Thursday, June 30, 2016

How to set on-street parking fees: eleven ways compared

How to set on-street parking fees: eleven ways compared
Many cities poison the politics of parking fees by lacking a clearly-stated basis for rate decisions or by using a wrong-headed approach.

I see this daily in news about parking price reviews from all over the world. Examples from the last few days include Washington DC, Delhi, Singapore, and Richmond VA.

But how SHOULD cities set their street parking prices? By what criteria? And which approaches best serve parking success without parking excess?

This post takes a look at eleven different ways to set on-street parking rates.

The best approaches make improved parking-management outcomes their primary goal. Losing sight of this goal in fee adjustments is a big mistake. If the public can't see any visible benefit from parking fees they will naturally be suspicious of any increase.

Singapore is finding this out at the moment. Cost recovery was the main justification given for the just-released price increases in government-owned parking (HDB and URA parking, which includes paid on-street parking). There was almost no mention of the parking management role of parking fees. Outrage on social media has been the unsurprising response.

Eleven approaches to setting on-street parking prices 

The information below is based on Table 13 in Section 5.5 of my "On-Street Parking Management: An International Toolkit" published by GIZ-SUTP.  If you see errors or omissions, please leave a comment.

The most promising options are near the end, so scroll down to Option 11 if you want to go straight to my recommendation!

By the way, although this post is about on-street parking, many of the comments below apply to price-setting for government-owned off-street parking too.

1. Political judgement  (with focus on revenue in price debates)

If prices are not adjusted regularly, then their parking management benefits erode gradually. After some time, the management goal of setting fees gets forgotten. Parking fees come to be seen as a ‘tax’ with revenue as their sole purpose. By that stage, even modest rises become wildly unpopular and can have a high political cost.

Examples: Very many cities worldwide, sadly, including Indonesian cities and most USA cities. In 2011 Boston, USA, raised the on-street parking price for the first time in 25 years, from $1/hour to 1.25, justifying it purely in terms of revenue.

Strengths: none

Weaknesses: Ad hoc. Hampers efforts to gain support for pricing as a parking management tool. Talking about revenue goals is futile because revenue as a key objective guarantees public hostility to price rises. Efforts to avoid political backlash by keeping prices stagnant usually fail anyway, since parking management comes to be seen as a failure and as merely a tax, so pricing becomes ever more unpopular. Singapore's current parking fee controversy comes to mind here.

In Singapore payment for street parking is via coupons like this.

2. Fuel price benchmark

Involves linking parking fees to fuel prices.  This seems to be an ill-conceived populist policy aimed at restraining local governments from raising prices ‘too much’.

Examples:  European national rules sometimes link parking fees to fuel prices (for a maximum price). Hungary is an example.

Strengths:  None that I can think of.

Weaknesses: Arbitrary. Not linked with management objectives. Encourages belief that parking must not be too expensive. Provides no guidance for where/when to price and at what levels.

3. Traffic speeds/ congestion (to serve traffic reduction goals)

Implies setting on-street parking prices higher in areas that are the key destinations of congested traffic flows. Also implies setting peak-time parking prices to match traffic peak times.

Examples:   Delhi briefly proposed higher parking fees during traffic peak-hours.  A Bangalore proposal suggested zones based on traffic conditions.

Strengths:   May help complement other demand-management policies to limit traffic congestion.

Weaknesses:  Untested. Ignores parking saturation issues. Difficult to implement as a clear criterion (rather than a goal). On-street parking and its prices are NOT closely linked with metropolitan traffic flows. If on-street prices rise automatically if traffic speed targets are not met, they might keep rising without notable impact on regional traffic speeds.

4. Turnover (short durations)

Aims to ensure that convenient on-street parking spaces ‘turn over’ frequently (usually so that they will be used by shoppers and not for all-day parking). In other words, the aim is short parking durations. This approach often goes together with parking time limits.

