City Journal contributing editor Aaron Renn and UCLA "parking guru" Professor Donald Shoup discuss how cities can make better use of dynamic, demand-sensitive pricing in order to ensure fair accessibility to parking.
Aaron Renn: Hello, I'm Aaron Renn, contributing editor at City Journal. I'm very excited to be joined here in the studio today by America's guru of parking policy, Donald Shoup. Dr. Shoup, thanks for joining us.
Dr. Donald Shoup: Well thanks for inviting me.
Aaron Renn: Donald Shoup is a Distinguished Research Professor in the Department of Urban Planning at UCLA. He is the author of the book, The High Cost of Free Parking, and he is the editor of Access, which is a magazine that translates academic transportation research into articles the average person can actually understand. And you can find that online at AccessMagazine.org. He is a great writer and thinker on all matters parking, but today, Dr. Shoup, what I'd like to discuss is your work on on-street parking. I admit I don't own a car today because I live here in New York, but when I owned a car back in Chicago, I hated cruising for parking, which could be tough. But yeah, just putting some quarters in the meter or maybe a couple extra blocks out of my way to search for a free spot on the street. What's wrong with the setup we have today in on-street parking?
Dr. Donald Shoup: Well, everyone wants to park free, including me. But that doesn't mean that on-the-street parking should be free. I agree with you that it's nice to be able to pull up to a meter, put a little bit of money in and do your business and come back and leave without a ticket. The problem is that when the parking is free or too cheap, all the curb spaces are full and you get to where you are going and there's no place to park. The only thing worse than paying for parking is not having any parking at all. So I think the ideal price for parking is the lowest price the city can charge and still leave one or two vacant spaces on every block, so that everybody will have great parking karma. When you get to where you are going, you'll see an open space waiting for you, which is just what we want. And I think if one or two open spaces are available on every block, nobody can say there's a shortage of parking. But the parking is also well-used, because almost all the spaces are full. So if you get the price right on a block, the spaces will be well-used, but readily available. And I think that's as good as you're going to get for on-street parking on any street.
Aaron Renn: Wouldn't the price you would need to charge for that vary by time of day, though?
Dr. Donald Shoup: It does. And when San Francisco tried this starting, I think, in 2011, a very surprising result happened - that more prices went down than up. And that's because almost all of the parking had been at too high a price in the morning. If you have the same price all day long, it can be too high at some times and too low at others, so San Francisco charged different prices at different times of day. Before noon, noon to three, and after three can have different prices. And I think that something like 17% of all prices in San Francisco went down to twenty-five cents an hour in the morning, starting out from two dollars an hour. So although some people claim that this was going to be another money grab for the city, it was just the opposite happened - that the prices went up in the afternoon but the average price declined by 4% after San Francisco began adjusting prices up and down to achieve this Goldilocks price of not too high and not too low, but just right. And just right meaning the lowest price they can charge and have one or two open spaces on every block.
Aaron Renn: That's interesting. And I thought that was the most surprising thing when I read your write-up on this research. Because it seems like if we were charging the most efficient price and there's now spots free instead of spots occupied all the time, that the price would have gone up, but the price actually went down on kind of a blended rate basis. Does this mean there were actually like a bunch of empty spots in the morning nobody was using?
