Tag Archives: parking

The So-Called Cost of Free Employee Parking

A new report from two pro-transit groups, the Frontier Group and the Transit Center, argues that allowing employers to deduct parking costs from their income when calculating their profits (and, thereby, their taxes) represents a $7 billion subsidy to driving. This subsidy, the report claims, adds significantly to highway congestion.

Baloney. First of all, just like providing office space to office workers and factory space to factory workers, providing parking is a cost of doing business. No one would argue that employers should charge their employees rent for the office or factory space they use. Why should employers charge for parking space?

Second, even if this were a subsidy, it has nothing to do with traffic congestion. The report claims that ending the tax break would reduce auto commuting by 2 percent. That’s probably high: just ending the tax break wouldn’t necessarily cause all employers to begin to charge for parking. But even if the number is accurate, the authors clearly don’t understand how congestion works.

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Density’s Parking Impact

The City of Portland has approved numerous massive four- and five-story apartment buildings in neighborhoods of single-family homes separated by streets of single-story shops. These buildings stress the infrastructure built to handle a smaller population, which is most obvious in the increased traffic and parking problems–especially since many of the buildings are designed without parking.

Despite Portland’s reputation as a car-free city, I can attest that neighborhoods that once had few cars parked on the streets are now jammed with cars, indicating far more cars per housing unit than there were a few decades ago. The introduction of apartments lining the business corridors of these neighborhoods has led to huge increases in congestion, which isn’t helped by the fact that the city carefully keeps most signals uncoordinated so that people now frequently drive on neighborhood streets to avoid stopping at frequent red lights.

To allay concerns that the apartments were taking parking away from existing homes and businesses, the city just published a report reviewing the parking situation around eight recent buildings. Four of these had about two-thirds of parking space per dwelling unit on site, while the other four had no on-site parking (page 3). The city’s report found that, even during peak periods, at least 25 percent of on-street parking within two blocks of these buildings was vacant (p. 2).

That was enough to lead the Oregonian to headline its story about the report, “City study finds increase in no-parking apartments but little neighborhood parking impact.” There’s more to the story, however.

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Donald Shoup on Free Parking

Donald Shoup supports free parking. At least, in a response to my first post about Tyler Cowen’s op ed against free parking, Dr. Shoup points out that he only wants the price of parking to be “right,” and “the right price [for parking] will often be zero.”

However, the main purpose of Shoup’s response is to correct my mistaken claim that he supports maximum-parking requirements, requirements that all businesses charge for parking, or other coercive policies. I apologize for that error.

In fact, Shoup’s book, The High Cost of Free Parking, argues only that cities should eliminate minimum-parking requirements and charge market rates for on-street parking, things that the Antiplanner favors as well. Where we disagree is about the effects of these policies.

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Free Parking Revisited

Two weeks ago, the Antiplanner responded with dismay to George Mason University economist Tyler Cowen’s op ed against free parking. This led to a variety of responses in the blogosphere, none of which address the Antiplanner’s point. Instead, they all argue against the minimum-parking requirements found in many zoning regulations.

In particular, Cowen himself points to a study that found that Los Angeles’ minimum-parking requirements forced some developers to build more parking than they would have without such requirements. But Cowen’s op ed was titled, “Free Parking Comes at a Price,” not “Minimum-Parking Requirements Come at a Price.” The op ed was based on a book by Donald Shoup titled “The High Cost of Free Parking,” not “The High Cost of Minimum-Parking Requirements.”

Nothing the Antiplanner wrote defended minimum-parking requirements. Instead, the Antiplanner pointed out that, even without such requirements, most businesses still provide free parking for their employees and customers. It is one thing to oppose minimum-parking requirements as an unnecessary form of government regulation. It is another thing to favor government regulation mandating that private businesses charge for parking.

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A Free Parking Space Grows in Manhattan

The Antiplanner blew it yesterday by saying there was no free parking in Manhattan, which shows this Oregon resident doesn’t spend much time in the Big Apple. It turns out Manhattan has lots of free on-street parking, though on many streets you have to move your car to the alternate side of the street every night.

This doesn’t change my main point, which is that it is one thing to argue that cities should not price parking below market rates where there is a market for parking. I have no problem with this. But it is quite another thing to argue, as many urban planners following the Shoup model do, that private businesses should be required to charge for parking (or be limited in how much parking they can provide) in areas where the market rate for parking is zero (meaning most areas outside of central city downtowns).

But I began to wonder: if there is so much free on-street parking in Manhattan, why would someone pay hundreds of thousands of dollars for their own personal parking space? Census data indicate that, outside of towns in Alaska that are not accessible by auto, Manhattan has about the lowest rate of auto ownership in the United States: just 22.5 percent of households have a car, compared with more than 90 percent in the rest of the country. So you might not think there would be much demand for parking.

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Free Markets and Free Parking

The Antiplanner is disappointed that my distinguished colleague and fellow supporter of free markets, Tyler Cowen, has fallen for the “high-cost-of-free-parking” arguments of Donald Shoup. Shoup is an excellent scholar, but like many scholars, he has the parochial view that the city that he lives in is a representative example of what is happening everywhere else.

Should free parking be a thing of the past?

Shoup’s work is biased by his residency in Los Angeles, the nation’s densest urban area. One way L.A. copes with that density is by requiring builders of offices, shopping malls, and multi-family residences to provide parking. Shoup assumes that every municipality in the country has such parking requirements, when in fact many do not, and that without such requirements there would be less free parking. This last assumption is extremely unlikely, as entrepreneurs everywhere know that, outside of New York City, 90 percent of all urban travel is by car, and businesses that don’t offer parking are going to lose customers to ones that do.

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Congestion-Priced Parking

The Antiplanner has never considered parking “subsidies” to be the serious problem that Donald Shoup thinks they are. At the same time, there is nothing wrong with cities pricing curbside parking at market rates. Toward that end, San Francisco’s plan to install parking meters whose rates vary depending on demand sounds just fine.

Unfortunately, the initial program is rather anemic, with rates varying no more than once a month. Instead, the city should allow rates to vary by the hour so that prices are always high enough to allow people to find a few vacant parking spaces when they need them (and are willing to pay for them). Would this lead hordes of people to switch to mass transit? Probably not. But it would help relieve traffic congestion in San Francisco and other crowded cities.

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