Don’t be Misled by Parking Space Economics

Donald Shoup’s famous parking policy book arrived the mail last week. Even though I’m about 5 years late to the party, the book still seems revolutionary.

I still remember the first time I realized that parking dominates local neighborhood conversation. I was young and naïve and just starting to pay attention to Twin Cities’ urban planning debates. I was just amazed that people were getting very upset about parking spots. “Why are you so worried about parking?” I asked myself. “Why not just walk another block?”

Boy was I young and dumb! (Still dumb, BTW.) As I quickly learned, people driving around looking for parking is second only to sex when it comes to tapping into our lizard brain, our deepest core of animal urges. Parking drives people to madness, making them do crazy things, losing themselves in some sort of green Hulk rage of parallel lines and proximity.

In fact, in his book Shoup points to psychological research to show how we understand parking through almost mystical lenses, as if we are “predators” governed by “parking karma.” He writes:

Thinking about parking seems to take place in the reptilian cortex… said to govern instinctive behavior involved in aggression, dominance, territoriality, and ritual display – all important factors in cruising for parking and debating about parking policies.

(Shoup xxiii)

That sounds about right to me. To this day, I don’t understand why people get so upset about parking their cars, when the worst case scenario is getting to exercise the pedestrian pleasures of walking through the city where you live. But at least I’ve come to respect the volcanic nature of parking debates.

Still, reading Shoup’s book, you realize how backwards the local parking conversation has become. There are at least a dozen misguided parking debates that I could offer up as examples from the past year, but the one that’s currently on my mind is the fight in Lowertown, Saint Paul.

As I’ve written before, there’s a plan to remove a dozen on-street parking spots in order to create a sidewalk expansion that might accommodate café dining along a popular park in the downtown area. The proposal will be going to the city council very soon, and it has turned into a hot button potato for many of the local downtown activists. Most of the concerns seem to be about parking.

I don’t want to get into all Shoup-ian complexities of the parking situation. Really anyone who’s interested should check out Shoup’s work, any of the reviews of his argument, or buy the book themselves. But there are a lot of misconceptions when it comes to the economics of parking…

Here’s a great example. One of the arguments made about removing on-street parking is that it will cost the city money. Because the meters are each generating $1000 per year, so the story goes, removing them to create something else along the street will cost $1000 x 365 (or whatever). Here’s one actual public comment that does this math for the parking spots in downtown St Paul:

22 meters  x  *48.5 hrs./week  x $1.75/hr. = $1865.25/wk. per meter. (maximum potential revenue per meter)

9 hrs. for 5 days = 45 hrs.

3.5 hrs. for 1 day = 3.5 hrs.

* 48.5 hrs./wk. per meter

$1867.25 x 51 wks.(adjusted for holidays) = $95,229.75 Maximum annual potential revenue

Value of parking not included above:

• • Fines
• • Override from new electronic meters
• • Evening and weekend use
• • Future rate increases
• • **Provision for disabled parkers

Adjustment for 20% projected vacancy:

.80 x 95,229.75 = $76,183.80 annual revenue loss to city

Annual Revenue loss to City if 6 meters are removed for bike lane:

$3462.90/meter per year x 6 meters = $20,777.40

$76,183.80

(less)    20,777.40

$55,406.40 Minimum annual parking revenue lost to City

You get the idea. Each parking meter is worth $3,400 each year, and so removing them for a bike lane or a café is not free.

 

Re-Introducing the Market to Parking

Shoup’s big idea is that parking in American cities doesn’t operate according to any kind of market principles. He argues that, today, how we build and price parking has many unforeseen negative effects. His two big examples: 1) overly-low prices for on-street parking spaces (they are often free), and 2) requiring minimum off-street parking spaces for developments.

In the first case, making on-street parking practically free (compared to off-street garages) means that many drivers will “cruise” for spots, instead of paying more to use expensive ramps.

