No Such Thing as a Free Parking Space

While the benefits of market pricing are readily accepted for items like consumer electronics, it’s difficult for people to accept the value of pricing on things they think should be free to the user (i.e. parking, road use, etc.). To adapt Milton Friedman’s famous maxim: there’s so such thing as a free parking space. There are in fact a myriad of problems associated with underpriced and zero-priced goods.

In the case of parking, Donald Shoup (parking guru and professor of urban planning at the University of California at Los Angeles) calculates that in some cases up to one-third of urban congestion is caused by drivers circling city streets to find a parking space. The lower rate of parking space turnover inhibits mobility making it more difficult to get from A to B. There’s also a lost opportunity to generate revenue that could be re-invested in infrastructure, like more parking.

Cities around the world are working to fix the problems associated with underpriced and zero-priced government-owned/operated parking assets. One approach being explored in San Francisco is variable market-based parking pricing. The program is known as SFpark and is being implemented by the San Francisco Municipal Transportation Agency (SFMTA). The premise is simple: use technology to allow variable pricing in urban parking.

SFpark is accomplishing this goal by installing 8,300 wireless parking sensors for metered and unmetered parking spaces in eight pilot areas across San Francisco. Meters were also installed at the entrance and exist of several public parking garages, and separate control neighborhoods. Then, SFpark installed a data feed responsible for maintaining parking space sensors and meter data. Finally, the city replaced existing meters with new ones that accept joins, major credit/debit cards and SFMTA parking cards that operate for extending time limits. For more on the program, read my April 2011 commentary entitled “San Francisco’s Experimental Market-Based Parking Pricing Program” available online here.

It’s a logistically complex program highlighted by Michael Cooper and Jo Craven McGinty yesterday in The New York Times, they write:

It is too early to tell whether the program is working over all, but an analysis of city parking data by The New York Times found signs that the new rates are having the desired effect in some areas. While only a third of the blocks in the program have hit their targeted occupancy rates in any given month since the program began, the analysis found, three-quarters of the blocks either hit their targets or moved closer to the goal. The program has been a bit more successful on weekdays.

Of course, price is only one factor that influences behavior. About a fifth of the time prices rose but more spaces filled up, or prices fell but fewer people parked. And the full effects of the phased-in price changes have yet to be felt, because the most expensive spots cannot hit the $6-an-hour maximum until next year at the earliest.

So far so good. However some my critiques of the program from nearly a year ago still apply. As I wrote last April, By only using eight pilot areas, SFMTA is taking a gradual approach that excludes most destinations within the city, meaning many drivers’ behavior will not be impacted. It is also difficult to know what impact private parking garages may have in reducing the program’s efficacy, since private parking garage prices do not seem to be included in SFpark’s data feed. And lastly, SFMTA has severely restricted its ability to raise or lower prices in a dynamic way, meaning it will take a significant amount of time to equilibrate parking prices with demand.

San Francisco isn’t the only city exploring alternative approaches to urban parking. Another noteworthy approach is implementing long-term concession public-private partnership (PPP) agreements whereby the city transfers operation of city-owned parking assets to a private operator. These types of PPP agreements are being successfully leveraged in cities like Chicago and Indianapolis.

For more urban parking, see my previous commentary here, and’s interview with Donald Shoup (below):