Parking Shortages Still Bad for Business
One thing you can normally count rightwingers to be correct about is the subject of price controls. Price controls seem appealing — everyone likes stuff, but nobody likes spending money, so price controls offer the promise of getting stuff for less money. It’s all good! Except it’s not good at all because price controls actually just lead to shortages. The market works, conservatives are awesome, you can look it all up. Unless the subject turns to parking. In that case, the DC GOP is responding to a parking meter price hike by whining that “the new rates will hurt businesses that depend on customers who drive to their stores.”
In fact, there are two ways meter pricing could, in theory, hurt businesses. On the one hand, meters might be so expensive that there are just tons and tons of vacant parking spaces haunting downtown. In this case, the high price of parking is keeping customers away from stores and the meter rates are two high. On the other hand, meters might be so cheap that convenient street parking is rarely available and drivers leave their cars parked for long stretches of time. In this case, the low price of parking is creating parking shortages and low turnover, keeping customers away from stores. One can’t deduce the answer to this question a priori, but it’s abundantly obvious if you walk (or drive!) around DC that downtown parking is too scarce not too abundant. That means the current price is too low.
On the one hand, this issue isn’t the most dramatic thing in the world. But on the other hand when you consider what a large proportion of economic activity still takes place in big city downtowns and how reliant this country is on automobile transportation it becomes clear that the systematic underpricing of parking in built-up areas is in fact a major source of economic inefficiency. Making it all the more maddening, local governments are leaving funds on the table. Normally when you think of revenue sources you’re dealing with a trade-off between useful expenditures and harmful taxes. But when it comes to parking, correct pricing results in both more efficiency and more revenue that can be spent on useful city services — that would be very good for businesses (and everyone else).
49 Responses to “Parking Shortages Still Bad for Business”
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January 8th, 2009 at 12:21 pm
You lost me at “DC GOP.”
January 8th, 2009 at 12:29 pm
Mr. Yglesias continues his personal war on the automobile, the best means of getting from point A to point B ever invented (I say that as someone who puts considerably more mileage on his bicycles then on his car every year).
January 8th, 2009 at 12:37 pm
And SLC continues his war against every single point Mr. Yglesias makes on any subject whatsoever. Yet for some reason he keeps reading and commenting on a blog whose position on every issue he disagrees with.
January 8th, 2009 at 12:39 pm
Matt’s right in theory, but if you’re not someone who drives a lot to do errands, I think it’s easy to underestimate how much expensive parking pisses you off.
Essentially people have gotten used to the idea of free or very cheap parking, and I suspect that the merchant’s intuition here is correct: Raising parking costs would hurt their businesses in the short-term.
January 8th, 2009 at 12:47 pm
The other great market innovation you would expect conservatives to embrace is this: if curbside parking is priced more expensively, then you would expect more competition from private off-street lots (ie. more lots, cheaper prices).
January 8th, 2009 at 12:48 pm
Perhaps the thinking is people in cars will drive to suburban malls and park for free, instead of driving downtown and paying to park. Urban parking fees end up as a subsidy to suburban malls. Urban parking structures with refundable (by merchants) parking vouchers offer an alternative.
January 8th, 2009 at 12:51 pm
I wonder if there is a way to electronically link parking meters together such that they automatically raise prices when space becomes more limited? It makes sense to have higher rates downtown during the workday, but not on U street which needs higher congestion pricing in the evening. A system that continuously self adjusted would compensate for the different uses of space at different times of the day. Of course, I’m sure there are downsides to this as well.
January 8th, 2009 at 12:51 pm
I’m not so convinced that free parking is irrational. Perhaps I’m biased by the special case where I live: a small town with a nice, historic downtown with a lot of local businesses. These businesses are competing with malls for their existence, and probably see the free holiday parking as necessary in that competition. It’s also true that parking is generally available (even when free).
I’ve lived in cities before, and I know the situation is very different there.
January 8th, 2009 at 12:54 pm
Mr. Yglesias continues his personal war on the automobile, the best means of getting from point A to point B ever invented (I say that as someone who puts considerably more mileage on his bicycles then on his car every year).
I simply hate concern trollery–and I say this as someone who simply *loves* concern trollery.
January 8th, 2009 at 12:54 pm
Re Adam
Hey, I just like to rattle the cages of trust fund scumbags.