Examples: Many cities.

Strengths: Keeping on-street durations short is especially relevant for retail areas, serving the interests of retailers.

Weaknesses: Not clear what level of turnover to target. Even if a turnover criterion is met, saturated parking can still cause problems. Turnover data can be misleading in some circumstances. Turnover is not easily/cheaply measured without digital pricing mechanisms.

5. Public transport fares as benchmark

Involves linking parking fees to the price of a primary alternative to driving, public transport. If public transport fares rise, so do downtown parking fees, avoiding an increase in the attractiveness of driving to the city centre.

Examples:  European local governments often link city-centre parking fees to the cost of a transit ticket (usually to set a minimum price). Budapest is an example.

Strengths: May slightly deter future populist attempts to lower city-centre parking prices. Prevents public transport fare increases from encouraging car use for travel to downtown.

Weaknesses:  Arbitrary – not obvious how parking prices should compare with public transport. May not prevent saturation. Suitable primarily for city centre parking. Defines only a minimum price. No guidance for where to price or on pricing hours.

6. Intensity of development

Parking price zones (usually concentric) typically match boundaries in the intensity or type of urban development. These boundaries often also reflect past step-by-step extensions of parking management.

Examples:  Seoul and various cities in Europe and China.

Strengths:  Serves traffic mitigation goals and the need to ration on-street parking more intensively in the busiest areas. Tends to match local expectations of where different policies should apply.

Weaknesses: Decisions on zone boundaries and on prices are rather arbitrary. No guidance for pricing hours.

7. Land values

Base parking prices on some percentage of nearby average land values. Based on the idea that parking pressure is highest in areas of highest land values/rents. Also alludes to the idea that parking should pay its share of land rent.

Examples: Proposed in India's national urban transport strategy. Proposed for Ahmedabad.

Strengths: Simple. Sends a helpful message about the value of parking. Parking pressure may correlate roughly with land values.

Weaknesses:  Untested. Proposals so far make parking an arbitrary (and low) proportion of estimated land prices. Insufficient evidence that on-street parking pressure correlates closely with land rents. Some low-land-price areas may have saturated on-street parking. No guidance for pricing hours.

8. On-street prices higher than off-street

Takes nearby off-street parking prices (or an average of such prices) as a minimum benchmark and sets on-street prices a certain amount or percentage higher. Aims to discourage cruising for on-street parking and encourage use of off-street parking, which otherwise is often under-used.

Examples:  Medellin; Beijing; Frankfurt-am-Main

Strengths:  Probably simple to implement. Widely advocated. Provides market-responsiveness if off-street parking has market-influenced prices. Should encourage off-street parking use and discourage cruising for on-street parking. Is in line with the fact that motorists often value well-located and well-managed on-street parking more than less-convenient off-street options, at least for short-term parking.

Weaknesses:  Limited evidence. Danger it may prompt calls to control off-street prices. Off-street parking is often under-priced due to other policies. Problems if off-street prices are not responsive enough. Does short-term on-street need to be pricier than short-term off-street, or is it adequate if on-street price for 6 hours or more is higher than the daily off-street price aimed at employees?

9. Precise occupancy targeting with tiny zones

Price setting based on a relatively narrow target range for the average on-street parking occupancy (such as 70 to 90%). Frequent price adjustments (monthly for example). Prices can change for any street section and any part of the day in which average occupancy over the previous survey period falls outside the target range.

Examples:  Los Angeles (in Express Park trial areas); San Francisco (in SFPark trial areas).

Strengths:  Highly targeted at a widely supported and important on-street parking management objective (preventing saturation). Tiny zones enable price-sensitive motorists to use their parking location choice to avoid high parking fees. Effective at reducing parking saturation and its ill effects. Makes on-street parking prices very responsive to changing conditions.

Weaknesses: High precision in space and such frequent price adjustments may not be necessary to achieve most goals. Has been tried so far only in high-income cities. Problems conveying detailed price information to motorists. Requires high capacities in data-collection, management analysis and price adjustment.

