May 2005

Pay As You Park

UCLA professor Donald Shoup inspires a passion for parking.

By Ruth Eckdish Knack, AICP

A mild-mannered urban economist with a sharp wit turned out be the surprise hit at this spring's national planning conference. Donald Shoup, FAICP, has been preaching for years that parking spaces should be considered a community asset, not a freebie.

Finally, people are listening. The session room in San Francisco was overflowing, and a long line of admirers — including some former students who identified themselves as "Shoupistas" — waited for the author to sign their copies of his new APA book, The High Cost of Free Parking.

Shoup's message is clear and simple. Parking is a scarce resource that can be mined by local governments to produce revenue for neighborhood improvements. "Cities should begin to see curb parking through the eyes of a parking lot owner," he says. They should also reevaluate off-street parking requirements. Land that's now devoted to parking lots could become housing. Further, employers who provide free parking should allow workers to "cash out" their benefit and use it for transit — or decide to walk or ride a bike to work instead.

We pay a price for ignoring the effects of our current parking regulations, Shoup says. In the case of off-street parking requirements, that price is the paving over of our urban and suburban landscape for parking lots. We pay in other ways, too. "The cost of parking has been shifted into higher prices for everything we buy," he says. "A little bit of every transaction is siphoned off to pay for parking."

All about economics

Shoup was born in Long Beach, California, in 1938, but his family moved around a lot with his Navy officer father, he says. "My main claim to fame is that we were living in Honolulu when Pearl Harbor was attacked."

After graduating from high school in Alexandria, Virginia, Shoup enrolled in Yale University to study electrical engineering. "But I took some economics courses with great teachers and discovered that I liked it a lot." He got a second degree in economics and then decided to go to graduate school, starting at Tulane and then returning to New Haven.

His major interest at the time was planning for advance land acquisition by local governments, the subject of his doctoral dissertation. "I took that direction in part because I had a fellowship in urban economics that was sponsored by Harvey Perloff, who was then at Resources for the Future," he says.

That's also when Shoup developed an interest in the ideas of Henry George, the "flat tax" advocate. "I was very interested in using land to finance public services, which was of course Henry George's idea. And what I'm doing now is very much related to that. I think cities should use land — curb parking spaces — to generate revenue for all sorts of public goods."

Shoup began a two-year post-doctoral fellowship at the University of California at Los Angeles in 1968, the year that Perloff founded the School of Architecture and Urban Planning. That's where Shoup wound up four years later. "I've been there ever since," he says, "teaching economics and public finance to planning students. While other professors teach them how to spend public money like drunken sailors, I teach them how to find it."

His initial foray into parking research began with a study of equity in transportation for the California Department of Transportation. "I looked at the issue of employer-paid parking. Most employers provide free parking as a fringe benefit. But they don't usually give anything to people who walk or ride a bike or take the bus to work. And those people tend to be less well-off than the drivers. That seemed really unfair."

Fifteen minutes of fame

One parking report led to another. In one study of commuters to downtown Los Angeles, for example, he and coauthor Richard Willson found that 69 percent of those who could park free drove to work alone, while only 48 percent of those who paid to park did so. "That was an eye-opener for me," he says.

His research eventually led to California's 1992 parking cash-out law. The measure, which he helped to write, requires employers to offer a cash benefit as an alternative to free parking. In practice, that means that the employer offers everyone, say, $70 a month, which can be used to pay for parking — or not.

"The law treats everybody the same," says Shoup, who credits Willson and another colleague, Don Pickrell, with contributing to the idea. "You can't offer less to a transit rider than you offer to someone who drives to work."

Following up on the California experience, Shoup wrote a report for the federal government called "Cashing Out Employer-Paid Parking." That led to what he calls his "15 minutes of fame."

"The Clinton administration incorporated the parking cash-out idea in the Climate Change Action Plan — a big deal at the time. I was invited to the White House when the bill was announced and got to shake hands with Bill Clinton and Al Gore." But then — nothing. "It turned out that the federal tax code actually prohibited parking cash out. The code said that employer-paid parking was tax-exempt only if it was offered in addition to, not in lieu of, cash. That finally got straightened out."

