Parking isn’t free. The assumption that it has no costs or the stipulation that it should be free ignore the fact that space is a scarce resource. Scarce resources have value and public policy is incredibly influential in determining how that value is allocated in the marketplace. Minimum parking requirements distort the markets for land and transportation by bundling the costs of parking with the costs of housing. Portland should repeal the recent decision to set minimum parking requirements for new apartment buildings over 30 units. In its place, the city should provide neighborhoods the option to create a well-functioning, well-regulated local parking market through Parking Benefit Districts. (Kolozsvari and Schoup 2003)
The concerns recently voiced by neighbors about the lack of parking provided by an incoming 81-unit apartment building on 37th and Division are valid. Contrary to the myth that most of the people living in these compact urban apartments don’t own cars, a city survey found that 72 percent do. It is hard to imagine how 60-70 new cars would not create a negative spillover effect on the immediate neighborhood, making it more difficult for residents and visitors to find a space and resulting in more congestion as cars drive in circles searching.
Parking minimums, however, are not an effective solution to the spillover effect. Parking minimums combine the cost of parking with the cost of developing an apartment. Developers don’t just lets those costs eat into their profits, they pass it on to tenants and inflate the costs of housing. On average, requiring parking adds about 10% to construction costs, and that can be significantly higher in dense urban areas that require underground parking or multiple levels of a parking structure (VTPI 2012). This means that developers build fewer, more expensive apartments that can sustain profits in the face of parking minimums. A study from Oakland in the 1960’s found that housing construction costs increased by 18% and housing density reduced by 30% after the implementation of minimum parking requirements (Schoup 1997).
The bundling of parking with housing is not economically efficient. Only about 5 percent of the cost of parking is borne directly by users, which means 95 percent of the costs are indirectly paid through higher costs of other goods (VTPI 2012). This total unpriced value of parking amounts to up to $438 billion per year, three times what we spend on public roads. The problem with paying for parking indirectly is that it disables us from making rational, efficient choices about how much we want. Minimum parking requirements operate in this “black hole” of unpriced demand: planners don’t know how much parking is needed. Evidence of this can be found in the startling range of requirements across cities for the same types of development. For example, one study reviewed parking minimums for funeral parlors across 66 cities and found 27 different requirements. Spaces were to be allocated based on square footage, number of seats, funeral vehicles, parlor area, or number of parlors (Schoup 1997). Clearly, there is not a methodological consensus among planners about how to allocate parking accurately.
The spillover effect of excess parking demand generated by new apartment buildings should be addressed by setting price on on-street parking, and that price should be responsive to market demand. New metering technology recently implemented in San Francisco uses sensors attached to the meters to determine how many vehicles are parked in a given area at a given time. Administrators monitor this data and adjust rates if demand is too high (spaces always full) or too low (many open spaces). Rates are only changed once per month, at a maximum. As a result, the demand of parking is optimized so at least a few spaces are always open, reducing cruising for parking and the congestion it creates. Other combined metering systems can use one kiosk for multiple spots, answering the aesthetic concerns of residential areas.
Residents and business owners will have to purchase parking permits to park on the street in the neighborhood. The number of these permits can be limited to reflect actual street parking available in the district, and residents can be given priority based on how long they’ve lived in the district. In a case like the 81-unit apartment on Division, not all the new residents would likely be able to obtain a permit, so the building would either attract tenants that don’t own a car, or the developer would find a way to add the right amount of parking to the building or even buy a nearby lot in order to attract tenants that need parking.
With permits and meters in place to foster a local market for parking, the city should setup a Parking Benefit District that ensures the revenue from both permits and meters will be redirected back into investments in the community. The funding can help pay for streetscape improvements, bike parking, tree planting, or even storefront improvements. By reinvesting revenues back into the community, current residents and business owners get to reap the benefits of the high demand for parking in their neighborhood. As a result, they are more likely to support permitting, metering and new growth. A Parking Benefit District in Old Pasadena, California generated $1.2 million net revenue (after operating expenses) that was used to improve pedestrian infrastructure and security (Kolozsvari and Schoup 2003).
Fostering a local market for parking through permitting, meters, and a Parking Benefit District may be more complex to administer, but it is a far more efficient and equitable solution than required parking minimums. As commercial districts around Portland revitalize and the city continues to attract sustainable infill development, the challenge of matching parking supply with demand will only grow more difficult. City commissioners should provide a fair, well-regulated market system under which residents can benefit from local parking revenues, visitors pay a fair price for the use of space, and new developers and business owners can determine on their own how much off-street parking is necessary to support their enterprise.
Barter, P. A. (2010). Off-Street Parking Policy without Parking Requirements: A Need for Market Fostering and Regulation. Transport Reviews, 30(5), 571-588.
David Evans and Associates (2012). City of Portland Parking Impacts for New TOD Along Inner Corridors: Parking Study. City of Portland Bureau of Planning and Sustainability. November 2012.
Kolozsvari, D., & Shoup, D. (2003). Turning small change into big changes. Access, 23, 3-7.
SFPark (2011). SFPark Rate Adjustment Policy: On-Street Parking. San Francisco Metro Transit Authority. 8 June 2011.
Shoup, D. C. (1997). The high cost of free parking. Journal of Planning Education and Research, 17(1), 3-20.
Victoria Transport Policy Institute (VTPI) (2012). Transportation Cost and Benefit Analysis II – Parking Costs. 22 February 2012.