January 8th, 2009 at 12:56 pm
You’re missing one other scenario…
People drive to area hoping they can get cheap parking on street. Not finding cheap parking on street, they park in a nearby ramp.
Consider it a loss-leader. You drive hoping to get that ipod for $15 only to find they are all sold out, but since you are there already, the cost of driving back home seems pointless…
January 8th, 2009 at 12:57 pm
If parking is generally available when it’s free, then there’s no problem. If it’s not, then you need to better allocate that resource – and price is a good way to do it.
What merchants often fail to realize is that they can’t compete with malls because they don’t have that kind of parking supply. Charging for parking at the appropriate level ensures turnover. Parking availability then becomes more important than the price.
January 8th, 2009 at 1:02 pm
I wonder if there is a way to electronically link parking meters together such that they automatically raise prices when space becomes more limited? It makes sense to have higher rates downtown during the workday, but not on U street which needs higher congestion pricing in the evening. A system that continuously self adjusted would compensate for the different uses of space at different times of the day. Of course, I’m sure there are downsides to this as well.
That’s actually more or less what “performance pricing” consists of. The process isn’t necessarily totally automated, but data is collected on the number of free spaces at various places and times of day, and the prices are adjusted accordingly.
January 8th, 2009 at 1:05 pm
Why not sell the parking spaces to private enterprise. If you owned a parking space in DC you would do a fairly good job figuring out how much to charge people to park their. Alternatively the city could lease the spaces to the highest bidder.
January 8th, 2009 at 1:11 pm
My hunch is that TW Andrews got this right at #5.
While you’re absolutely correct that underpricing is causing the shortage, you’re making the same mistake the GOP usually makes, which is to attempt to solve complex public policy problems by applying reductive Econ 101 “wisdom” to topics where it doesn’t really belong.
People tend not to be rational actors where matters of driving and parking are concerned. And they never act rationally when a previously free or subsidized service is suddenly priced at a market rate. They become angry apes. And the angry ape model should always assume that people will act in irrational and counterproductive ways in order to spite the people who try to make them pay a fair price for stuff they are accustomed to getting for free. They will go to great lengths, and even incur other costs, in order to continue getting free stuff. I’m sure someone with actual social science expertise can probably point us to a serious theoretical work to explain such things. But I think the Angry Ape model will suffice.
Anyway, pricing parking on a supply/demand curve will inevitably break down, because there is still a large supply of free parking outside the Beltway. This is why downtown retail died out long ago in most medium-sized cities in America, and why it has only been revived as a result of substantial public planning and investment. Bare minimum, any increase in meter prices should be phased in slowly, and accompanied by improved convenience (like, say, installing new meters that accept Metro smart cards so people don’t have to dig through their sofas for change before going shopping)
January 8th, 2009 at 1:17 pm
the meter rates are two high.
Spellcheck is not MY’s friend . . .
January 8th, 2009 at 1:20 pm
Maybe he just means they should be cut in half.
January 8th, 2009 at 1:22 pm
San Francisco is planning on implementing a plan called SFPark that would monitor parking availability with a target of 85% occupancy per block. Meter rates would be lowered and raised as much as 25¢ per hour on a monthly basis.
More information here:
January 8th, 2009 at 1:22 pm
Seems my link didn’t go through:
Click.
January 8th, 2009 at 1:49 pm
Maybe this isn’t the total answer but I wish when discussing this aspect of parking policy, Matt and others would also acknowledge time limits as a factor. In Philadelphia on South Street parking is 15 minutes for 25 cents but you can only park for two hours. I’m afraid Matt would call this a dollar an hour that you could calculate at 8 dollars a work day when in fact the specific policy here rotates parking every 2 hours. Come on, acknowledge and address this or reveal that high price parking policy is just too precious to you in and of itself.
January 8th, 2009 at 1:58 pm
There is another option besides raising the price, of course: Increasing supply.
That is, when it comes to living space, MY often agrues that high demand and high prices and overcrowding in cities indicate that people really like living in cities, and the solution is to build more residential units and make the population denser. Which makes sense.
But you could apply that same logic to parking. If parking really is that hard to come by, that’s a signal that people really like driving to downtown destinations, and the optimal policy would therefor be to prefer parking over other developments. With things like… um… minimum parking requirements for new developments and gargantuan parking garages.
