesharing among employees. There are three main types of area-
wide rideshare incentives or programs:
** Area-wide commute management organizations, or "third-party" ride-sharing
agencies, provide carpool and vanpool matching services, shared-ride taxis, and
other commute trip elimination strategies.
Transportation management associations or organizations (TMAs/TMOs) are
generally business partnerships that provide similar services directly to members
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Commute Alternative Incentives Page 2
or provide a channel for organized private sector involvement into public sector
planning.
** State and local tax incentives and subsidy programs facilitate new vanpools,
transit ridership, or carpooling by offering tax incentives for participating in a
ridesharing program and by providing regulatory exemptions for vehicles
participating in shared-ride arrangements. The Congestion Mitigation and Air
Quality Improvement Program, for example, provides federal funding to states
which in turn subsidize transit improvements, ridesharing services, and pedestrian
and bicycle programs. [1]
Employer-based transportation management programs and state and local rideshare
incentives principally serve home-to-work trips in urban areas with populations of 50,000 or
more. Because this type of trip accounts for only 25 to 33 percent of all trips made in most urban
areas, the impact of commute management on area-wide VMT is limited. However, the
commuter market represents the best potential for grouping riders, removing vehicle trips, and
reducing VMT. Additionally, many harmful pollutants are generated in the morning hours from
stationary sources, so that mitigating the effects of mobile sources in the same period is
advantageous. Reducing commuter trips not only reduces emissions associated with VMT, but
also those associated with "cold starts," when commuters set out in the morning and "hot soaks,"
when vehicles are parked at work and continue to produce evaporative emissions even after the
engines are turned off.
1. Background
Employer-based
Reducing commuter trips not only reduces
programs have been used primarily elusions associated with VMT, but also due to
"cold starts" when commuters set out in the
morning and "hot soaks" when vehicles are
parked at work and continue to produce
evaporative emissions even after the engines are
turned off.
transportation management
programs have been used pi
by large employers, i.e., those
having more than 100 employees at
a single worksite. A number of
well-known employer programs
have been in existence for a
relatively long time. One of the
earliest programs was initiated by
Reader's Digest. A move from Manhattan to Westchester County, NY in the 1920s prompted the
publisher to form and subsidize a private bus system to transport relocated workers. The energy
crises of the mid- and late-1970s also prompted a significant number of new programs as public
efforts to promote ridesharing began to focus on employers. In the 1980s, trip reduction
ordinances (TROs) were adopted in many localities to combat growth, traffic congestion, and air
quality problems, resulting in new employer programs because TROs typically require employers
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Commute Alternative Incentives Page 3
to implement programs or developers to work with tenants to implement programs. The Clean
Air Act Amendments of 1990 required the implementation of employer-based trip reduction
programs in severe and extreme ozone non-attainment areas.
Many ridesharing agencies serving metropolitan
areas were formed after the 1973-1974 oil embargo.
These programs focused largely on marketing
rideshare options to the general public via roadside
billboards and mass media campaigns.
Commute management
organizations were largely an
outgrowth of the energy crises of
1973-1974 and 1979. Many
ridesharing agencies serving
metropolitan areas were formed
after the 1973-1974 oil embargo.
These programs focused largely
on marketing rideshare options to the general public through roadside billboards and mass media
campaigns. The Federal Highway Energy Conservation Act of 1974 authorized the use of
regular highway funds to establish and operate rideshare demonstration projects. In 1978, the
Surface Transportation Assistance Act replaced the Emergency Act and made ridesharing
assistance a permanent federally funded program. One of the most important lessons learned
from that period was the need to target employers, given their influence over employee commute
and working patterns. Therefore, programs operated during the 1979 oil crisis focused their
efforts through employers to better reach commuters who might be able to "pool' together or use
other options to driving, such as transit and bicycling.
The growth of rideshare programs was assisted by changes in state motor vehicle laws
and regulations (e.g., high occupancy vehicle lanes). [2] These changes were often needed to
remove barriers to employer commute subsidies and the use of vehicles for shared commuting
arrangements. Finally, the concept of linking employers and other interested parties together in
an employment center association for managing commute transportation prompted the formation
ofTMAs.
2. Costs and Benefits
In addition to improving air quality primarily by reduced automobile trips and VMT,
employer-based transportation management programs can provide benefits such as savings in the
following:
*+ Vehicle expenses
*+ Road construction, operation, and maintenance costs
** Expenditures on public services devoted to vehicle traffic
*+ Resource consumption
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Commute Alternative Incentives Page 4
Some employers have found that incentives and subsidies may improve employee morale
and productivity, reduce employee stress and related health problems, and improve employee
recruitment and retention by enhancing the employer's image.
These benefits may be partially offset, however, by other changes in driving behavior.
Commuters who shift from driving to transit, for example, may make additional off-peak
automobile trips for errands they previously performed while driving home from work.
Additional short trips may be made by family members with access to a vehicle left at home. If
one worker in a household is sharing a ride with someone else, the other family commuter may
have to make more circuitous trips before and after work for child care, shopping, and other
errands.
Employer-based
transportation management Benefits from "desharing may be partially offset,
however, by other changes in driving behavior.
