Tuesday, January 31, 2012

An overpricing trap in simple versions of performance pricing for parking?

An overpricing trap in simple versions of performance pricing for parking?

In my last post I asked if imperfect versions of performance pricing are better than none at all.  My answer: generally yes. Taking small steps towards demand responsive pricing for on-street parking is usually a good idea (for reasons to be explained in future posts).

But I can see at least one mistake to avoid: over-pricing. 

In imperfect approximations of demand-responsive parking pricing, it would be easy to over-price parking. This would create too many vacancies and make the whole idea vulnerable to objections that it is killing local businesses.

High-quality performance pricing has an answer to that:  if motorists really stop coming, then the prices will drop again until the problem is solved and, in any case, the prices will not rise past the point that gives 15% vacancies.

But rough-and-ready versions of demand-responsive pricing might indeed need to be careful not to over-price at certain places and certain times. This mistake could be tempting for at least two reasons. Today I will talk about one of them.

Simple versions of performance pricing can only vary their prices on a coarse scale. 

For example, you might have just three prices (zero, basic and peak) with two pricing zones and two time periods in which to apply these prices.

For example, the American town of Nashua, NH, has just started a basic version of performance pricing. Its downtown area now has three pricing zones: Zone 1 (red): 25 cents per 15 minutes (or $1 an hour), Zone 2 (blue): 25 cents per 20 minutes (or 75 cents an hour), and Zone 3 (green): 25 cents per 30 minutes (or 50 cents an hour).

Now, if you aim for vacancies at the really busy places and times within a large zone and over a long pricing-period, you would end up accidentally overpricing parking for part of the zone and for some of the time. Oops.

We don't yet have many examples to analyze but I think the danger is real.

After all, overpricing can happen even when on-street pricing is NOT demand responsive. For example, Donald Shoup was critical of the City of Los Angeles last year.
Two years ago the city doubled meter rates everywhere, and I’ve since seen entire blocks where there isn’t a single car parked at a meter. The prices should come down on these blocks...
Meter rates were based on revenue when the city doubled meter rates everywhere, with a minimum $1 an hour, two years ago.  Since most meters had been 25¢ an hour, that meant quadrupling the price at most meters.  Rates at most of the city’s meters had not changed at all in the previous 18 years. Inertia had been the city’s policy, not maximum revenue or good management.
The SFPark trial in San Fransciso is also revealing that the previous flat parking prices must have involved overpricing many streets at many times. How do we know? Because many of the price adjustments under SFPark have been price REDUCTIONS due to very low occupancy rates. 

These arguments also suggest that performance pricing should be introduced step-by-step and cautiously. And, in fact, even though SFPark is 'gold standard' performance pricing, it is being introduced in small steps, with only small price changes allowed, and only once per month. The discussion above suggests that such caution could be even more important if your pricing is not 'gold standard' and will not be varying much in time or space.

Do you have any examples of cities falling into the trap of over-pricing when adopting simple performance pricing? Or maybe I am wrong to worry about this?

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Saturday, January 28, 2012

Is performance parking pricing an "all or nothing" thing?

Is performance parking pricing an "all or nothing" thing?
There is a gold standard for making on-street parking prices responsive to demand. But what if your city can only take baby steps? What if it can only manage a 'silver standard' or 'bronze standard' for performance pricing?

The gold standard is to make sure that on-street parking prices vary across both space and time so that every stretch of street has roughly one of every eight parking spaces open all of the time. San Francisco's SFPark trial is doing this with the help of smart electronic parking meters and parking sensors in the ground. It aims to match the ideal of performance pricing very closely.

[By the way, if this idea is new to you then you may like to read about performance-pricing basics first.]

Making parking prices more demand-responsive is one of the reform ideas in Adaptive Parking. One of the ways in which Adaptive Parking is a little different from Donald Shoup's recommendations on parking policy is that it suggests the modest goal of making parking "more demand responsive" rather than calling for "performance pricing", period.

So Adaptive Parking encourages small steps in the right direction in the hope that performance pricing can be made more attractive to more places, even if the gold-standard version seems way too daunting. 

An article in the Vancouver Sun mentioned this issue last week. Neil Podmore, of Vancouver-based PayByPhone, was quoted:
“I think Vancouver has actually been ahead of San Francisco and L.A. for a long time. They realized that on-street parking was a valuable commodity, that it ought to be broadly market-based and they haven’t thrown a lot of money into technology,” he said. “There is a big question in the industry as to whether you need to invest $10,000 per parking space in order to get near-real-time-based parking. Vancouver hasn’t gone that way so they’ve been efficient with the money they spend for the money they get.”
So is a highly-imperfect approximation of performance pricing a step in the right direction? 

