Who really pays for free parking?
Who pays for free parking? "Everyone but the motorist," said Professor Donald Shoup of the University of California Los Angeles. He made his remarks at the Center for Transportation Studies Fall Luncheon on November 3, 2005.
Americans park for "free" at the end of 99 percent of their trips. The true cost of parking, however, is diffused throughout the economy, embedded in the price of everything from movie tickets to housing. "We don't pay for parking in our role as motorist," Shoup said, "but we pay for it...as consumers, investors, workers, residents, and taxpayers."
This price distortion arises from what Shoup argued are two mistakes in parking policy: it keeps curb parking free or cheap, and it requires a great deal of off-street parking.
We all bear the cost of this "great planning disaster," Shoup declared. Parking requirements skew travel choices, distort urban form, degrade urban design, raise housing costs, impede reuse of older buildings, limit homeownership, damage the urban economy, and harm the environment.
The cost of free parking is staggering. The total subsidy for off-street parking in 2002, Shoup estimated, was between $127 billion and $374 billion.
The good news, Shoup said, is that there is "almost an easy way out" of this situation through two reforms in parking policy: charging market rates for curb parking, and returning the meter revenue to the neighborhoods that generate it.
The success of this approach is evident in Old Pasadena, a 15-block historic district that was a slum 25 years ago. The city of Pasadena lacked funding for public improvements, but merchants had opposed parking meters for fear of losing customers. When the city offered to return all parking meter revenue to Old Pasadena in 1993, however, merchants and property owners immediately agreed.
Now, 690 meters yield $1.2 million each year for Old Pasadena. The revenues pay for repaving, increased sidewalk cleaning, and other landscaping amenities. Both businesses and customers support the change.
"The meter money has transformed the public sector...and that has enabled the private sector to do what it can do," he said.
Today's modern meters, which allow variable pricing and let motorists pay with their cell phones or credit cards, are a part of the area's success. Technology also allows communities to monitor the occupancy rate of spaces, reducing the need for meter readers.
Shoup concluded his talk by outlining two future scenarios. In the first, parking policies are unchanged, costs remain hidden, and transportation choices are distorted. Our cars—parked 95 percent of the time—prevent the valuable land beneath them from being tapped for revenue.
In a "better" future, Shoup envisions communities that charge market-rate prices for curb parking, use the revenue to improve neighborhoods, and remove off-street parking requirements. The cost of parking becomes unbundled from other transactions, so driving and oil consumption drop and our air is cleaner. "We pay less for the price of everything except parking," he summarized.
For more about his research, please visit Shoup's Web site at http://shoup.bol.ucla.edu.
(Condensed from the December 2005 CTS Report.)