Free Parking Comes at a Price


New York Times

IN our society, cars receive considerable attention and study — whether the subject is buying and selling them, the traffic congestion they cause or the dangerous things we do in them, like texting and talking on cellphones while driving. But we haven’t devoted nearly enough thought to how cars are usually deployed — namely, by sitting in parking spaces.

s this a serious economic issue? In fact, it’s a classic tale of how subsidies, use restrictions, and price controls can steer an economy in wrong directions. Car owners may not want to hear this, but we have way too much free parking.

Higher charges for parking spaces would limit our trips by car. That would cut emissions, alleviate congestion and, as a side effect, improve land use. Donald C. Shoup, professor of urban planning at the University of California, Los Angeles, has made this idea a cause, as presented in his 733-page book, “The High Cost of Free Parking.”

Many suburbanites take free parking for granted, whether it’s in the lot of a big-box store or at home in the driveway. Yet the presence of so many parking spaces is an artifact of regulation and serves as a powerful subsidy to cars and car trips. Legally mandated parking lowers the market price of parking spaces, often to zero. Zoning and development restrictions often require a large number of parking spaces attached to a store or a smaller number of spaces attached to a house or apartment block.

If developers were allowed to face directly the high land costs of providing so much parking, the number of spaces would be a result of a careful economic calculation rather than a matter of satisfying a legal requirement. Parking would be scarcer, and more likely to have a price — or a higher one than it does now — and people would be more careful about when and where they drove.

The subsidies are largely invisible to drivers who park their cars — and thus free or cheap parking spaces feel like natural outcomes of the market, or perhaps even an entitlement. Yet the law is allocating this land rather than letting market prices adjudicate whether we need more parking, and whether that parking should be free. We end up overusing land for cars — and overusing cars too. You don’t have to hate sprawl, or automobiles, to want to stop subsidizing that way of life.

As Professor Shoup wrote, “Minimum parking requirements act like a fertility drug for cars.”

Under a more sensible policy, a parking space that is currently free could cost at least $100 a month — and maybe much more — in many American cities and suburbs. At the bottom end of that estimate, if a commuter drives to work 20 days a month, current parking policy offers a subsidy of $5 a day — which is more than the gas and wear-and-tear costs of many round-trip commutes. In essence, the parking subsidy outweighs many of the other costs of driving, including the gasoline tax.

In densely populated cities like New York, people are accustomed to paying high prices for parking, which has helped to encourage a relatively efficient, high-density use of space. Yet even New York is reluctant to enact the full social cost of the automobile into policy. Proposals to impose congestion fees have failed politically, and on-street parking is priced artificially low.

Manhattan streets are full of cars cruising around, looking for cheaper on-street parking, rather than pulling into a lot. The waste includes drivers’ lost time and the costs of running those engines. By contrast, San Francisco has just instituted a pioneering program to connect parking meter prices to supply and demand, with prices being adjusted, over time, within a general range of 25 cents to $6 an hour.

Another common practice in many cities is to restrict on-street parking to residents or to short-term parkers by imposing a limit of, say, two hours for transients. That makes parking artificially easy for residents and for people who are running quick errands. Higher fees and permit prices would help shore up the ailing budgets of local governments.

Many parking spaces are extremely valuable, even if that’s not reflected in current market prices. In fact, Professor Shoup estimates that many American parking spaces have a higher economic value than the cars sitting in them. For instance, after including construction and land costs, he measures the value of a Los Angeles parking space at over $31,000 — much more than the worth of many cars, especially when considering their rapid depreciation. If we don’t give away cars, why give away parking spaces?

Yet 99 percent of all automobile trips in the United States end in a free parking space, rather than a parking space with a market price. In his book, Professor Shoup estimated that the value of the free-parking subsidy to cars was at least $127 billion in 2002, and possibly much more.

PERHAPS most important, if we’re going to wean ourselves away from excess use of fossil fuels, we need to remove current subsidies to energy-unfriendly ways of life. Imposing a cap-and-trade system or a direct carbon tax doesn’t seem politically acceptable right now. But we can start on alternative paths that may take us far.

Imposing higher fees for parking may make further changes more palatable by helping to promote higher residential density and support for mass transit.

As Professor Shoup puts it: “Who pays for free parking? Everyone but the motorist.”

Tyler Cowen is a professor of economics at George Mason University.



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10 responses to “Free Parking Comes at a Price

  1. I ran into the parking problem when I was looking at commercial property to build my art studio on. For a small lot with a business that was not open to the public, I would be required to have 5 hard surfaced parking spaces and room to turn around a handicap van. The lot would be bigger than my shop and account for 27% of the building cost! Needless to say, I just couldn’t do it. I can see a lot of small businesses running into the same problem.

  2. Danny

    I remember a couple other small business owners here in Lex having the same problem in the past several years when they tried to convert unused buildings downtown. And I may be wrong, but isn’t part of the CVS story also attributable to parking requirements with respect to their option 1 tenant (not CVS)? Not sure if this was owner/business mandated or government mandated, but seems like it came from city or state or federal regulations (not sure which).

    • the developer wanted to do mixed use, which would require a garage, which is vital urban infrastructure – at least for the next couple of years. Infrastructure has always been considered a public responsibility. Yet the city said no. We got a mini sprawlmart.

  3. Danny

    How is that assumption of public infrastructure costs as a public responsibility different than the publicly subsidized parking spaces described in this article?

    I’m thinking of this paragraph:

    “If developers were allowed to face directly the high land costs of providing so much parking, the number of spaces would be a result of a careful economic calculation rather than a matter of satisfying a legal requirement. Parking would be scarcer, and more likely to have a price — or a higher one than it does now — and people would be more careful about when and where they drove.”

