Monday, July 21, 2008

Prof. Donald Shoup Interview: Part 1

Photo courtesy of Prof. Shoup's homepage

Recently we interviewed Prof. Donald Shoup for a new feature on TransLiblog with some questions about his groundbreaking work in parking. This is the first half of that interview. The second half will be posted on 4 August 2008.

Prof. Shoup’s canonical work, The High Cost of Free Parking, is radically changing approaches to transportation in the academic world as well as industry. In this book, Prof. Shoup has argued for three fundamental parking principles- (1) implement a market-based pricing scheme for curbside parking that will ensure a 15 percent vacancy rate, (2) eliminate parking stall requirements for new developments, and (3) reinvest the lion’s share of parking revenue locally. Prof. Shoup received his PhD in Economics from Yale University and is currently Professor of Urban Planning at UCLA, having formerly served as Chair of that department as well as Director of UCLA’s Institute of Transportation Studies. He has also worked with various governmental organizations to assist in the creation of new policies for parking and public investment.

ITSL: Market-based pricing of curbside parking is one of your more important contributions to the academic study of parking and is beginning to be adopted in different municipalities across the US. Another transportation topic that is currently very popular is congestion pricing for highways. What do you think is the source of the current trend toward transportation solutions based upon utilization pricing? Has utilization pricing always played a role in transportation through things like the fuel tax, or is the current movement fundamentally different?

DS: Pricing is becoming a popular solution to transportation problems in part because of the huge advances in pricing technology. Old fashioned single-space parking meters require drivers to carry exact change and decide in advance how long they want to park. Many drivers end up either paying for more time than they use, or not paying enough and risking a ticket. New technology, however, allows drivers to pay for curb parking without carrying exact change and without deciding in advance how long they want to park. Buying time at the curb can now be as convenient as any other of life’s daily transactions—no more complicated than buying a loaf of bread or a quart of milk.

The technology of collecting congestion tolls has also improved greatly, so most objections to transportation pricing are now political, not technological. I think the political key to generating political enthusiasm for performance-priced curb parking is to return at least a share of the meter revenue to pay for added public services in the metered neighborhoods. In Pasadena, CA, for example, after the city offered to spend all the meter revenue to pay for public investments in the Old Pasadena business district, the business and property owners quickly agreed to install meters because they saw that they would directly benefit from the revenue. The desire for public improvements soon outweighed the fear of driving customers away. Businesses and property owners began to see parking meters in a new light—as a source of revenue. They recommended the unusual policy of operating the meters until late in the evenings and on Sundays. The business and property owners bought into the proposal for parking meters because they were bought off with the resulting revenue.

Many transportation planners and economists agree that proper pricing is the best way, and perhaps the only way, to reduce congestion. And as Winston Churchill said, Americans will always do the right thing... after they've exhausted all the alternatives.

ITSL: Taking the first question into account, why do you suppose there is political and societal resistance to such an approach? Is this only a resistance to new and different ideas, or are there more robust arguments in place from detractors of market-based parking and congestion pricing?

DS: A generation ago, many planners and politicians opposed market solutions to public problems almost as a matter of principle, but even skeptics who still doubt the merits of market prices for other public services can in good conscience recommend charging them for parking. If cities underprice curb parking, they must require off-street parking everywhere—imposing enormous costs on the economy and the environment. Planners can and should regulate the quality of parking, but they should deregulate or limit its quantity. Instead of planning without prices, we can let prices do the planning.

No one wants to pay for parking—that will never change—but residents who benefit from the nonresidents’ payments for parking will begin to think like landlords, not tenants. Curb parking will come to be seen as a privilege, not a right. Once people understand that they will receive added public services paid for by curb parking, they begin to understand the rational arguments to charge performance prices—prices that vary to maintain about 85 percent occupancy—for curb parking. If cities continue to suck meter money out of neighborhoods and use it for general fund purposes, rational arguments about traffic congestion and the environment won’t convince many people that cities should charge performance prices for curb parking.