This will be familiar to most people. Much like George Costanza, my father would never pay for parking if he could spend half an hour trying to get it for free. This kind of price signal, what Shoup calls a “classic commons problem,” has all kinds of perverse incentives. It means that a very large percentage of traffic (sometimes 30%+) in a dense part of town is just people cruising around like parking sharks. Not only does that waste gas and time, it causes congestion, noise, and annoyance for everybody.

The other interesting unforeseen consequence of this price structure is that, should you be lucky and get one of these “free” spots, you will stay parked there as long as possible. Shoup gives the example of employees at a restaurant that might grab a key on-street space right when meters expire (sometimes 5:00 or 6:00 PM around here). They’ll stay in that spot all evening because it’s free, while potential restaurant patrons may have difficulty finding parking. Shoup argues that on-street parking should be more expensive than its off-street garage and ramp competition, so that those key spots turn over faster, while the less-convenient off-street or out-of-the-way spots are used by those who intend to remain parked for longer periods of time.

It makes sense to me. So much of the time, we fight over a few on-street parking spots while expensive parking garages lurk down the block unused. That is a horrible use of our investment dollars.

Shoup’s second key critique of the parking “market” has to do with off-street minimums, a ubiquitous tool in every city’s zoning code. He has a lot of fun with these policies, pointing to the absurditiy of requiring X spaces for an auction house vs. Y spaces for a dance hall.

But Shoup isn’t just a jester. He goes into detail about how these minimum requirements are based on extreme cases, coming from old data from the Institution for Transportation Engineers (ITE), and that there is a tremendous amount of variability within how much parking different restaurants (for example) might use. He convincingly shows that hard rules about ‘parking per square foot’ are based on little more than voodoo. Shoup calls it “precision without accuracy,” and if you’ve ever glanced through your city’s code, I’d bet you’d agree.

This is important because the cost of off-street parking is completely hidden from the price of everything we do, from housing to shopping to dining to the cost of an office building. Shoup makes the bold suggestion that we get rid of parking minimums altogether, “unbundling” parking from the pricetag so that people begin to treat it is a separate expense.

The alternative, requiring parking for everyone regardless of their transportation choices, has a great many perverse outcomes. For example, Shoup makes clever analogy between minimum parking requirements and french fries. He writes:

Suppose cities required all fast-food restaurtns to include french fries with every hamburger. The fries would appear free, but they would have a high cost in money and health. Those who don’t eat the fries pay higher prices for their hamburgers but receive no benefit. Those who eat the fries they wouldn’t have ordered separately are also worse off, because they eat unhealthy food the wouldn’t otherwise buy. Even those who would order the fries if they weren’t included free are no better off, because the price of a hamburger would increase to cover the cost of the fries. How are minimum parking requirements different?

(Shoup xxxviii)

Requiring off-street parking might seem like a good idea, but in the end it has lots of negative effects. Without requirements, businesses, residences, and industries can still build off-street parking if they want to. But forcing the issue means that alternatives disappear. You want decision makers to actually calculate the costs and benefits of parking, and consumers (shoppers, home buyers, office managers) to learn to make that decision for themselves.

The alternative is that we continue to legislate massive hidden subsidies for automobile transportation, we continue to bulldoze our cities for often-empty parking lots, and we continue to block small-scale development and entrepreneurship by imposing costly, perhaps-unnecessary requirements. As long as minimum parking requirements are inflexible, its difficult to see our cities making progress toward fostering alternative modes of transportation.

 

Focus on the Problem, not the Solution

This might all sound a bit abstruse, but the key is to focus on the problem. Don’t jump ahead to a solution without considering the alternatives and potential consequences.

Let’s return to the example of the parking spaces around Mears Park. What the original analysis gets wrong, showing that removing these meters will cost the city $55,000 each year, is that it ignores that fact that parking is a dynamic market. If you remove one parking spot, it doesn’t mean that money goes away. People will still be driving around, looking for somewhere to stop their car. If you take away one meter, the one next to it immediately becomes more valuable.

