Monday, August 04, 2008

Prof. Donald Shoup Interview: Part 2

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 second half of that interview. The first half was published on this blog on 21 July 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 insure 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: You come from a background in Economics. What initiated your interest in the transportation, and parking specifically, coming from this background? What peculiarities about parking drew you in from an economic standpoint, and at what stage in your career did they begin to draw you in?

DS: In 1975 the California Department of Transportation commissioned Philip Vincent and me to write a report on "Equity in Financing the California Transportation Plan." I wrote one chapter on the equity implications of employer-paid parking, because it seemed unfair that most employers offer free parking to commuters who drive to work and nothing to commuters who walk, bike, or ride public transit to work. It also seemed unfair that the parking subsidies are exempt from income taxes. When I looked more closely, I saw that employer-paid parking increases solo driving to work and thus produces a raft of harmful side effects.

I concluded that employer-paid parking is not only unfair but also inefficient. Nevertheless, free parking is the most common fringe benefit offered to workers in the US, and 95 percent of American automobile commuters park free at work. Almost every commuter with a car will drive to work if there is free parking at work. Free parking thus helps explain why 91 percent of commuters drive to work, and why 93 percent of their vehicles have only one occupant. The annual cost of all the free parking spaces at work is about 1 percent of the gross national product. This money could be used to pay for other fringe benefits or for higher salaries, but drivers rarely think about the cost of parking at work, and might be surprised to learn that it has any cost at all.

Many solo drivers who park free at work would drive to work alone even if they had to pay for parking. But employer-paid parking is like a matching grant for commuting by car: employers pay for parking at work if commuters drive to work. This matching-grant feature of employer-paid parking invites additional commuters to drive to work alone. Some solo drivers who park free at work, for example, would carpool, ride public transit, walk, or bike to work if they had to pay for parking. Employer-paid parking therefore changes these commuters’ travel choices: they drive to work only because they can park free.

After writing about employer-paid parking for several years, I began to study other problems created by ubiquitous free parking and came to believe that better parking policies could produce enormous benefits for cities, the economy, and the environment. Since most other urban planners and economists had overlooked parking or thought it unimportant, there was plenty to discover.

ITSL: You note your performance-based curbside parking abides by the "Goldilocks Principle." This principle deems that the number of curbside parking vacancies should not be too big or too small, but instead "just right" (~15% vacancy). Prices are to be adjusted to meet the vacancy number, which in turn is useful to keep cars off the roads- improving congestion, greenhouse gasses, and lost time. While I know you've been asked before about the effects of your program on low-income individuals- one conceivable downside of market-based pricing for curbside parking, given the anticipated large increase in fees for parking, is that driving will become prohibitively expensive first for low-income individuals, while presumably high-income individuals will be less affected by price differences. Is this analysis correct?

DS: Charging market-rate prices for curb parking is economically efficient, and it may become politically feasible, but is it fair? Many people will initially say no, but they may change their minds after they think about it. After all, the complaint that charging for curb parking is unfair can be made against charging for almost anything. Motorists pay for most other costs of owning and operating a car (gasoline, tires, repairs, insurance, and the vehicle itself), but few see this as unjust. If people pay rent for housing, why shouldn’t drivers pay rent for parking?

To judge whether charging for curb parking is fair, we can compare it with the current alternative—off-street parking requirements that increase the prices of everything else. With off-street parking requirements, even households without cars pay for parking indirectly in the form of higher prices for everything they buy. In contrast, when curb spaces are priced at market rates, only parkers must absorb the cost. Charging for curb parking thus seem fairer than imposing off-street parking requirements, especially for those who are too poor to own a car. The 2001 National Household Travel Survey found that households with incomes less than $25,000 a year are nine times more likely not to own a car than households with incomes greater than $25,000 a year. Similarly, households living in a rented residence are six times more likely than homeowners not to own a car. Because cars are unequally distributed in the population, charging drivers for the curb parking they use is fairer than forcing everyone to pay for off-street parking whether they use it or not. Parking requirements take money from the poor to subsidize the better-off: drivers park without paying, while nondrivers pay without parking.

I am not saying we should pay more for parking. Off-street parking requirements force everyone, including the carless, to pay too much for parking indirectly. I am saying we should pay for parking directly. Cities can individualize—decollectivize—the cost of parking, so that we pay less for parking if we use less. While we all want to park free, we should not elevate this wish into a social judgment that charging for curb parking is unfair, especially when we compare it with the alternative—off-street parking requirements that impose a heavy burden even on those with the least ability to pay. Almost everyone will be better off by paying only for the parking they use and not paying the high costs that off-street parking requirements impose on everyone.

ITSL: Assuming market-based pricing does in fact push out low-income drivers first, are there policies that could reduce such a problem? Could the implementation of a graduated pricing scheme to reduce certain types of vehicles (e.g. SUVs, luxury vehicles, trucks, or whatever) be integrated into your program?

DS: To ensure equity in curb parking, cities can offer "lifeline" credits for lower-income households, similar to the existing lifeline pricing arrangements for electricity and telephone service. For example, cities may choose to give every low-income citizen a minimum parking credit without charge. These credits will guarantee at least a minimum level of access, and those who don’t own a car can use their credit to pay for parking when drivers offer them a ride. Because the city will charge for curb parking that was formerly free, the lifeline credits will not require a cash outlay. Instead, they will transfer income from those who own cars to those who don’t. Charging market prices for curb parking and offering lifeline credits to the poor is fairer than requiring off-street parking everywhere.

