Let Prices Do the Planning

The point of cities is multiplicity of choice.—Jane Jacobs

Randal O’Toole and I agree that governments should eliminate minimum parking requirements and charge fair market rates for on-street parking. Still, there are areas of disagreement between us. O’Toole says, “Shoup thinks that these changes would have dramatic effects on the amount of driving people do. I think the effects would be trivial, and that the larger effects would be to discourage people from traveling to high-density areas (such as downtowns) where parking is currently below market value.”

Does Free Parking Increase Driving?

O’Toole cites no research to support his two statements, which are both wrong. O’Toole is wrong on the first point because I never said that eliminating parking requirements and charging market rates for curb parking would “have dramatic effects on the amount of driving people do.” In my book I said that if a city removes its parking requirements, the changes will be gradual. Most parking will remain free in the short run because the capital stock is long lived. In the long run, however, no cost is fixed and nothing is free; without off-street parking requirements, the price of parking will rise toward the cost of providing parking spaces. Post-parking-requirement cities will become more compact and less automobile dependent over time.

Automobile dependency resembles addiction to smoking, and free parking is like free cigarettes. More people would get into the habit of heavy smoking if cigarettes were free, and their addiction would be hard to break even if the subsidies for smoking were removed. Automobile dependency will also be hard to break even if parking subsidies are removed. Cities will adjust slowly to the removal of parking requirements because new development will occur in the midst of a largely car-oriented society. Off-street parking requirements have cemented many planning mistakes into the built environment, and it will take decades for cities to recover from the damage.

There is also plenty of research to refute O’Toole’s second point that charging market prices for parking will have trivial effects on the amount of driving. As I wrote in the lead essay in this conversation, “Where curb parking is underpriced and overcrowded, a surprising share of traffic can be cruising in search of a place to park. Sixteen studies conducted between 1927 and 2001 found that, on average, 30 percent of the cars in congested traffic were cruising for parking. For example, when researchers interviewed drivers who were stopped at traffic signals in New York City, they found that 28 percent of the drivers on a street in Manhattan and 45 percent on a street in Brooklyn were cruising for curb parking. In another study, observers found the average time to find a curb space on 15 blocks in the Upper West Side of Manhattan was 3.1 minutes and the average cruising distance was 0.37 miles. These findings were used to estimate that cruising for underpriced parking on these 15 blocks alone creates about 366,000 excess vehicle miles of travel and 325 tons of CO2 per year.”

Cruising for parking is unwanted driving because the drivers have already arrived at their destinations and are waiting in traffic to find an open curb space, like hawks hunting for prey. I conducted a year-long research project on cruising for parking in Westwood Village, a 15-block business district next to UCLA. The average cruising time to find a curb space was 3.3 minutes, and the average cruising distance was half a mile (about 2.5 times around the block). The small distances cruised by each driver add up quickly because the turnover rate for curb parking was 17 cars per space per day. With 470 metered parking spaces in the Village, almost 8,000 cars park at the curb each day (17 x 470). Because so many cars park at the curb, a short cruising time for each driver creates an amazing amount of traffic. Although the average driver cruises only half a mile before parking, cruising around the 15 blocks in the Village creates almost 4,000 vehicle miles traveled (VMT) every weekday (8,000 x 0.5).

Over a year, cruising in Westwood Village creates 950,000 excess VMT—equivalent to 38 trips around the earth, or four trips to the moon. The obvious waste of time and fuel is even more appalling when we consider the low speed and fuel efficiency of cruising cars. Because drivers average about 10 miles an hour in the Village, cruising 950,000 miles a year wastes about 95,000 hours (11 years) of drivers’ time every year. And here’s another inconvenient truth about underpriced curb parking: cruising 950,000 miles wastes 47,000 gallons of gasoline and produces 730 tons of CO2 emissions in a small business district.

In areas where a lot of the traffic is cruising for underpriced curb parking, I suspect that market-priced curb parking would quickly reduce VMT. Like good and bad cholesterol, maybe we should distinguish between good and bad VMT. Underpriced curb parking encourages bad VMT because people drive around without going anywhere. Market-priced curb parking enables good VMT because people drive directly to their destinations.

Cruising creates bad VMT in dense cities all over the earth. O’Toole mentioned in an earlier message that “Shoup’s work is biased by his residency in Los Angeles, the nation’s densest urban area.” Perhaps I am biased by living in Los Angeles, but O’Toole may also be biased by living in Camp Sherman, a hamlet in rural Oregon where drivers never pay anything for parking and have no daily experience with how a commercial parking market works or how parking subsidies affect travel decisions.