January 8th, 2009 at 2:12 pm
Yeah, I don’t know about this. I don’t drive downtown all that often, but when I do I rarely have that much trouble parking. Dupont Circle on a Friday night, maybe, if I don’t get there til 8 or 9, I have to look for ten or fifteen minutes for parking, but if you get there at 6:30-7, it’s pretty easy. And even 10-15 minutes isn’t all that bad. Georgetown is one of the easiest places to park in the city. These places become free to park (usually) after 6:30.
Bethesda, on the other hand, charges for parking until 10:30 every night except Sunday.
I don’t ever drive to Bethesda. Ever. I’m more likely to drive to Tenleytown, where it is easy to park, and metro back to Bethesda. And since this is a lot of trouble, I practically never go anywhere in Bethesda since I stopped living there.
So, my experience is completely 180 degrees from this one. Places in Bethesda aren’t so good that I’m willing to pay to park there instead of just going somewhere else where I don’t have to pay. And parking isn’t nearly bad enough to deter me from going to those places, since usually all you have to do is get a block or two off the main drag and it becomes incredibly easy to find parking.
January 8th, 2009 at 2:15 pm
In Memphis we have the same problem with parking at meters being unavailable quite often. On the other hand we have fairly low fines for illegal parking and spotty enforcement. The solution many people use is parking in prohibitted places and looking at paying the tickets one gets on ocasion as the price of parking. It ends up costing about the same as parking in a garage over time.
January 8th, 2009 at 2:49 pm
DTM
I am thinking in terms of the formulation that if X is scarce and expensive, people must love X and we should therefore enact policies to get more X.
That is, people often claim, strangely, that people don’t want to live in cities because cities are too expensive. Matt rightly counters with the common-sensical reply that actually, the fact that prices are so high seems to indicate that people do, in fact, want to live there. So we should build more homes so people can afford to live there. The counter response is, screw those jerks. If people want to cram themselves into Manhattan and live in a shoebox, they are getting what they deserve. Just let the prices go up until people stop wanting to live there.
Same goes for parking. One response to scarce spaces is, of course, let the price go through the roof. That way, the people who REALLY want to drive will be able to find (expensive) spots. An alternative would be… let’s have policies that encourage more parking.
I am not charging him with any kind if inconsistency. Rather, I think that Matt is correct about at least one thing: There certainly isn’t a “free market” in parking. It’s hugely tied up with zoning and other regulations, not to mention public policy preferences. So nobody really knows what it costs.
But the same goes for residential. Just look at Pittsburgh, which has been subsidizing the crap out of high-end condos downtown of late, despite the fact that the city holds half the people it once did. The argument was that the market would not support the high-end places. Only low end. Now that the high-end places are done, the developers are demanding subsidies for low-end housing. Because the market will only support high end units all of a sudden. Strange.
That is to say, it’s hard to find people making “principled” economic arguments about downtown development. Seems to me that people who prefer “city living” on moral/aesthetic/environmental/personal grounds magically seem to find compelling “market based” arguments for their positions. As do people driving their Hummers in from the suburbs.
January 8th, 2009 at 3:02 pm
The problem with private garages is that they’re far too expensive for just running errands. Almost all downtown DC garages (unlike suburban garages like Pentagon City) charge about the same rate for 1 vs. 8 hours. This does make meters to only option for brief errands. I think that the meter fee change will make me think about avoiding running errands at downtown stores or using downtown doctors.
January 8th, 2009 at 3:20 pm
Seems to me that people who prefer “city living” on moral/aesthetic/environmental/personal grounds magically seem to find compelling “market based” arguments for their positions. As do people driving their Hummers in from the suburbs.
Very true. This is because “the market”, like “God”, is an all-powerful metaphorical figure who always takes one’s own side in an argument, and never demands a retraction when you invent quotes or facts and attribute them to its counsel.
January 8th, 2009 at 3:51 pm
The are other alternatives to paying at the meter or not going. For some odd reason parking building always seem more expensive than parking meters. This could be due to always having space or for longer parking times. However, in most cities, parking at a meter is cheaper on an hourly rate than parking in a parking building. If you raise the price of meter parking, the parking building is raise their rates and then the public transportation system will raise their rates. No more capacity if created but the entire arrangement takes money of out people pockets instead of having them spend it in a downtown business.
