Most Americans will tell you that they support free markets. When it comes to parking policy, however, even many of the most conservative free marketeers suddenly transform into ardent communists.
They treat the right to park oneâÄôs car as an entitlement and behave as though it is the governmentâÄôs solemn duty to ensure an ample supply of parking spaces wherever they may wish to travel.
Drivers complain bitterly whenever the government fails to fulfill this obligation, and the government responds by either increasing the supply of parking directly, or by passing laws that force private developers to do so.
The parking industry is thus essentially run by the principles of command economics. Government officials, rather than markets, dictate how much parking needs to be supplied. In most cases, they strive to ensure a large enough supply of parking so that it will be available for free; one nation-wide transportation survey found that 99 percent of all car trips in the United States begin and end in free parking spaces.
Free parking may seem to be a good thing at first glance, but the problem with this approach is the same problem that beleaguered the Soviet Union: Command economies are woefully inefficient at distributing resources.
In the book âÄúThe High Cost of Free Parking,âÄù Donald Shoup, a professor of urban affairs at the University of California, Los Angeles, dedicates more than 700 pages to explaining just how harmful our nationâÄôs parking policies are. Shoup calculates that the size of the total parking subsidy amounts to between $127 billion and $374 billion per year. Of this, drivers only end up paying $3 billion per year.
Parking subsidies work in two ways. First, governments provide a large quantity of parking directly with curbside spaces and government-owned parking garages. Second, the government passes regulations that require developers to build a minimum number of parking spaces when they construct a new building.
When the government provides parking, it sets the price âÄî which is usually zero. Furthermore, even when they charge for it, they usually charge less than what it costs to build and maintain and far less than what theyâÄôre worth if they were sold at market value.
On top of this, the federal government gives tax incentives to employers that provide parking to their employees. They may deduct $180 from their income taxes for each parking space they provide their employees. A few years ago, policymakers tried to even this by giving a $100 deduction to public transit, but that will go away in a few years.
Government also subsidizes parking with regulations. In 2009, at the very same time that the Central Corridor light rail was in its final stages of planning, the Minneapolis City Council voted to impose a parking overlay on the University District. This overlay mandates that developers must provide a minimum of one parking space for every two bedrooms that they build.
A four bedroom apartment would have previously required one parking spot, but now requires two. Perhaps this doesnâÄôt strike you as too onerous. But it is a substantially higher supply than the market will bear. The cost of having to provide these extra parking spaces is one of the factors that has driven the development of luxury property in the area. And students who donâÄôt drive are forced to subsidize those who do.
Regulations forcing builders to provide parking simply make no sense. Imagine what would happen if the government passed a law that required all restaurants to include free desserts along with meals. The price of meals would increase to accommodate the price of desserts, and people would consume far more dessert than they do now. Obesity, heart disease and diabetes would all get worse.
In the same way, when people buy a house, or when a business buys a building, they are forced to buy parking along with it. This increases the cost of housing and employment, and increases the consumption of parking.
Another problem subsidizing parking causes is increased congestion. Sixteen studies conducted between 1927 and 2001 found that, on average, 30 percent of the cars in congested urban areas were cruising for parking. Reflect on that for a moment: If we could provide and price parking more sensibly, we could reduce traffic congestion in central cities by almost a third.
There are a few steps we can take to fix the problem of the inefficient allocation of parking. For the parking that governments own directly, they should try to mimic free market policies as closely as possible.
They should follow the lead of San Francisco, which this year implemented a program that prices parking spaces according to demand at different times of day. The city installs sensors on each parking space that can detect whether the spot is occupied or not and uses the information to properly price these parking spots.
Governments should also eliminate parking minimums. If developers feel that there is a need to supply free parking for their buildings, let them do so, but donâÄôt force them. If they believe that free parking is good for their business, let them give it away, but also give them the freedom to sell their parking if they so choose.
Taking these steps will more efficiently allocate parking, eliminate waste, free up money to deal with budget problems and reduce the incidence of other problems that are a byproduct of parking subsidies.