State and six municipalities agree on updated Transportation Charter

The updated Transportation Charter for the capital area, signed today, focuses on reduced travel time, fewer delays, increased traffic safety, lower carbon footprint, improved public transportation, more biking and walking paths, and development of main roads.

The charter presents a shared vision for the entire capital area, emphasizing efficient and cost-effective development of transport infrastructure. The goal is for transportation in the capital area to be world-class, making the region and Iceland competitive for both people and businesses.

The state and six municipalities in the capital area, Garðabær, Hafnarfjörður, Kópavogur, Mosfellsbær, Reykjavík, and Seltjarnarnes, agreed on an updated charter for developing transport infrastructure and public transportation in the area until 2040.

Simultaneously, an agreement was signed on cooperation for the operation and management of public transportation in the capital area. The goal is to enhance public transportation, including increased state support, with a joint company to be established for planning and operations.

Realistic plan until 2040

The charter was updated last year due to increased scope and general cost increases. Cost estimates have been revised based on experience, and many projects are closer to implementation. The charter's validity has been extended to 2040 to ensure a realistic timeframe for preparation and financing.

A presentation on the Transportation Charter was well-attended.

Cost-effectiveness and social benefits

An independent analysis of the social benefits of Transportation Charter projects (Cowi 2024) indicates significant gains due to shorter and more reliable travel times and reduced traffic congestion. The total investment in the Transportation Charter is 311 billion ISK. The benefit is estimated at 1,140 billion ISK over 50 years, with an internal rate of return of 9.2% and a benefit-to-cost ratio of about 3.5. This means that for every króna invested in the project, society receives three króna in return.

Increased freedom of choice in transportation is key to the analysis, as more people will have the option to use public transportation, resulting in reduced traffic congestion and pollution, as well as lower household operating costs.

Main roads, public transportation, biking and walking paths, and smarter traffic management

All key projects remain the same as before in the Transportation Charter, with changes made to individual projects.

The total investment in the first period of the updated Transportation Charter, until 2029, averages over 14 billion ISK annually. This corresponds to one-third of annual transport investments in the budget. From 2030 to 2040, the total annual investment averages 19 billion ISK. The total investment until 2040 is estimated at 311 billion ISK.

Transportation Charter projects are divided into four main categories: Main roads, CityLine and bus routes, walking and biking paths, and projects related to traffic management, flow, and safety. The following is a more detailed description of the project categories and their share in the Transportation Charter:

• Main roads - 42%. Six major main road projects will be undertaken in the capital area, in addition to the three already completed under the charter (main road projects on Suðurlandsvegur, Vesturlandsvegur, and Reykjanesbraut).
• CityLine and bus routes - 42%. Public transportation will be greatly improved with the development of CityLine in six phases. Service to residents will be continuously improved with an integrated network of buses and CityLine.
• Biking and walking paths - 13%. Biking and walking paths will be significantly increased and improved in the updated charter, with about 80 km of new paths to be added in addition to the 20 km already constructed under the charter.
• Traffic management, traffic flow, and safety measures - 3%. Continued investment in new technology and equipment to improve traffic flow and safety on main roads.

Miklabraut in tunnel and new intersection of Reykjanesbraut and Bústaðavegur

The biggest changes to individual projects from the previous Transportation Charter are that Miklabraut will be placed in a 2.8 km tunnel with connecting tunnels at Kringlumýrarbraut instead of a 1.8 km Miklabraut highway cap, and Sæbraut will be placed in a highway cap instead of the previous plans for one split-level intersection. New intersections of Reykjanesbraut and Bústaðavegur have been designed with free-flowing car traffic as well as dedicated space for CityLine to connect Mjódd to the public transportation system. Finally, construction on Suðurlandsvegur between Norðlingavað and Bæjarháls moves to the transportation plan. Options leading to increased cost-effectiveness and traffic safety are continuously evaluated.

Mayor Einar Þorsteinsson called the Transportation Charter a joyous and important milestone.

Increased contribution in financial plan

The funding split between state and municipalities remains the same as before, with municipalities at 12.5% and the state at 87.5%.

The state's direct contribution to the Transportation Charter will be 2.8 billion ISK annually from 2024 through 2040. Additionally, an annual additional contribution of 4 billion ISK is planned in the newly approved state financial plan from 2025 through 2029. Increased benefits are expected from the development and sale of Keldnaland, which the state contributed to the project when signing the Transportation Charter in 2019.

The municipalities' direct contribution will be 1.4 billion ISK annually from 2024 through 2040. Additionally, an annual extra contribution of 555 million ISK will be added to the municipalities' direct contributions from 2025. Municipalities in the capital area divide costs each year based on their proportional population as of December 1 of the previous year.

From 2030, income from traffic or other state funding is expected. The government is working on a new approach to road system financing, to be implemented in stages over the coming years. The goal is to adapt the financing system to energy transition and reduced use of fossil fuels, with charges based on usage instead of specific taxes such as oil and gasoline taxes. The first steps have already been taken with the introduction of a kilometer tax on electric cars, which previously paid very little for road system use.

Joint company for greatly improved public transportation

The state and municipalities signed an agreement on cooperation for the operation and management of public transportation in the capital area. The agreement includes increased financial support from the state and more active involvement in governance. The state will cover one-third of operating costs minus passenger revenue, against the municipalities. The state will also provide contributions for energy transition in public transportation.

The agreement involves the municipalities and state establishing a joint company responsible for planning and operating public transportation in the capital area. The new company's operations will cover both traditional bus routes and CityLine. The company is expected to start operations at the turn of the year.

Public transportation service will be significantly enhanced until the new route network is fully implemented with CityLine. With the new route network and CityLine, the goal is for seven out of ten residents to be within walking distance (400 m from a stop) of high-quality public transportation running every seven to ten minutes. Improved public transportation is key to enhancing residents' quality of life and reducing their transportation costs, improving traffic flow, and reducing pollution.

About the negotiation group's work

The state and municipalities' negotiation group began updating the Transportation Charter in March 2023. The group was tasked with updating the Transportation Charter and implementation plan, conducting an impact assessment of the charter's project portfolio, and drafting an agreement on enhancing public transportation to ensure its operation in the capital area.

The negotiation group called upon numerous parties who attended group meetings, in addition to extensive cooperation with Transport for the Capital Area and the Road Administration. Ragnhildur Hjaltadóttir, board chair of Transport for the Capital Area, led the negotiation group.

Slide presentation from the press conference on the Transportation Charter, August 21, 2024..

The state and municipalities in the capital area' negotiation group began updating the Transportation Charter in March 2023.