10. Non-systematic occupancy targeting

An approximation of occupancy targeting emerges if:

  1. avoiding saturation is an important consideration in price setting (with or without an explicit occupancy target range); and 
  2. there is a willingness to have different prices for specific locations or streets with high parking pressure.
Examples: Vancouver, several Boroughs in London, many places in Australia, various cities in Hungary, Taipei (almost systematic actually). Many cities that seem to use another criterion in this table may, in practice, use occupancy in this way behind the scenes.

Strengths: Widespread. Reaps some benefits of occupancy targeting (to the extent that occupancy does influence prices). May provide first steps towards systematic occupancy targeting.

Weaknesses:  Not sufficiently objective or transparent if price setting is a judgement by officials (potentially influenced by other issues besides avoiding saturation). This makes it difficult to defend price changes. So there is a risk of sliding back towards the ‘political judgement’ approach.

11. Occupancy targeting with simple zones

Price setting is based on a target range for the average on-street parking occupancy (or vacancy) rate. Price zones are not tiny (covering several streets or blocks but usually not more than about 1 km across). Price adjustments regular but usually much less often than monthly. Certain examples have some time-of-day pricing but most have a single price for all priced hours.

Examples:  central Auckland; central Calgary; Rotterdam; Seattle; possibly Budapest.

Strengths:  Well targeted at a widely supported and important on-street parking management objective (preventing saturation). Reduces the incidence of on-street parking saturation (and its ill effects such as illegal parking, double parking, and cruising for parking). Makes on-street parking prices responsive to changing local conditions. Simpler price information to motorists than the tiny-zone option above. Does not stretch data management and implementation capacity. Suited to incremental introduction and improvement.

Weaknesses:  Small areas and short periods of severe parking saturation can emerge if parking demand is not uniform within each zone and across the day. [However, this can be addressed by incremental improvements, such as splitting zones or adding time-of-day pricing as needed, as was done in Seattle’s Chinatown.] Zones that are too big often fail to give motorists the option of avoiding high prices by parking a little further then walking.

Conclusion

My current view is that the best choice is occupancy targeting, especially the final option, ‘occupancy targeting with simple zones’.

Most of the other approaches will typically fail to tame on-street parking saturation and its negative side-effects. This risks having pricing being seen as a failure. It also fuels the (often false) perception of parking shortage and prompts various wasteful parking efforts and investments and many misguided parking policy efforts, including excessive minimum parking requirements .

Occupancy that is neither ‘too full’ nor ‘too empty’ is a simple and intuitive criterion that is easily explained to the public.

If you want parking success without parking excess, then urge your city to consider ‘occupancy targeting with simple zones’ for on-street parking price setting.

Do you agree?

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Monday, June 20, 2016

Free parking: major problem or no big deal?

Free parking: major problem or no big deal?
Do you want your city or town to shift away from promoting plentiful parking? Do you agree with Prof. Donald Shoup that inducing excessive free parking is a costly mistake?

If so, you have probably heard someone trivialize the issue. Maybe they told you that free parking is no big deal. Maybe they said it is no worse than all the other cross subsidies in society, or that it is just one more thing some of us pay for but don't use.

A wonkblog post on parking and its many angry comments

I was reminded of those claims by a post last week by Emily Bagder on WaPo's Wonkblog that provoked many comments along those lines.

Badger's post highlighted Donald Shoup's latest parking article "Cutting the Cost of Parking Requirements".

A lot of angry comments focused on the social justice angle, reacting especially to the title "Poor people pay for parking even when they can’t afford a car" and to this quote early in her post:
"People who are too poor to own a car," Shoup writes in the University of California's ACCESS Magazine, "pay more for their groceries to ensure that richer people can park free when they drive to the store."
The post also highlighted Shoup's striking new parking cost estimates:
The cost of constructing above-ground parking in a major American city runs about $24,000 per space, in Shoup's research (this doesn't include the cost of buying the land underneath). An underground spot costs $34,000. 
Let's emphasize again that these costs EXCLUDE LAND COSTS. Wow!