Commuters who shift from driving to transit, for
example, may make additional off-peak
automobile trips for errands they previously
performed while driving home from work.
programs have the potential to be
highly cost-effective. Employers
incur initial costs to design the
program and to develop eligibility
requirements for their employees.
Monitoring and accounting costs
are incurred periodically.
Significant variation in costs has been observed based on the size of the employer, the nature and
complexity of programs offered, and the amount of the subsidy, if any, offered. [4]
^ General travel allowance programs, for example, have required considerable
planning and promotional efforts during the pre-implementation phase, but the
ongoing administrative costs have been relatively small. General allowances can
be used by employees for any transportation mode or for non-transportation
purposes. There are low monitoring costs, and accounting costs are negligible,
because the allowance is given out to all employees as a bonus. The only
significant cost to the employer is the cost of the allowance itself. This cost can
be at least partially offset, as the reduction in the number of employees needing
parking can generate savings in maintenance, monthly parking lease costs, and
savings in future capital requirements.
^ Targeted and specific allowance programs, such as transit and vanpool
allowances, may require on-going administrative effort for accounting and to
monitor eligibility requirements as the employee base changes.
** Flexible use of allowances for services provided by many different operators
describe the most complex programs and may cost even more because of greater
administrative, monitoring, and accounting needs.
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Commute Alternative Incentives Page 5
The costs and benefits of state and local rideshare incentive programs are more difficult
to measure. The primary area of uncertainty regarding these programs is the difficulty in
determining causality between area-wide promotional efforts and VMT and emission impacts.
Area-wide commuter management organizations, TMAs, and state and local tax incentives and
subsidies are largely supportive of in-house employer programs. There appears to be no
evaluation that has estimated the impact of these programs above and beyond that attributable to
the employer programs. Clearly, these efforts improve the effectiveness of employer-based
ridesharing programs, produce results among unaffiliated commuters, and serve to maintain
existing levels of shared ride modes. It is a difficult task to separate out the impacts of these
programs above and beyond those reported for employers or to speculate on the increase in VMT
or emissions if these programs did not exist.
It is difficult to separate out the impacts of any one trip reduction measure, and the
techniques are not strictly additive due to the complementary nature of many strategies. Care
must be taken not to double-count the effectiveness of area-wide rideshare incentives with the
benefits of employer-based transportation management programs. In addition, the roles and
responsibilities of various public, non-profit, and for-profit organizations involved in promoting
ride-sharing and other travel alternatives within a region need to be carefully delineated so that
the various efforts are not perceived as either duplicative or conflicting by employers and
individuals.
3. Implementation
Employer-based
transportation management
programs and TMAs are
implemented by private entities
and therefore do not require a
substantial investment in
government resources (although
public seed funding may be an
important catalyst to TMA
development). Commute management organizations and state and local rideshare incentives,
however, do require some public investment.
"...many of the most successful programs have
been located in large suburban activity centers.
This result may be due to the fact that less
ridesharing occurs naturally in these areas, leaving
the program more opportunities to shift
commuters' mode of transportation."
The amount of time required to implement an incentive program is relative to the
complexity of the measures offered. Employer-based transportation management programs can
be implemented almost immediately. TMA development activities can be very time consuming,
however, often requiring one to two years before the TMA can be fully operational.
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Commute Alternative Incentives Page 6
Employer-based transportation management programs can consist of both voluntary and
mandatory measures; generally a "package" of various complementary measures produces the
greatest impacts. For an individual employer, trip reduction effects can be seen immediately. To
effectively reduce area-wide commute trips, however, the cooperation of the majority of
employers within the target area must be obtained. One employer's effective program can be
negated by a neighboring firm with no program if the localized impacts of the successful program
are subsumed by additional through traffic and the ability of neighboring employees to access
their site more easily.
One potential concern is the long-term sustainability of the program's impacts. If
management support, financial commitment, employee turn-over, or other factors wane, the
program's effectiveness can diminish. Programs that include financial incentives are more likely
to have sustainable results. Three examples of types of financial incentives and their goals are
summarized below.
*+ Tax incentives, in the form of investment tax credits or accelerated depreciation,
can prompt employers and developers to provide facilities and equipment
conducive to ridesharing.
*+ Subsidy programs can be important "pump primers" to enlist employer
involvement and share in the initial risk of trying something new for employees.
Such programs are based on the hope that the employers will see the benefits of
continuing the subsidies on their own to satisfy employee demands or comply
with regional or local mandates. Also, some subsidy programs can target
commuters directly, when employer involvement is unlikely or impractical. For
example, vanpool subsidies tied to corridor reconstruction projects can aid in the
formation of vanpools among commuters using the affected facilities, regardless
of where they are employed.
** Legislative enablement or reform can eliminate or minimize barriers to
widespread implementation of employer-based trip reduction programs. Although
employer-based transportation management programs can be either voluntary or
mandatory, a legal requirement mandating employer or developer involvement is a
powerful determinant of program effectiveness. Mandatory participation is key to
assuring widespread participation by enough employers to have an area-wide
impact. State enablement of certain types of organizations, such as special
assessment districts, can reinforce partnership efforts, such as TMAs. For
example, tax, safety, and liability laws can be clarified to prevent them from
acting as barriers to forming vanpools.