Saturated parking in Brickfields in Kuala Lumpur, Malaysia.
Do even small steps towards responsive parking prices offer benefits? Or are there risks? For example, could some halfway-houses of performance pricing be vulnerable politically? Does doing this in half measures run the risk of being seen as a failure? Could it give the whole idea a bad name?

I will tackle these questions in several posts over the next week or so.

Here is a brief preview of some of the points I will make:
  • Yes, I believe that small steps towards the ideal are better than none (usually).
  • But there is some danger. Over-pricing could derail the reforms. 
  • On the other hand, under-pricing certain places and times is less risky for the reform process. 
  • Sending a strong and clear signal that creating vacancies is the primary focus of parking pricing should be a valuable step, even before we change anything else. 

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Thursday, January 26, 2012

Parking reform wins 2012 Sustainable Transport Award

Parking reform wins 2012 Sustainable Transport Award
San Francisco's parking reforms, including SFPark, have made it joint winner (with Medellin, Colombia) of the 8th annual Sustainable Transport Award announced in Washington, D.C. on 24 January.

San Francisco's nomination profile explains:
San Francisco is a 2012 Sustainable Transport Award nominee for its implementation of SFPark, an innovative new parking and traffic demand management system, and its “Pavement to Parks” program that reclaims street and parking spaces for public spaces.
SFPark is a a demand-pricing based approach to parking management in commercial districts around the city. Over the past year, the city tested its new parking management system at 7,000 of San Francisco’s 28,800 metered spaces and 12,250 spaces in 15 of 20 city-owned parking garages. Despite much initial concern, the program has been well received in its test neighborhoods, helping local businesses and making the streets more pleasant for the huge populations of transit riders and people on foot and bicycle.

The Pavement to Parks program has created new street plazas and many new parklets (sidewalk platforms that replace car parking spaces) by reclaiming street space in partnerships with businesses and other community groups around the city. The parklets program has captured international attention, prompting a host of other cities to begin their own programs, from New York City to Vancouver.

SFPark's website provides details information on the emerging variations in the price of on-street parking.

The Sustainable Transport Award is run by the Institute for Transportation and Development Policy (ITDP) and nominees and winners are chosen by a steering committee from various leading organisations working on sustainable transport issues. Previous winners include Guangzhou, Ahmedabad, New York City and Seoul. 

Your reactions? Does SF deserve its award?
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Monday, January 23, 2012

Tangled up in equity arguments

The rise of performance pricing for parking is provoking equity-based objections.

As an example, let's take a look at the equity arguments quoted by the Boston Globe article on performance pricing which I mentioned last week. I liked it for mentioning that market pricing can shake up how we think about parking. But I wasn't so impressed by its take on the equity implications:
If Back Bay spots floated up to a market price, lower-income drivers would effectively lose access to parking spaces that they have as much legal right to as anyone else. The result, ultimately, would be a city where the rich have access to whatever spots they want, while everybody else has to settle for what’s affordable.

I care about equity and I agree that parking policy has important equity implications but this paragraph seems deeply muddled to me.

How does having the 'legal right' to park have anything to do with how parking should be priced? I have a 'legal right' to rent an apartment in the most prestigious street in my city. The fact that I, like most people, can't afford to do so has nothing to do with whether apartments should be market-priced. Of course, if significant numbers of people can't afford any decent shelter we must look for solutions. In market economies, those solutions are (usually) targeted and don't abolish market pricing for real estate generally. In any case, surely parking in busy urban streets is much less of a basic need than housing.

This brings me to 'compulsory car' thinking, which is a culprit in many of these equity objections. Many people seem to assume that driving is the only (tolerable) way to move around or that most drivers have little or no choice. They assume that if you can't afford to park in an area, then you can't afford to go there. Many people seem to be thinking of parking and driving as a basic necessity, like water. We do price water of course, but the politics of pricing for basic needs is always tricky. Highly automobile dependent societies, like the USA, are naturally especially prone to compulsory car thinking. However, the places where parking is scarce enough for performance prices to be high also tend to be the kind of dense urban places that are richest in mobility alternatives. Cars are one option among many and are clearly not a basic need in order to reach such places, even when such a place is located within a generally auto-dependent metropolitan area.

It is a pity the Boston Globe journalist didn't dig further into the connection between equity worries and how we frame parking as a good (which was a strong point in the story).