Staying on message

Why the fascination with parking? "Partly, it's that very few people were studying it," he says. "Most people in transportation focus on the five percent of the time that cars are moving. But the average car is parked 95 percent of the time. I think there's a lot to learn to learn from that 95 percent.

"It's astonishing to me that there's so little interest, even among planners," he continues. "Look at the literature. You'll find very little analysis of parking. I always advise young academics who are looking for a research topic to choose something that other people have overlooked or thought unimportant. Parking is an example."

In any discussion of the factors that influence urban form, parking should be at or near the top, says Shoup. "I would say that off-street parking requirements have a far bigger effect on cities than planners have acknowledged."

To make the point, he began his conference presentation by comparing the Los Angeles convention center with San Francisco's Moscone Center. He pointed out that the two facilities are almost the same size, about 700,000 square feet. "But Los Angeles requires as a minimum 50 times more parking spaces than San Francisco allows as a maximum. The L.A. center has about 6,000 parking spaces. San Francisco has none."

His PowerPoint presentation at the APA conference showed people streaming out of the Moscone Center on their way, on foot, to nearby shops and restaurants. The L.A. slides showed a sea of parking. "Our off-street parking requirements do an immense amount of harm in terms of urban design and urban form, traffic congestion, housing costs, and urban density," he says. "And they help to explain why we're so much more oriented toward the car than other countries."

He points to the results of the Nationwide Personal Transportation Survey, conducted every five years by the U.S. Department of Transportation. "They call about 50,000 households and ask them about their travel on the previous day. Most of those trips are made by car. The respondents are then asked if they paid for parking during any part of these trips. The answer is that parking was free for 99 percent of all these trips.

"Now consider that American motor vehicles consume an eighth of the world's total oil production. That means one out of every eight gallons produced is burned as gasoline in the U.S. That's an alarming statistic."

The future

"Some countries have done a far better job of creating a balanced transportation system than we have," Shoup says. "France has the same number of vehicles per capita as the U.S. did in 1972. And Denmark has the same as the U.S. did in 1961. That suggests that they have not gone so far overboard with cars as we have. But that could change.

"In 2000, the rest of the world had the same number of vehicles per capita as we did in 1920. But within five years, we doubled that number. If other countries do the same and enact the same sort of off-street parking requirements, they too will wind up with vast acres of parking lots."

The good news is that the U.S. — and other countries as well — have a choice."We have two possible futures ahead of us," says Shoup. "One is that we can keep going in the same direction. We can stick with free parking and enact even stricter off-street parking requirements everywhere. If we do, we'll continue to use way too much oil, we'll continue to sprawl, and it will be very hard to build at higher density and to have infill development in our cities."

But there's another possible future, one in which we eliminate off-street parking requirements. How can we do that? We can charge market prices for curb parking, prices that would be high enough to yield a few vacancies on every block, he says. The curb spots plus some well-designed parking structures would take care of everyone's parking needs.

But wouldn't the merchants and residents object? No, says Shoup, not if we use the revenue from curb parking to finance public improvements on the block where it is collected.

"That money could go to steam clean the sidewalks or improve facades or plant street trees, or put wires underground, or clean the snow off the streets. The point is that you spend the money right in front of the parking meter so that the residents can see an improvement. Then they'll say, yes, why shouldn't outsiders pay for parking on our street?"

Following Shoup's ideal scenario, public jurisdictions would charge market prices for curb parking the way private businesses charge for gasoline and for cars. Parking benefit districts would be created to ensure that the parking meter revenue is spent in the district where it's collected. Finally, all off-street parking requirements would be eliminated.

Then, he says, planners could spend much more time regulating the siting and landscaping of parking lots and garages. The parking lot of the future would be attractive and energy-efficient, like the Los Angeles convention center parking lot that is topped by solar collectors. Shoup pushed for better design of parking structures when he served as a member of the Westwood neighborhood design review board from the mid-1990s to 2003.

Where it works

Adam Millard-Ball, who, although not a former student, says he's proud to be called a Shoupista, was also a panelist in San Francisco. He described the work of his San Francisco-based firm, Nelson\Nygaard Consulting Associates, in implementing Shoup's ideas in three places: Arlington, Virginia; Petaluma, California; and San Francisco's Octavia Street neighborhood.