Suppose cities do return the meter revenues to pay for added public services on the metered streets. Then are there any robust arguments for free curb parking in areas where there is a parking shortage at the zero price? The only one I can think of is that performance pricing might be expensive to implement. But modern technology has greatly reduced the cost of collecting performance-based parking charges. Collection costs (both capital and operating) are usually less than 20 percent of the gross revenue even when parking charges are low. When meter rates rise to market levels, collection costs will be an even smaller share of the gross revenue. So I would conclude that all the objections to performance pricing are political, and that strategic use of the meter revenue can answer these political objections.

ITSL: One could analyze your approach to parking as a contribution to long-term sustainability in urban development. Is your approach, by feeding parking monies back into the community and by economically coaxing drivers into only taking trips they genuinely need to take, meant to be part of an effort to shift communities away from the current auto-centric model a more sustainable one? What do you take to be a sustainable urban model with regard to transportation?

DS: One of my basic research instincts is to look at cases where prices deviate greatly from costs, and to try to think of politically acceptable ways to bring the prices people pay into line with the cost they impose. In transportation, and especially in parking, the prices that drivers pay are often far below they costs they impose, and this underpricing leads to excessive driving.

Most proposals to restrain driving often suffer from their across-the-board nature. Because no one group benefits much more than another, the measures lack a natural constituency who will put time and money into advocating them. This is why I proposed the idea of Parking Benefit Districts, in which cities return meter revenue to pay for neighborhood public goods such as sidewalk repairs, underground wiring, and added police protection. These added public benefits for the residents can generate the necessary political support to charge for curb parking. Residents who receive the benefits can vote for their member of the city council, while most nonresidents who pay for parking in the neighborhood cannot. Politicians think politically, and in supporting a Parking Benefit District they will not have to break free from parochial, place-based concerns to adopt a reform that serves the wider public interest. By creating legitimate constituencies who enjoy selective public goods, Parking Benefit Districts rely on parochial, place-based concerns to provide the incentive for reform. The political support for these benefit districts will come from narrow self-interest, not ideological conviction, and no one needs to believe that charging market prices for curb parking is good transportation policy. In this case, residents who think locally and act locally will also be acting globally, whether they know it or not. Returning curb parking revenue to the metered neighborhoods makes sense at both the local and global levels. Getting the price of curb parking right will do a world of good.

ITSL: Historically speaking, why do people in our society expect free parking? Is it possible to wean people away from this expectation?

DS: When only the rich owned cars at the beginning of the 20th century, motorists simply parked their new cars at the curb where they had formerly tethered their horses and carriages. But when car ownership grew rapidly during the 1910s and 1920s, the parking problem developed. Curb parking remained free (the parking meter was not invented until 1935), but there were no longer enough spaces for everyone to park whenever and wherever they wanted. Drivers circled in vain looking for a vacant curb space, and their cars congested traffic. In the 1930s, cities began to require off-street parking in their zoning ordinances to deal with the parking shortage. This sounds like a good idea, and, in one sense, it was a good idea. Requiring all new buildings to provide ample on-site parking did solve one problem—the shortage of free curb parking—but the solution soon created new problems. People expected to park free, and urban planners began to assume that most people would travel everywhere by car, park on-site while they worked, shopped, or dined there, and then drive on to their next destination. Cities began to require each site to provide its own parking lot big enough to satisfy the expected peak demand for free parking, and most commercial buildings are now required to provide a parking lot bigger than the building itself. The required parking lot at a restaurant, for example, usually occupies at least three times as much land as the restaurant itself. Off-street parking requirements encourage everyone to drive wherever they go because they know they can usually park free when they get there: 87 percent of all trips in the U.S. are now made by personal motor vehicles, and only 1.5 percent by public transit.

So long as cities continue to require ample off-street parking at every site, people will never be weaned from expecting free parking. And unless cities begin to charge performance-based prices for curb parking, reducing or eliminating off-street parking requirements will not be politically possible. So I would argue that getting the price of curb parking right is a precondition to weaning people away from expecting free parking everywhere. Therefore, I would also argue that Parking Benefit Districts with revenue return to finance added local public services will create the political demand for more sensible parking prices.