For example, on-street parking is owned by the community as a whole. But is it like space on an uncrowded beach or is it more like city-owned tennis courts in a popular urban park in a dense city? Both are publicly-owned but their pricing stories are different. Pricing the space on an empty beach is unlikely (and in any case, the 'performance price' there would be zero!). But pricing municipal tennis courts seems reasonable (at least in dense places) since tennis involves relatively few people using up a lot of space. Having 'peak pricing' for tennis courts (higher prices for high-demand times like weekends) also seems acceptable (here are some examples from London). And underpricing of tennis courts would cause nothing worse than a waiting list, whereas under-priced on-street parking causes traffic chaos and disruption. So why are some people so suspicious of performance pricing for on-street parking?

Two eminent left-of-center American economists are also quoted in the article:
“My first reaction was that this is going to create a huge issue of equity,” said University of Oregon economist Mark Thoma, who publicly voiced this concern in a 2010 blog post responding to a New York Times op-ed arguing for demand-based pricing.

Robert Reich, former labor secretary and professor of public policy at the University of California at Berkeley, who recently lamented the creep of privatization into public life, points out that the current system has a kind of equity built in: People who make less money, and can’t afford to park in a garage, can instead invest their time in the search for a cheap metered space. “Which is best? It depends in part on how much time you have relative to how much money,” Reich wrote in an e-mail. “Upper-income people have more of the latter, of course, which makes the allocation-by-price system better for them. But it’s far from clear it’s the best system for everyone.”
Now I respect these two economists enormously but I don't think they have thought this parking issue through. 

For example, there is a hidden assumption here that the status quo is fair. Why assume that? It seems likely that there are often more low-income people among the victims of cruising for parking (such as bus users) than among the beneficiaries of the under-priced parking.

Here is another way to think about the lack of fairness of the status quo. Imagine a city with a long-standing system of performance pricing for its on-street parking. Would a cap on parking prices really be high on your list of ways to improve equity of access to prime locations in this city? Would such a cap accurately target the people who really need most help? Would the poor really receive a big share of the benefit?

There is much more to be said on equity and performance-pricing but that is enough for one blog post.

What do you think?

Friday, January 20, 2012

Parking protection rackets

Parking protection rackets
South Africa's informal car guards were featured this week in the New York Times in an article that highlights the stories of the guards as well as the problems with this practice.

It is a phenomenon that happens around the world.

Latin America has them. Mexico City's informal parking attendants have been featured in various media. Last year I saw an informal car guard operating on a Sunday along a restaurant/market street in the beautiful Buenos Aires district of Palermo Viejo.

They are widespread around Asia too. They were familiar when I lived in Malaysia for several years. My father-in-law, a police officer in Singapore in the 1960s, tells me that 'jaga kereta' (Malay for car guard) were also common in Singapore at that time.

Informal parking attendants provoke polarized opinions. Car guards are often feared and loathed. But their existence also reflects serious unemployment and poverty problems, so that a draconian enforcement approach seems harsh and unfair.

My report on Parking Policy in Asian Cities for the ADB makes the point that this phenomenon seems to emerge to fill a vacuum:
If parking in a vicinity is not managed efficiently by governments, informal fee collectors may step in, as seen in Bangkok, Jakarta, Kuala Lumpur, Manila, and some Indian cities. In Bangkok, Kuala Lumpur, and Manila such activities occur whenever and wherever the official fee collection system is absent but where demand remains high.

So the car guard phenomenon is best understood as a sign of our failure to manage on-street parking properly. 

These guys are telling us something important. Where parking is saturated for long periods of the day, then motorists will be willing to pay for parking. If cities don't do the pricing, then informal attendants often will.

Harsh action against them is futile (others take their place) and just hurts people who are already poor and marginalised. But the actions of illegal parking guards ARE often problematic. Wouldn't it be better to provide legitimate employment to legal parking attendants by improving and expanding legal parking fee collection systems? This would enhance the level of security and trust on both sides of the transaction.

Indian cities are an interesting case. Most have legal parking attendants, providing employment and managing parking (after a fashion). That is a start. But with weak contractual arrangements and very low prices, the contractors are often tempted to overcharge.  The City of Makati in Metro Manila does a better job, with uniformed attendants wielding digital devices.

Arresting illegal parking attendants is not going to solve the problem. Filling the vacuum with legitimate parking management may.

A Makati parking attendant with digital device.

Do you have any insights or anecdotes on informal parking attendants or car guards?

Monday, January 16, 2012

"A rethinking of what parking is in the first place"

"A rethinking of what parking is in the first place"
If your parking policy debates are going in circles, there is a good chance the protagonists are 'framing' parking in totally different ways. 