Badger then continues to emphasize the social justice aspects in Shoup's article. For example:
Regulations that require developers to bake those costs into shopping centers, offices or apartment buildings — whether people intend to drive there or not — are a matter of inequality, Shoup argues. They force people who don't drive to subsidize those who do. They assume everyone does drive when many people can't. And they make it more expensive to build affordable housing, which means we get less of it. 
Median parking requirements for office space in a set of US cities. 
This is part of a larger infographic by Seth Goodman published on the Graphing Parking site

Why parking-minimum-induced excessive free parking IS a big deal

I don't recommend delving deeply into those comments, which include many knee-jerk assumptions about Badger's and/or Shoup's supposed anti-car and/or left-wing intentions and/or stupidity.

But I do want to address this one comment, which is among those with the most "likes", and which is one of many that makes a similar point:
"Foolish article. I pay school taxes despite the fact that I never had children in the local schools. Everyone in a large and complex society pays taxes for some things they do not use, want, or need. That's just how it goes."
So what is wrong with this comment?

First, the mention of taxes is misleading. Free off-street parking is mostly about "bundling" not about tax money. In areas with plentiful parking, private owners of parking cover its costs from the rest of their enterprise (housing revenue, retail revenue, office space revenue, or whatever).

Second, the free parking a result of local government REGULATIONS! Plentiful free-of-charge off-street parking is usually NOT a natural outcome of the free market at work. Rather, it is minimum parking requirements that promote so much parking supply, especially in the USA, that the price is driven to zero.

Third, the comment seems to suggest that nothing much can be done. Not true. Prof Shoup's suggested policy reforms are a good place to start. Reinventing Parking also has various suggestions. Feel free to explore.

Fourth, shifting parking costs from direct users to everyone is not trivial. That was Shoup's key point in highlighting the enormous cost of providing each parking space in a city. Each parking space costs more than most of the cars that will ever park on it. And he didn't even consider land costs. And our own Seth Goodman estimated that, in USA cities, one parking space adds about $225 to monthly apartment rent.

Finally, just because the costs of many goods and services are not covered by user fees does NOT mean that is a good way to organize parking. User fees, especially market-responsive fees (a.k.a. market prices), send important signals to the actors in the system. In a market economy, unless there are good reasons to do otherwise we generally prefer things to be funded via prices rather than the other options, such as non-responsive fees, taxes, advertising, and imposts on specific groups of non-user beneficiaries (via targeted levies).

Yes, there are many things that are not funded by user fees/prices. For good reasons. But most of them are not relevant to parking.

For the really keen readers among you, here is more detail on those good reasons not to rely on pricing and why they generally DO NOT apply to parking.
  • Sometimes the transaction costs of imposing user fees are too high. In the past, this was often relevant for parking, but modern parking pricing technology makes parking fees easy. 
  • Sometimes bundling a cost with other goods is a business decision (fries and a drink come at a discount with a burger). This is relevant to parking. Retailers often offer free parking, even if their parking is tight, via parking validation (free parking for motorists who spend enough). But for other kinds of building, bundling of parking costs is only common when parking is plentiful, not when it is scarce. Most bundling is because of parking minimums.  
  • Sometimes a direct user fee is just not feasible (think free-to-air broadcasts or fire fighting). But, as I said, it IS easy to charge for parking. So parking is NOT a non-excludable public good. 
  • In some cases, society benefits if people get a good even if they would not or could not pay ("merit goods" or goods with positive externalities; think basic education). This argument is used for parking but is based on the huge mistake of thinking that plentiful parking is the best way to prevent on-street parking chaos. In fact, on-street parking management is the best way to deal with on-street parking problems, regardless of off-street parking supply. 
  • Sometimes, as for mass transit, the economically efficient user fee (the 'marginal cost price') is inherently lower than the cost recovery fee. There may actually be an element of this in parking, but not enough to justify excessive parking minimums or free parking.
  • Sometimes (often?), government-funded freebies are aimed at helping businesses. Unfortunately, this is indeed common in parking, with many downtowns providing free or cheap parking at taxpayer expense to help downtown businesses. If such help is needed, I wish they would find transport-mode neutral ways to do it that don't also subsidize car dependence. 
  • And, finally, yes sometimes we deviate from user pays for social justice reasons. It is a good thing that most countries enable even the poorest people to get basic health care, education, and other basics. But parking is hardly a basic need! Shifting parking costs away from its users is a horribly poorly targeted way to help low-income people.  