Cities can also give lifeline credits to help disabled drivers who need to park close to their destinations. By creating a few vacancies everywhere, market-priced curb parking will improve access for the disabled because able-bodied drivers will never "need" to park in spaces reserved for the disabled. Because business owners and residents in parking benefit districts will lose revenue whenever a driver misuses a disabled placard to park free at the curb, they will actively support strict tickets for this despicable behavior. As it is now, disabled placards are so widely misused, and detection of a violation is so difficult, the chance of getting a ticket is so low that even high fines for violations do not prevent misuse. In parts of Los Angeles, for example, so many disabled spaces are fraudulently occupied that legitimate users of disabled placards cannot find a parking space; that is, the share of disabled spaces that are illegally occupied approaches 100 percent! Ending the rancorous disputes about illegal parking in disabled spaces thus represents yet another advantage of charging the right price for curb parking and returning the revenue to neighborhoods.

ITSL: Do you see advances in Intelligent Transportation Systems as playing a role in your ideas regarding parking? While there have been some advances in ‘smart’ parking garages and in-vehicle metering, many new technologies seem to be in logistics and safety. Does a parking-based restructuring of transportation require new technologies or not? Could the restructuring be helped along by certain types of technologies like in-vehicle metering and GPS?

DS: Intelligent transportation technology is key to better parking management. The adage that "You can’t manage what you can’t measure" fits parking perfectly. And until recently, the technology for measuring the performance of curb parking was crude. From the user’s point of view, most American parking meters are identical to the original model invented in 1935: you put coins in the meter to buy a specific amount of time and risk getting a ticket if you return after your time expires. Early critics of the parking meter called it "just a combination of an alarm clock and a slot machine."

The problems with conventional parking meters are myriad. What if you have no change? What happens if your plans change and you can’t get back to your car in time? If your visit gets cut short, why can’t you get some money back? And, from a city’s point of view, how can managers adjust the rates for parking meters to keep pace with changes in demand? Few other payment systems improved as little as parking meters in the 20th century. Nevertheless, two advanced technologies—multispace parking meters and curb-space occupancy sensors—now make it much easier for users to pay for curb parking, and for cities to adjust prices to meet the demand.

Multispace meters accept payment by coins, bills, credit cards, smart cards, and cell phones. Drivers thus don’t need to carry exact change to feed the meters. The meters have computer capabilities that allow charging different prices by time of day or day of the week, thus responding to variations in parking demand. Parking officials can remotely reconfigure the price schedule in any neighborhood, and the new rates are sent wirelessly to all the meters in the neighborhood. Multispace meters can show information on a large, interactive graphic screen, so they can convey complex information. They can be multilingual, show graphics, and guide the user through transactions, displaying messages such as "Please insert your card other side up." Electronic technology produces records of parking occupancy on each block by time of day and day of the week. This information is useful to analyze usage patterns and set prices to manage the parking supply.

Occupancy sensors are another new technology that will greatly increase the ability to measure and manage curb parking. These occupancy sensors are embedded in the pavement and sense changes in the earth’s magnetic field when two tons of metal are parked above them. These occupancy sensors can give transportation managers real-time information on the occupancy status of every curb parking space in the city. This information will enable managers to adjust parking prices to respond to changes in demand.

With multispace parking meters and occupancy sensors, transportation managers will be able to adopt the "Goldilocks Principle" to set curb parking prices: the price is too high if many spaces are vacant and too low if no spaces are vacant. When about one space on each side of every block is usually vacant, the price is just right.

Because both parking meters and occupancy sensors can communicate with transportation managers in real time, the city will have full information on the number of occupied parking spaces on each block and the number of spaces that are being paid for. Enforcement officers can go directly to the blocks with many meter violations, rather than roam around looking for violations. With better enforcement, more drivers will also choose to pay for parking rather than risk a ticket. Paying for parking will thus come to resemble paying for everything else. You won’t pay for my parking, I won’t pay for yours, and no one will drive around hunting for free parking.

ITSL: You’ve noted in your work the importance of actually being able to apply your theories to real situations- for example, citing numerous situations where market-based pricing of curbside parking has been successfully employed. What are some of the advantages and disadvantages, in your mind, in the division of labor in transportation between academe and industry?

DS: The division of labor between academics and practitioners works best when both know what the other is doing, and appreciate the importance of what the other is doing. In California, we have developed several institutions that increase cooperation between academics, transportation staff, consultants, and elected officials. On of these institutions is Access magazine, published by the University of California Transportation Center. This journal invites academics to translate their research articles into shorter pieces intended for a wide audience. Access bridges the gap between academics and practitioners.

Another institution that does this is The Public Policy Program of UCLA’s Extension service that sponsors an annual conference at Lake Arrowhead to examine the interrelationships among transportation, land use, and the environment. This conference regularly attracts academics, elected officials, agency administrators, union leaders, business representatives, and environmental activists to discuss policy problems and propose potential solutions. I presented a preliminary version of my parking cash-out proposal at one of these conferences in 1988, and received valuable feedback in the form of questions and concerns from the politicians and employers who attended. I then revised the proposal to address these concerns, and summarized the research to support it. As a direct result of the cooperation and communication fostered by these conferences, the cash-out bill was eventually enacted in 1992 as Assembly Bill 2109. The bill was introduced by Assemblyman Richard Katz, Chairman of the Assembly Transportation Committee, whose chief aide, John Stevens, participated in the conference that debated the original cash-out proposal.

ITSL: The parking situations at various academic institutions provide a peculiar problem. In the Bay Area, colleges and universities like UC Berkeley and the City College of San Francisco are located in settings where faculty, staff, and students all vie for spots with the local residents in abutting neighborhoods. While residents dislike their curbside spots being occupied by the nearby university, they are also reluctant to give up free parking for their own use. Is your idea of reinvesting fees collected from curbside parking back into neighborhoods enough of an incentive to encourage residents to accept market-based parking fees in their neighborhoods?

DS: I hope so.

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