Will Removing Minimum Parking Requirements Discourage People from Traveling to High-Density Areas?

O’Toole also says that removing minimum parking requirements and charging market prices for curb parking will “discourage people from traveling to high-density areas (such as downtowns) where parking is currently below market value. Instead they would go to low-density areas where the market rate for parking is zero.” Is this statement true?

The simplest way to test O’Toole’s claim is to compare cities with and without off-street parking requirements in their Central Business Districts (CBDs). Boston, Chicago, New York, and San Francisco have no minimum parking requirements in the CBD, while Detroit, Houston, Los Angeles, and Phoenix do have minimum parking requirements in the CBD. Which cities would you say have more people traveling to their CBDs?

When O’Toole say that removing parking requirements would “discourage people from traveling to high-density areas,” perhaps he assumes that “traveling” always means “driving.”

Parking and the Central Business District

A successful CBD combines large amounts of labor and capital on a small amount of land. CBDs thrive on high density because the prime advantage they offer over other parts of a metropolitan area is proximity—the immediate availability of a wide variety of activities. The clustering of museums, theaters, restaurants, and offices is the commodity a downtown can offer but other areas cannot. Yet downtowns have long been plagued by questions about access, for they can either thrive on or be destroyed by congestion. In order to thrive, a CBD must receive a critical mass of people every day but do so without clogging itself to the point of paralysis. By attracting more cars, off-street parking requirements can strangle the streets of CBDs with congestion, and the required parking spaces have high costs.

It’s not hard to see how a conventional parking lot can undermine a CBD’s success; a downtown surface lot often has a very high and very visible opportunity cost. Instead of a building teeming with activity there is an expanse of asphalt with one employee manning a booth; where there could be something there is instead not much. But even when off-street parking is dressed up or hidden—when it is placed underground, or in a structure that has retail uses at the street level—it is inimical to density. Because land is most expensive in the CBD, off-street parking is also most expensive there, and constructing it uses up capital that could otherwise be invested more productively. More important, if off-street parking is required, as it is in many cities, then it becomes rational for firms to locate in places where land is less expensive, meaning it becomes rational to locate outside the CBD. A parking requirement that is applied uniformly across a city, in other words, implicitly discriminates against development in the CBD, because the burden of complying with the requirement is greater in the CBD than it is almost anywhere else.

A Tale of Two Parking Requirements

The impact of parking requirements becomes clearer when we compare the parking requirements of San Francisco and Los Angeles. San Francisco limits off-street parking, while LA requires it. Take, for example, the different parking requirements for concert halls. For a downtown concert hall, Los Angeles requires, as a minimum, fifty times more parking than San Francisco allows as its maximum. Thus the San Francisco Symphony built its home, Louise Davies Hall, without a parking garage, while Disney Hall, the new home of the Los Angeles Philharmonic, did not open until seven years after its parking garage was built.

Disney Hall’s six-level, 2,188-space underground garage cost $110 million to build (about $50,000 per space). Financially troubled Los Angeles County, which built the garage, went into debt to finance it, expecting that parking revenues would repay the borrowed money. But the garage was completed in 1996, and Disney Hall—which suffered from a budget less grand than its vision—became knotted in delays and didn’t open until late 2003. During the seven years in between, parking revenue fell far short of debt payments (few people park in an underground structure if there is nothing above it) and the county, by that point nearly bankrupt, had to subsidize the garage even as it laid employees off.

The money spent on parking shifted Disney Hall’s design toward drivers and away from pedestrians. The presence of a six-story subterranean garage means most concert patrons arrive from underneath the hall, rather than from the sidewalk. The hall’s designers clearly understood this, and so while the hall has a fairly impressive street entrance, its more magisterial gateway is an “escalator cascade” that flows up from the parking structure and ends in the foyer. This has profound implications for street life. A concertgoer can now drive to Disney Hall, park beneath it, ride up into it, see a show, and then reverse the whole process—and never set foot on a sidewalk in downtown LA. The full experience of an iconic Los Angeles building begins and ends in its parking garage, not in the city itself.

Visitors to downtown San Francisco have a different experience. When a concert or theater performance lets out in San Francisco, people stream onto the sidewalks, strolling past the restaurants, bars, bookstores, and flower shops that are open and well-lit. For those who have driven, it is a long walk to the car, which is probably in a public facility unattached to any specific restaurant or shop. The presence of open shops and people on the street encourages other people to be out as well. People want to be on streets with other people on them, and they avoid streets that are empty, because empty streets are eerie and menacing at night. Although the absence of parking requirements does not guarantee a vibrant area, their presence certainly inhibits it. “The more downtown is broken up and interspersed with parking lots and garages,” Jane Jacobs argued in 1961, “the duller and deader it becomes … and there is nothing more repellent than a dead downtown.”