Historically, one of the greatest state/local incentive/subsidy issues concerns the taxation
of commute benefits. Employer-provided free parking has not been considered taxable income
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Commute Alternative Incentives Page 7
for the employee, whereas most subsidies for commute alternatives were. However, provisions
in the Taxpayer Relief Act of 1997 and the Transportation Equity Act for the 21st Century have
changed this interpretation. The law now allows employers to provide commute benefits with
pre-tax dollars. The cost of these benefits is not taxed as income. Tax exemption for commute
benefits is allowed up to the following limits for 1998:
** $170 per month for parking at or near the work site
*+ $65 per month for public transit passes or vanpool services for work commute
transportation
Limits for 1999 are:
*+ $ 175 per month of parking at or near the work site
*+ $100 per month for public transit passes or vanpool services for work commute
transportation
Limits are adjusted annually for inflation thereafter.
Employer size and location, however, do not seem to determine program effectiveness.
Although one can readily understand that programs in downtown settings would be effective,
given the range of commute alternatives available, many successful programs, contrary to what
one might expect, have been located in large suburban activity centers. This result may be due to
the fact that less ridesharing occurs naturally in these areas, leaving the program more
opportunities to shift commuters' mode of transportation.
4. Equity Issues
At the level of the individual employer, equity questions exist in the distribution of
subsidies and incentives. Employees using different transportation modes and new employees
may not be treated equally. General travel allowance programs are considered to be the most
equitable option.
5. Summary of Recent Examples
Employer-based transportation management programs have been in effect in many
locations nationally. These programs are most often associated with parking pricing measures
and TROs (which mandate that employers or developers work to implement transportation
management programs). One example of a successful employer-based transportation
management program is William M. Mercer, Inc., located in downtown Seattle, which subsidizes
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100 percent of all bus and ferry passes for employees, in addition to other TCMs. As a result, the
firm has achieved a modal split with 33 percent SOVs, well below the area average of 43 percent
SOVs.
CH2M Hill, located in suburban Bellevue,
Washington, has also achieved a low rate of SOV
commute travel (52 percent versus 81 percent for
the region), primarily by offering a $40 per
month travel allowance as well as bus pass and
carpool subsidies. Neither of these examples
examined the emissions impacts of their
programs.
Among the states, California has the
most comprehensive set of tax
incentives in place to benefit
employers and employees who
participate or establish rideshare
programs and arrangements
State and local rideshare incentives are
not common. Among the states, California has the most comprehensive set of tax incentives in
place to benefit employers and employees who participate or establish rideshare programs.
These "State Rideshare Tax Incentives" were enacted in 1988 and 1989. Employees receive a
personal exemption of rideshare costs from gross income for vanpooling, buspooling, and mass
transit use, and a tax credit for non-employer-sponsored vanpool expenses. Employers receive a
deduction for the following allowable expenses:
** Vanpool subsidies
** Transit pass subsidies
*+ Preferential parking
** Facility improvements
** Company bus or van provision
** Transportation allowances
They also receive an accelerated schedule of depreciation for facility improvements, a tax
credit for purchasing vans, a tax credit for leasing vans, and limitations on provision of free
parking as a tax-free incentive.
In addition, several state and regional rideshare subsidy programs are in place in southern
California. The state offers a vanpool subsidy program for employers, TMAs, and individual
groups of commuters to help underwrite the purchase of leasing costs of new vanpools. The City
of Los Angeles offers a subsidy of $5 per month per employee for firms with less than 100
employees. For firms with over 100 employees, the city requires employers who offer free or
subsidized parking to employees, to contribute $15 toward the monthly cost of a transit pass.
The air quality effects of these incentives have not been measured.
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Commute Alternative Incentives Page 9
6. Sources
[1] Opportunities to Improve Air Quality through Transportation Pricing Programs, United
States Environmental Protection Agency, Office of Air and Radiation (September 1997).
[2] Moving People in Florida: Transit, TDM, and Congestion, University of South Florida,
Center of Urban Transportation Research (November 1995).
[3] Commuting Alternatives in the United States: Recent Trends and a Look to the Future,
United States Department of Transportation (December 1994).
7. On-Line Resources
The Environmental Protection Agency's (EPA) Office of Mobile Sources has established
the TCM Program Information Directory to provide commuters, the transportation industry, state
and local governments, and the public with information about TCM programs that are now
operating across the country. This document and additional information on other TCMs and
TCM programs implemented nationwide can be found at:
http://www.epa.gov/omswww/transp/traqtcms.htm
The EPA's Market Incentives Resource Center (MIRC) Directory of Air Quality
Economic Incentive Programs is an on-line resource which features a compilation of market
incentive program (e.g., transportation pricing, vehicle buy-back, trading programs, etc.)
summaries from around the United States. The MIRC Directory is posted as a link from the
Office of Mobile Sources' home page at:
http://www.epa.gov/OMSWWW/transp/traqmkti.htm
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