The Octavia Street specific plan, which is now going through environmental review, outlines a residential parking program that strictly limits parking permits. Petaluma's specific plan includes a "park once" provision, meant to work with the city's new form-based zoning code to encourage shared parking.

To reduce the amount of required parking, developers in Petaluma will be allowed to pay an in lieu fee to the city rather than providing all the parking called for originally. That money may in turn be used to create shared parking. Eventually, says Millard-Ball, the plan calls for phasing out all of Petaluma's parking requirements.

Clearly, he says, the reduced parking allowed by the new zoning code has stimulated development. Within a month of the code's adoption, a $75 million mixed-use development was approved, with 100 fewer parking spaces than would have been required before. "It made the economics of the project work," says Millard-Ball.

Shoup's prime example is Old Pasadena. "People there understand," he says. "If somebody's willing to pay for parking, why not charge them? If we don't, it's as though they're taking money out of our pockets. People also understand that when it comes to pricing curb parking, it's a question of how much the market will bear. In London, it's $8 an hour at some meters."

Marsha Rood, FAICP, who was Pasadena's development director when the city adopted its new parking rules for the historic area, was also a conference speaker. She affirmed that "parking, planning, and place making go hand in hand."

Over the years, Pasadena has adopted a number of the strategies Shoup advocates. After several decades with little development activity, the downtown was "discovered" in the early 1990s as a shopping and dining destination. "That's when the national chains began to come in, and when we realized we had a parking problem — even though we had a lot of free curb parking," Rood said.

"We learned, just as Donald Shoup says, that free parking comes at a price. Parking places quickly filled up, and when people couldn't find a place to park, they simply drove to another area.

That's when we started to charge for curb parking," Rood says. And, amazingly, "people learned to love the parking meters." It helped that the meter revenue was plowed back into Old Pasadena, into a specifically created parking benefit district.

Old Pasadena learned how to manage its parking program to create revenue for local improvements, says Shoup. "It learned how to set meter prices to create turnover. If all the spaces are full, the meter price is too low."

What's next

Shoup's next project stems from his belief that transportation revenue should stay where it's collected. He's studying the high-occupancy toll (HOT) lane experiment being implemented by the San Diego Association of Governments.

"The San Diego area has had HOV (high-occupancy vehicle) lanes for a long time, but they've always been underused. And drivers would ask, why should those lanes be empty when we could use them? SANDAG decided to experiment with allowing solo drivers to pay to use the fast lanes. And they came up with a very clever way of varying the price to manage demand. Drivers use transponders to pay automatically. Their account is debited when they go under a reader.

"It works like a charm," he says. "Along with two Ph.D. students, I'm working on a proposal that would allow the revenue from the fast lanes to go directly to the cities that have freeway miles in them. It would be like keeping parking revenue where the meters are located." Maybe, he adds, that would make the HOT lane plan more attractive to Los Angeles, which has so far turned it down.

It's not that Shoup is against cars, and he certainly understands their universal appeal. He joked at the APA session that "some of you may even have been conceived in a parked car." It's just that he wants to keep cars in their place. Although he does drive, he has always biked to campus, for instance. "It's an idyllic route, on residential streets with almost no traffic. It's the best part of my day," he says.

He also wants to make it clear that he is not attacking planners per se when he criticizes the parking policies of the past decades. "I indict planners for their strategies and tactics, not their motives," he says. "We do eventually recognize our mistakes," he adds, referring to the excesses of the urban renewal period, so there's hope. "Most planners today know little more about parking than the average citizen does. I want to change that."

Ruth Knack is the executive editor of Planning.

Resources

Images: Top — Donald Shoup on a San Francisco street. Is he smiling at the prospect of the city revenue that would come from raising those meter rates? Photo Robert Ortner. Bottom — Chicago's Marina City: valuable real estate wasted on parking.

Reading. The High Cost of Free Parking, by Donald C. Shoup (2005; APA Planners Press; 733 pp.), is available in hardcover for $59.95 (members $52.95) from APA's Planners Book Service. Additional material is included in Parking Cash Out (PAS Report No. 532); $48 from APA.