    Seems to me that the developers expected the default city assumption of parking responsibility, and when that fell through, carefully considered (OK, not that part) their options and sold to option 2, CVS, who bulldozed, as you’ve noted, a 1 story structure to build a new 1 story structure.

    What’s different that I’m missing?

    • I took the issue in the article to be the zoning requirement to provide massive amounts of parking in suburbia – out there, parking cannot come at a price, as people have come to expect that it should be free. Thus developers take the cheapest approach, which is surface parking. None of this is government subsidized parking – it is developer subsidized parking because of a government mandate. And the article says that if we could get past inane parking “standards” the developers themselves would economically allocate land in a more efficient manner than parking lots. With the decline of abundant “free” parking the result, people would be forced into changing habits.

      In urban areas, parking almost never comes with an expectation of “free.” There, government could choose to subsidize parking structures as a tool to leverage private investment. They chose not to in this case, the result being, in combination with our shitty suburban-biased zoning ordinance, a strip mall.

      So in my take, here locally, government fails twice. In the suburbs, we require too much parking, which results in wasteful surface parking lots, but in the urban core we dont do all we can to encourage high density mixed use development.

      • In reality, the downtown zone in which the CVS is proposed has NO parking requirements associated with a new development. The parking lot and the drive through window and lane are the requirements of the tenant and not government. A multi-story structure could be built and occupied on this site in full compliance with the local zoning ordinance.

        Government should have no part in providing any parking, downtown or otherwise. Looking back through history, livery stables were a private enterprise style of land use as should parking garages today.

      • I think the city has one of two choices: provide parking infrastructure to leverage private investment (the same way they build streets in Blue Grass Business Park for example) OR change the regulations such that the default position isnt suburban – forcing developers to provide the parking infrastructure themselves if they want to develop.

        I obviously favor the first in concept. The city provides tons of incentives for business development – we should do the same for downtown. On the other hand, peak oil has crippled our economy in such a way that discussions of this kind are academic now….

  4. Danny

    The article doesn’t say “free” spaces, it reads, “Parking would be scarcer, and more likely to have a price — or a higher one than it does now,” which I would think should be applied–higher than it does now–to any place with parking.

    I don’t know if I agree with the suburban/urban divide you cite: it doesn’t seem to fit geographically here–I know businesses on North Limestone, south of Loudon, that are required to have a set amount of parking for their site. Are these urban or suburban spaces? Holding up urban spaces as distinct or separate from suburbia also seems to give a pass to big-money urban developments that 99% of the population has no hope of participating in.

    In the case of the CVS building proposal one, the argument I hear you making is that the city should have subsidized the parking because it’s an urban good that will stimulate private investment. Fine enough, but let’s take it further. That investment, and the models upon which that investment operate, are destructive, as this blog often points out.

    First, like the suburbs, parking is cheap in the city–not free, but cheap–and that cheapness is most certainly a direct result of government subsidizing of parking structures, which simultaneously devalues public transportation into and throughout the “urban” city. Case-study 1: our devalued bus transportation system. (Observational sidenote from a former inner-suburban vehicular visitor to Lexington: there is more than enough parking downtown right now. People just expect to park a block from the place they shop, eat, or get drunk at. This is unlike any dense city I know of, where you park within an area and walk around.)

    But publicly funded parking not only subsidizes the very things that this article describes, it’s also subsidizing (an out-dated) big-business model economy that requires more and more vehicular traffic flow to sustain itself. Parking structures are expensive and this cost, when provided by the city, inflates the value of downtown property relative to the rest of the city–good for individual, already well-heeled, downtown developers, not so good for me, a downtown pedestrian traveler who gets to reap the fruit of such inflated ventures: crappy national retail franchises like CVS, Krispy Kreme or Dunkin Donuts and Jimmy Johns who require a certain amount of parking to create larger profit margins that get sent back out of the local economy to franchise headquarters.

    What I normally don’t get from these high-cost private ventures are local businesses who require smaller start-up costs and less traffic to make a living. Where are these places locating? Not in any new developments around the city core that I can see–they can’t afford it. But it does look good to the progressive crowd touting the city, many of whom have directly benefited from Lexington’s supposed downtown revitalization.

    To cap a rambling post, I don’t agree with the urban/suburban divide as it lets the (recently and currently glorified) city off the hook at the expense of suburbia, and the city’s subsidizing of large parking structures actually reinforces socio-economic models that are destructive to the kind of city that I would like to imagine myself living in or near a couple decades hence. It does this by rewarding the same jackassses who have contributed to the problems we face today, while creating yet another future (gigantic) obstacle to work around when driving becomes officially outdated.

    At least the one-story CVS will be easy (and relatively cheap) to dismantle and, when the time comes, to build on its parking surface. Tough to say the same thing for a city-built parking garage attached to a multi-million dollar private building.

    • Well that helps me think about it further. I’m coming at it from a conventional perspective: if you want density, you subsidize urban parking. And preceeding that is the belief that we need density here. That has been my bias for a long time: to preserve greenspace, we need density (because we’ve been told we are going to grow) and density needs a lot of things, urban design and parking cars, among them.

      So, are we better off with a huge energy sink that is a concrete and steel parking garage? If I’m true to what I’ve been saying for a while, no. Better perhaps to forgoe the short-term “fix”, the better to deal with the long term reality: what we need across Lexington is access to fresh food, clean water, sanitation, and alternative ways to get around the city, and that’s just the basic infrastructure – not mentioning the social infrastructure.

      So, a discussion on parking leads round to the future we are facing. It’s not a question of the “right” way to park cars, but the best way to deal with reality. I’m growing.

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