My guess is that Tysons Cormer mall would love for Pentagon City Mall, Clarendon, Ballston, etc to raise the price of parking.
January 8th, 2009 at 4:09 pm
Here in Baltimore, a lot of neighborhoods are changing from parallel curbside parking to angle-in parking as a way to increase available spaces.
January 8th, 2009 at 4:10 pm
Hmm, my link-fu is also teh suxx0rz. Angle-in parking in B-More:
http://tinyurl.com/7o2pvn
January 8th, 2009 at 5:05 pm
Anyone who’s ever spent any time in DC knows how hard it is to find an open parking meter. And most garages/surface lots charge over $5 for one hour. $2/hour is still comparatively free, assuming you can get it.
January 8th, 2009 at 7:18 pm
Glad to see this thread. Parking management is really tough. As a Capitol Hill resident, we’ve seen the new solar powered ticket-spitter meters installed to manage overflow parking in the neighborhood that was expected as a result of the new DC ballpark. The meters were intended to have variable pricing, but that feature is not yet operational, as I understand it. The other (un-noticed) benefit of these meters is to increase parking supply. Parking meters are spaced roughly 20 feet apart. Lots of small cars are way less than 20 feet long. Get rid of the meters, put in the ticket spitters, and you’ll get on average 1 or two more spaces per block.
As for pricing, as a long-time downtown DC worker, I can tell you that the parking vacancy rate approaches zero in the heart of heart of downtown seven days a week. It is FAR more convenient for me to drive and park for free at Potomac Yards to shop than to go downtown to shop. In fact, I suspect the lack of available parking (along with high asking rents) are the main reason why downtown retail is so weak.
The irony is that underground parking is a feature of almost every new building in downtown DC. Underground parking is expensive to construct–and relative to a surface lot, expensive to operate. But a large portion of the underground lots are closed during the evenings and on weekends.
Wouldn’t it make sense to raise the curbside meter rate–using ticket-spitter meters–and use the revenue to subsidize extended hours for the existing underground parking? Wouldn’t this put downtown retailers on a more even footing with the suburban retailers?
Here is the current deal: In theory, you can park for cheap or free on-street downtown–but you can’t because the parking is too cheap so there’s no place to park. OR you can pay your $12 bucks (or $20 bucks if there is a game at Verizon Center). But you won’t do that if you just want to drive to Macy’s to browse for a sport coat. Or you can drive a little longer to Virgina, park for $2, guaranteed, at Pentagon Row.
Predictability and a fair price wins every time.
BTW–the whole idea that constraining parking reduces trips, may be true but it’s misguided policy. It mostly displaces trips, from places where you can’t park to places where you can. In my view, expanding the parking supply in DC by raising the meter rates and making the underground parking more readily available would actually REDUCE congestion. Downtown DC is the center of the road network–it’s a lot easier to get downtown from a lot of places in DC than it is to get to the shopping centers. By freeing up parking, and setting it’s price at a fair level–say $2/hour–the downtown DC primary trade area would get a lot bigger.
The reason this won’t happen, of course, is that the average household income, and the racial makeup of portions of these close-in residential neighborhoods, are not the demographic that the powers-that-be that run DC want to pursue.
January 8th, 2009 at 7:47 pm
In some studies I’ve seen, it was amazing what percentage of parking spaces are taken up by employees and government workers in businesses downtown. In one small town I recall it was about 70% and that was with parking meters. Every couple of hours workers would troop out and feed the meters. When the city tried satellite parking and free buses the workers ignored them and continued to feed the meters. Our small city is considering parking meters downtown, but since it is only a short walk there from many residential areas people are afraid that parking will become jammed on the residential streets. And resident’s only parking was struck down in the state courts–you can’t prevent the public from using public streets was the argument. So, the residents will suffer, and there may be a few more spaces available for businesses. One problem by the way is that families with children do not want to park far from their cars. Even if you want to walk it just isn’t practical lugging around diaper bags, piles of raincoats, etc. I’ve known several couples who loved urban life until they had children, and then it became a nightmare partly because it is so hard to use a car. It seems that many urbanists are young singles or old rich folks.
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