Dr. Donald Shoup: That's right. There were a lot of empty spaces in the morning. And in that situation the only thing the city can do, or ought to do, is to reduce prices. It took about two years to get down to twenty-five cents an hour, because the prices only moved by twenty-five cents an hour. Every month they look at all the occupancy in the previous month and look at the blocks where the price ought to be nudged up and where it ought to be nudged down, but only by twenty-five cents. So if you start out at, say, three dollars an hour, it takes four months to get down just one dollar. And I think that the average price declined about 4%, which means really that it didn't change at all. So the important result, I think, is it shows the city was not trying to maximize revenue, it was trying to optimize occupancy. That's a very different issue. I think the city could get more money if it began raising prices higher than they are now, but they have stated a principle that no other city had done before, say this is how we set prices. We look at the results. And I think that's the only good way to set prices, to look at the results. And if the results show that there are a lot of empty spaces, we reduce prices. If there are no empty spaces, we raise them. It's a principle that they have stated. And it depoliticizes the price of parking, because most people don't even know that it's happening. See if you are a tourist in the city and you go to Fisherman's Wharf and you want to find a place to park, you're just happy to see a space waiting for you. You don't know that it's cheaper or more expensive three blocks away. You are just happy with what you get. For people who live in the city, by experience, they learn where the cheaper prices are. And it's all on the web. If you really are concerned about the price of parking, look on the web and see which are the cheap blocks. And many people now find that they can get a real bargain if they are willing to walk four or five blocks, which I think is good for everybody. It's good for the driver, who gets some exercise, it's good for all the merchants that they pass to and from, and it's especially beneficial because if you really are concerned about saving money, now you can in San Francisco. In the past if it's all three dollars an hour, you can't save money on curb parking. But now you can save a lot of money by being willing to think ahead and walk three or four blocks so you can pay twenty-five cents an hour.
Aaron Renn: Well that's very interesting. And the thing that you seem to be hinting at in what they did, versus what a lot of other cities are doing, is that they are treating parking meter pricing as a tool, not as a tax. Is that really a sea change in how cities think about it? Do most cities think about it as just another way to grab cash?
Dr. Donald Shoup: I think it's a bit of both. Say in Los Angeles there was a big cash crunch about four years ago and they doubled the price of parking everywhere in the city after it had been left set for 17 years. So it was clear that the goal of the increase in the parking meter rates was to get more revenue. But now L.A. has followed along with San Francisco - a somewhat similar program, although less widely publicized, and the same thing happened in LA. that the average price went down but the occupancy went up. When you lower prices in the morning and get more cars in the street, the occupancy went up and the total revenue went up. Just because the average price went down doesn't mean that the total revenue goes down, because you get higher occupancy. And they also learned that they should extend the meter hours in the evening. If you have this principle that you are going to set the right price, it doesn't go to zero at 6:00 p.m., the way most meters were. It's quite obvious that if you've been adjusting prices in the daytime and then there's not a single occupancy after 6:00 p.m., well, then you go extend the meter hours, and they did that in L.A. It goes until 8:00 or 10:00. In Hollywood, I think, it's up to 2:00 a.m., because if there's still a high demand it means the right price, or the price that yields one or two vacant spaces, can occur at any time of day.
Aaron Renn: Shifting gears a little bit, the old-school parking meters that I knew for so much of my life were the little stand and you put the quarter in and you turn the dial. Then a few years ago we got these multi-space kiosks that take credit cards, and now there's places where I can pay with my cell phone. What is the future of parking meter, if you even want to think of it as a meter, technology and how we pay? And how is that going to change things?
Dr. Donald Shoup: Well, I've made so many wrong predictions in the past I shouldn't make any new ones now, but I think that most meters on American streets are almost identical to the ones installed in 1935, when the parking meter was invented. As you put your money in the meter and you hope to get back before your time runs out. And people bitterly opposed meters when they were new. They said it was an infernal combination of a slot machine and an alarm clock, because you were gambling. And I think that the method that we now have for paying for parking is fundamentally wrong, is that you have to pay in advance and hope to get back before your time runs out. New technology allows you to pay for just the time you use, like a long-distance telephone call in the old days, is you start paying when you start talking and you stop paying when you stop talking. So the new meter technology allows you to pay just for the time you use, and so there's no overtime ticket. You are simply paying for as long as you are there. When you come back you stop paying. So I think that most parking technology will move in that direction. That if cars can drive themselves, they'll certainly be able to pay for parking themselves. In fact some of the industry leaders think that these on-street meters will disappear because the navigation systems of cars will be able to pay for parking. I mean they are constantly in contact with the web as to show where they're going, and what turn they should make, and things like that. So they could also pay for parking. And you can pay for parking with your telephone now, so - and you can pay for exactly the time that you park, so I think that we'll get more used to the idea that you simply pay for what you use and you don't pay for what you don't use.
Aaron Renn: Dr. Donald Shoup, thank you very much for joining us today.
Dr. Donald Shoup: Thank you.