Training. Parking regulation is the subject of a new AICP training workshop, scheduled for July 13-14 in Chicago and September 16-17 in Washington. Contact Mary Shaw, AICP, at mshaw@planning.org, or call 202-349-1009.

Book Excerpt: In Pasadena, Meter Money Makes the Difference

Excerpted from chapter 16 of The High Cost of Free Parking, published by APA's Planners Press.

In the 1980s and 1990s, the city devised two creative parking policies that have contributed greatly to Old Pasadena's revival: First, it has returned parking meter revenue to finance public improvements. Second, it has allowed businesses in Old Pasadena to pay a modest fee to satisfy off-street parking requirements, making it possible for owners to rehabilitate an existing building or change its use without providing any new on-site parking spaces; two public garages in Old Pasadena provide the parking spaces individual properties would have had to provide.

Old Pasadena had no parking meters until 1993. All curb parking was free and was restricted only by a two-hour time limit. Because employees parked in the most convenient curb spaces and moved their cars periodically to avoid citations, customers had difficulty finding places to park. The city's staff proposed installing meters to regulate curb parking, but the merchants and property owners opposed the idea. They feared that meters, rather than freeing up space for customers, would discourage customers from coming at all. Customers and tenants, they assumed, would go to shopping centers with free parking.

Meter proponents countered that anyone who left because they couldn't park free would make room for others who were willing to pay for parking if they could find a space, and that the want of convenient short-term parking kept many potential customers away. Proponents also argued that people who were willing to pay for parking would be likely to spend more money in the shops while they were in Old Pasadena.

Debates about the meters dragged on for two years before the city reached a compromise with the business and property owners: All the meter revenue would be used to pay for public investments in Old Pasadena. Parking meters came to be seen in a new light — as a source of revenue — and the desire for public improvements suddenly outweighed the fear of driving customers away. The business and property owners agreed to an unusually high rate of $1 an hour for curb parking and even to operating the meters in the evenings and on Sundays.

The city also liked the arrangement because it wanted to improve Old Pasadena. The meters could provide the $5 million needed to finance the city's ambitious plan to improve Old Pasadena's streetscape and to convert its alleys into walkways with access to shops and restaurants. In effect, Old Pasadena became a parking benefit district. Business and property owners bought into the proposal for parking meters because they were bought off with the resulting revenue.

The city installed the parking meters in 1993 and then immediately borrowed $5 million to finance the "Old Pasadena streetscape and alleyways project," with the parking meter revenue dedicated to repaying the debt. The bond proceeds paid for street furniture, trees, tree grates, and historic lighting fixtures throughout the area. Dilapidated alleys were turned into safe, functional walkways with access to shops and restaurants.

In 2001, Old Pasadena's 690 parking meters yielded $1.3 million, or $1,867 per meter. The parking meter zone earned additional revenue from valet parking services that use meter spaces, as well as from investment earnings on the meter fund balance, so the total revenue was $1.4 million ($2,096 per meter). The total capital and operating expenses for collecting the revenue amounted to $383 per meter (18 percent of total revenue). Old Pasadena therefore received $1.2 million of net parking revenue ($1,712 per meter) to fund additional public services.

A second policy — public parking garages instead of private parking spaces — has also spurred Old Pasadena's revival. Under the city's "Parking Credit Program," businesses can pay the city a modest fee in lieu of providing the required off-street parking spaces, only $115 per year per space in 2001. Because paying $115 a year is far cheaper than providing an off-street parking space, most businesses choose to pay the fee rather than provide the required parking. The low fees for the parking credits remove a barrier to the adaptive reuse of existing buildings, and the freedom from parking requirements is essentially the freedom to create new businesses.

To accommodate the parking demand generated by new businesses, the city constructed two public parking structures and contributed to the construction of a private structure open to the public. Because the 1,567 public spaces are shared among different land uses that experience their peak parking demands at different times, fewer spaces can meet the total parking demand, and the city therefore issues 1.5 parking credits per space in the public garages. The parking credit program began in 1987, and by 2001 the city had allocated 2,350 credits. Businesses can satisfy the city's parking requirements without providing any additional on-site parking spaces.