Conclusion

When it comes to parking economics and policy, Randal O’Toole seems often wrong but never in doubt. He indulges in the luxury of opinion without the burden of research. Many other people do essentially the same thing when they think about parking policies. Most people have been driving cars since they were teenagers, and have parked cars all their adult life, and they don’t want to pay for parking. Most people thus see the “need” for parking not only as a policy issue, but also as a personal one. Almost everyone’s self-interest in the availability of free parking reinforces the paradigm of minimum parking requirements and free curb parking. As Yale political scientist Edward Tufte explained, we suffer from “a bias toward policies with immediate, highly visible benefits and deferred, hidden costs—myopic policies for myopic voters.”

I am grateful to Cato Unbound for this rare opportunity to debate parking policies that most people think are, at most, a small problem. Nevertheless, as University of Chicago economist Henry Simons wrote, “The way to multiply big problems is to neglect small ones.”

References

Michael Manville and Donald Shoup, “People, Parking, and Cities,” Journal of Urban Planning and Development, Vol. 131, No. 4, December 2005, pp. 233-245.

Donald Shoup, The High Cost of Free Parking, Chicago: Planners Press, 2005.

Donald Shoup, “The Trouble with Minimum Parking Requirements,” Transportation Research Part A: Policy and Practice, Vol. 33A, Nos. 7/8, September/November1999, pp. 549–574.

Donald Shoup, “Cruising for Parking,” Transport Policy, Vol. 13, No. 6, November 2006, pp. 479–486.

Donald Shoup, “Truth in Transportation Planning,” Journal of Transportation and Statistics, Vol. 6, No. 1, 2003, pp. 1–16.

Donald Shoup, “The Ideal Source of Local Public Revenue,” Regional Science and Urban Economics, Vol. 34, No. 6, November 2004, pp. 753-784.

SFpark

Also from This Issue

Lead Essay

  • Free Parking or Free Markets by Donald Shoup

    America’s supposed love affair with the automobile is more like an arranged marriage, says Donald Shoup. Car and parking policies make cities and suburbs less livable for human beings. He recommends three reforms: First, adjust parking meter prices according to supply and demand. Second, return parking revenue to local communities for civic improvement. And third, remove minimum parking requirements that lock up useful land, lengthen commute times, and contribute to urban and suburban sprawl. These policies, he argues, are good for the community, good for the environment, and represent sound, market-based urban planning.

    America’s supposed love affair with the automobile is more like an arranged marriage, says Donald Shoup. Car and parking policies make cities and suburbs less livable for human beings. He recommends three reforms: First, adjust parking meter prices according to supply and demand. Second, return parking revenue to local communities for civic improvement. And third, remove minimum parking requirements that lock up useful land, lengthen commute times, and contribute to urban and suburban sprawl. These policies, he argues, are good for the community, good for the environment, and represent sound, market-based urban planning.

Response Essays

  • Using Markets to Enhance Mobility by Randal O'Toole

    Randal O’Toole argues that the automobile brings mobility to the common people in a way they could never have otherwise. As such, it is a great social good, and those who criticize urban sprawl are neglecting the many good things about our highly mobile contemporary lifestyle—among them better housing, higher labor productivity, and better access to consumer goods. These may well be worth the commute.

    Some parking subsidies, such as minimum parking requirements and cheap on-street parking, should indeed be removed. But using parking fees to subsidize local public works projects simply redistributes the automobile subsidy to local landowners. O’Toole proposes to privatize parking; private entities would then use the money they collected to build additional parking in response to consumer demand.

  • Zero Price Parking and Nickel Beer by Sanford Ikeda

    Sanford Ikeda calls Shoup’s proposal “an important, and presently… politically feasible step in the right direction.” He contrasts it favorably to congestion pricing, which represents, to him, a needless added layer of regulation. He recommends several refinements to Shoup’s thesis and situates it in a larger constellation of free-market transit policies, including especially deregulated private conveyances. Moving toward these policies, Ikeda argues, should be the ultimate goal.

  • Efficient Road Pricing for Stationary Vehicles: The Case for Curb Parking Charges by Clifford Winston

    Clifford Winston offers a variety of suggestions for further research and implementation of optimal parking charges. What are the current shares of various types of parking capacity? How much of it actually is free right now? How would congestion fees on roads interact with efforts to price parking efficiently? What can new information technologies offer us in this area? Although Winston is clearly sympathetic to Shoup’s thesis, his essay points to the magnitude of work yet to be done.

The Conversation