The bottom line

Shifting parking costs onto everyone need not be "just how it goes". In the case of parking, it is better to charge the actual users.

Some of the reasons for this can be seen as left wing. Some are usually seen as right-wing. Many are based on centrist public-policy wonkishness. It doesn't matter. I don't see this as a left-right thing. Do you?



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Friday, June 10, 2016

Parking success without parking excess

Parking success without parking excess
What is parking success?

A recent trip to China reminded me of this question, which is important for cities everywhere.

Beijing

Shortage problem or management problem?

China's cities have serious parking problems and most of them blame shortage.

Rapid increases in urban car ownership since the year 2000 has left many streets and residential areas with parking chaos, especially in older parts of town. Convenient parking is very often more than 100% full, causing search traffic and illegal parking on streets, on sidewalks and on public spaces. These in turn cause congestion, danger, and interpersonal conflict.

Many Chinese cities have concluded they have a huge gap between parking supply and parking needs. Simply counting their legal parking spaces and comparing this city-wide number with the registered vehicles reveals the gap.

Beijing
Naturally, such gaps are blamed for parking problems.

This is despite the fact that more detailed local studies often find that off-street (especially underground) parking is under-used and that commercial areas with parking problems typically have no such parking supply-demand gap.

Weak management of on-street parking, sidewalk parking and parking in building frontages means that motorists have little incentive to seek out the less convenient underground option, which often also costs them more.

China's cities push for more parking

If shortage is the diagnosis, then supply seems the obvious medicine.

So around China, various city governments are planning boosts to parking supply, especially by:
  • Revising their parking minimums upwards (from their currently relatively low levels), and
  • Investing directly in city-built parking, despite the daunting costs. 

But many cities in China are also pushing to be 'transit metropolises'

Urban transport policy priorities in China are seeing significant changes.

For example, China's largest cities are now limiting the growth of car ownership, and the national Ministry of Transport has launched its 'Transit Metropolis' policy, in which more than 50 cities will see accelerated mass transit development.

Seeing plentiful parking as the definition of parking success is therefore a problem. This parking goal is in direct conflict with China's new urban transport policy priorities.

Urgent need for parking policies that succeed without promoting car dependence

Chinese cities do need to ease their very real parking problems which are making so many places unpleasant and unsafe.

But the solutions must not fuel car dependence. China needs parking success without parking excess.

And there are some signs of change. Shenzhen has introduced on-street parking fees after a hiatus. Rather steep fees in fact. Shenzhen has also lowered its parking minimums for buildings near mass transit. China's National Development and Reform Commission (NDRC) has also been liberalizing parking prices (many of which used to be controlled by local governments).

Do you too want parking success without excess? Then Reinventing Parking is for you.

Isn't success without excess what you want too? If you are a regular reader here, you know that this site is not offering plentiful parking as the solution.

On Reinventing Parking we seek parking success without parking excess. If you want that too, then explore the site, come back from time to time, or sign up for email alerts to new posts.

Adaptive Parking is a path towards parking success without parking excess. 

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