They have different ideas about 'what parking is in the first place', as the Boston Globe's Leon Neyfakh puts in in his short feature, which focuses on the rise of performance pricing for parking in US cities. 

I have written before that parking debates often involve different ways to frame the whole idea of parking. So I liked this bit in the article:
At one level, the idea is a novel piece of urban engineering made possible because of new parking technology. But at another, it amounts to a rethinking of what parking is in the first place — not a public resource to be shared by all, but a scarce commodity whose price should fluctuate depending on how badly people want it. 
Possible translation into policy-speak:  parking is not a public good, it is a private good which can have a market price.  

Does that claim shock you?

How could parking in public space (such as in a street) be a private good? Well, you need to understand that when policy wonks use the term 'private good' they do NOT necessarily mean it must be privatized. It just means that it is both rivalrous and excludable.

Now, you CAN try to pretend that parking is a public good if you really want to. This means you would refuse to ration it (or 'exclude' some people some of the time). But, unfortunately, you can't magically stop parking from being rivalrous. If I am parking in a specific spot you can't park there at the same time. So you end up not with a public good but with a common-property resource (or 'commons good'). This means it is non-excludable (or inconvenient to exclude) but it is rivalrous (or 'subtractable'). It also means that you are likely to face a tragedy of the commons situation, such as saturated parking with lots of cruising for parking and much moaning about the parking 'shortage'.

Image from Living Economics
By the way, we have lots of choices on how to manage common-pool resources. Shifting them into the private goods box (eg by pricing it or allocating property rights) is one approach. Others include central planning or local community solutions, such as the common property regimes highlighted by Elinor Ostrum's Nobel winning work on common pool resources). 

Further into the article we can see some of these ideas applied to parking and expressed in everyday English:
At the heart of the early resistance to meters was a sense of entitlement to free street parking that has endured in America to this day. We carry a deep-seated belief that people should be free to go where they please on the streets we’ve built, and that a city’s curb space is public — that, like air and water, it belongs to everyone.
To Shoup and his adherents, this is the wrong way to see it: Curbside parking isn’t a shared resource, like Boston Common, but rather a valuable piece of real estate, managed by the city, that should be priced according to what it’s worth. As Shoup put it, “We have a problem with parking exceptionalism in this country. Somehow people think that the normal laws of supply and demand don’t apply.”

So Shoup's thinking on parking, even on-street parking, sees it as a 'private good' (in the policy-wonk sense of the term). This causes dismay to people who are thinking of it as somehow 'public' or 'common'.

This post was about on-street parking. What about off-street parking? That's a whole different story. Conventional parking policy treats off-street parking as like the restrooms we require with each building and we should probably treat parking more like the cooked-food outlets that the market provides and planners usually allow in any walkable district. More on that some other time.

Are parking debates where you live going in circles? Is it because of different ideas about what parking is in the first place?
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Saturday, January 14, 2012

Demand-responsive parking prices: a key element of Adaptive Parking

Demand-responsive parking prices: a key element of Adaptive Parking

If your town or city wants a parking system that is fair and efficient and which adapts itself easily to changing conditions then you will also need parking prices that adapt to changing conditions.

Pricing parking is controversial but there is no getting away from its importance for improving parking outcomes. 

So a shift towards performance pricing for parking is a key part of the Adaptive Parking agenda. The barriers are political, not practical. We have the technology.

SF Park Embarcadero
SFPark's performance pricing uses smart parking meters like this one.

One key reason to make parking pricing more responsive to demand has been well explained by Donald Shoup. It is to reduce cruising for parking. In districts with saturated on-street parking an alarming percentage of traffic consists of motorists searching for a local parking spot. This is totally unnecessary traffic caused by mismanaged parking!

In the Adaptive Parking agenda I would extend this reason a bit further and take aim at ALL queuing for parking (including queues outside parking lots and even invisible queues, like waiting lists for permits). 

Why extend performance pricing to minimizing all queuing for parking? Because a second reason to want responsive parking prices is to better reveal market prices for parking in each neighbourhood.

Even private sector parking prices can be unresponsive. There is an adage in the parking industry that many operators set their prices by simply 'looking across the street'. Many organizations have long waiting lists for employee parking permits. A broader approach to performance pricing might seek ways to reduce such queues and make parking prices more responsive and less sticky so that they more accurately reflect current conditions. 

This post is the third in a series explaining the basics of Adaptive Parking. Performance pricing is the second key reform principle in the Adaptive Parking list. The first was to encourage more parking to be open to the public or shared

Would more responsive parking prices make sense for your community?

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