ITSL: Does your work fit in with the New Urbanism, Smart Growth, and Transportation Oriented Development movements? In what ways does your approach differ from or cohere to these movements?

DS: I hope the advocates of New Urbanism, Smart Growth, and Transit Oriented Development will work to get parking right in new development. Most American cities put a floor under the parking supply to satisfy the peak demand for free parking, and then cap development density to limit vehicle trips. European cities, in contrast, often cap the number of parking spaces to avoid congesting the roads, and combine this strategy with a floor on allowed development density to encourage walking, cycling, and public transport. That is, Americans require parking and limit density, while Europeans require density and limit parking. The American policy looks exceptionally foolish when combined with complaints about traffic congestion and calls for Smart Growth.

A few American cities—Boston, New York, and San Francisco—do limit parking in their downtowns, but even these cities require parking everywhere else. If parking caps reduce vehicle trips, parking requirements surely increase them. If we want to reduce traffic congestion, energy consumption, and air pollution, the simplest and most productive single reform of American zoning would be to declare that all the existing off-street parking requirements are maximums rather than minimums, without changing any of the numbers, as the London Borough of Kensington and Chelsea did in 1995. From that point on we could let the market take care of parking, and let city planners take care of the many vital issues that really demand their attention.

ITSL: In The High Cost of Free Parking, you mention Thomas Kuhn’s work a number of times- particularly through his theories developed in The Structure of Scientific Revolutions. While the results of a parking-oriented approach to sustainability may converge with the efforts of planning movements like New Urbanism, the analysis of parking you provide is more revolutionary in terms of its conceptual break with traditional urban congestion analysis. Why is modifying city planning, as driven by economical considerations, more of a Copernican-style revolution than a modification by urban design principles?

DS: I think good economics and good design are complementary, and that bad economics in urban planning has led to bad design. As a profession, urban planning was once largely about urban design and arguably suffered from an absence of quantitative rigor. The profession has since compensated for its lack of quantitative analysis, but off-street parking requirements in zoning ordinances are an example of the pendulum having swung too far in the other direction, because most cities’ parking requirements give little consideration to aesthetics and city form. Most shopping centers with all the parking spaces that planners require become giant parking lots with a few buildings—not a good place to be a pedestrian. It undoubtedly meets the peak demand for free parking, but do planners really recommend this urban pattern? Parking profoundly affects the markets for both transportation and land, but is treated as an afterthought. Off-street parking requirements increase the cost of housing, subsidize cars, distort transportation choices, encourage sprawl, burden low-income households, damage the economy, and degrade the environment. Off-street parking requirements are a disease masquerading as a cure.

Supposing to require enough parking to meet the peak demand, urban planners focus almost exclusively on the ratio of parking spaces to floor area, and they neglect how all the required parking spaces affect urban design. Off-street parking requirements represent the triumph of quantity over quality in urban planning. Planners should stop requiring more parking spaces, and start requiring better parking design.

Parking spaces are an essential part of the transportation system, and they produce enormous benefits, but this does not mean that we need more parking spaces, or that parking should be free. When planners set minimum parking requirements, they do not define demand and supply the way economists do. For example, economists do not define the demand for food as the peak quantity of food consumed at free buffets where overweight diners eat until the last bite has zero value. Nor do economists, when asked for policy prescriptions, recommend that restaurants should be required to supply at least this quantity of free food no matter how much it costs. Yet planners do define parking demand as the peak number of spaces occupied at sites with free parking, and cities do require developers to supply at least this number of parking spaces, whatever the cost. Planning for parking is planning without prices. Getting the prices right in planning for parking will help architects design better buildings.

ITSL wishes to thank Prof. Shoup for his thoughtful answers to these questions. Check back on 4 August 2008 for the second half of the interview.

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