The issue in Lowertown, Saint Paul is that lots of people want to leave their cars on a very few pieces of land. The problem that comes from that is that many people spend a lot of highly frustrating time “cruising,” struggling in vain, attempting to find one of these precious patches of asphalt nirvana. That’s the key problem! We need to find a way to liberate the seething masses from this teeth-grinding white-knuckled parking hell on wheels.

Shoup’s solution to this problem is to tweak prices so that the parking market equals out, to use pricing to equalize the supply and demand between the highly in-demand and the little-used parking psots in the city. (As a friend recently pointed out, downtown Saint Paul has lots of parking. Most of it is underused.) This might mean raising prices around Mears Park, and lowering them on the north side of West 7th Street. This might mean raising on-street prices in general, and lowering prices at the many large parking ramps. Done right, there would always be a spot for the taking along Mears Park, and many of the (city-owned) underused parking ramps would be full.

No parking meter is worth $55,000 per year. The entire parking ecosystem of downtown Saint Paul is one large market, and the city as a whole is worth a certain amount per year. The value of each parking space is directly related to the value of every other, and we need to figure out ways to get the most value out of each of them.

The ironic fact lurking in the background is that the one thing driving this whole process is demand. How exciting, interesting, and vibrant is your city in the first place? That’s what causes parking revenues to rise. (For example, it’s easy to find parking in Youngstown, Pennsylvania, though I don’t know why you’d want to.)

 

Creating Value

One of my biggest pet peeves is to walk past an old historic building in Minneapolis or Saint Paul, and to peer in the windows to find it converted into a parking ramp. There are a few buildings like that in both city’s downtowns, and given the dearth of historic building fabric in America, given all the needless demolition of the 50s and 60s, it’s a damn shame to see an old building used for nothing other than housing unpeople’d rusting steel.

That’s why it’s so exciting to see what’s happening in Lowertown these days. I just heard about a new development project between Mears Park and the Farmer’s Market that is going to un-convert one of these parking lot buldings back into useful space for humans, in this case, mixed-use rental and commercial. It’s a moment for celebration.

But nobody in their right mind would argue that losing these parking spaces is a travesty. It’s clear in this case that you’re improving the value of the land, and the value of the entire neighborhood, by transforming a historic building from parking into housing.

I’d say that the same thing is usually true when you take out some on-street parking spaces to improve parkland, create a sidewalk café, or add a bike lane. You’re adding value to the neighborhood, replacing the least productive use (storage for non-moving empty cars) with one for actual human beings. Your creating space for people who actually using our cities, enjoying it, starting to appreciate and value being there. That’s worth a lot more than just another of a thousand identical parking spots.

The dirty little secret to parking is making it easy. Shoup describes a world where, if you set the price of parking correctly, there’s always one open spot on every city block. Close your eyes for a second and imagine never again having to circle the block, looking for somewhere to plop your car. Imagine never again cursing as someone pulls into the one open spot just in front of you. Imagine never having to think about where to park downtown, or never timing your journey to arrive just when enforcement ends. Imagine never starting a conversation with the all-too-common phrase, “so, where’d you park?”

That’s what Shoup is promising, and in his ultra-long and detailed book. He lays out a way to get there.

It’s not just Lowertown. There are a dozen places where you could apply these principles. Right now, all over the Twin Cities people are pulling their hair out about parking in Uptown, Dinkytown, Selby Avenue, Grand Avenue, and pretty much anywhere else.

As long as we keep on-street parking free or absurdly cheap, almost everyone is going to be pissed off about it. That problem will never disappear, no matter how much paradise you pave. But if you get the prices right, parking problems will melt away.

 

 

PS. I haven’t mentioned the carrot at the end of the stick, which is Shoup’s idea of linking the increased parking revenues to local neighborhood initiatives. For example, you could use a downtown Saint Paul parking district to fund a BID. You could use parking districts in Minneapolis to re-fund the NRP program, giving the money directly to local neighborhood groups to spend as they please. Really, there are lot of exciting possibiltiies.