The Economics of Street Meter Parking

Lynne Kiesling

Chicagoist reports that the Metropolitan Planning Council, Chicagoland’s “smart-growth” top-down planning elites, is proposing to reduce the amount of “free” on-street parking by installing more meters in business districts. They also propose to raise parking meter prices:

The Metropolitan Planning Council has proposed to install more parking meters and raise meter rates in busy business districts to raise money for city services like mass transit. Under the proposal, rates would continue to rise in busy areas until drivers stop clogging the streets looking for a free spot.

This development fascinates me for a variety of reasons. I am happy to see the urban planners in my region moving toward using price signals to enable private agents to coordinate their actions and possibly to change their behavior in ways that create benefits for others. This approach may yield better results than the political approach of currying legislative favor to get taxpayer funding for public transportation, and it’s certainly more fair, in my estimation, than using taxpayer funds for public transportation.

It’s also notable that, according to this article in the Daily Southtown, the policy arises out of the work of UCLA urban planning economist Donald Shoup, which we discussed here in May 2005.

The Metropolitan Planning Council has a commitment from the 53rd Street Business District in Hyde Park in Chicago’s 4th Ward to adopt Shoup’s strategy of increasing street meter rates.

Shoup said businesses in Pasadena initially feared that increased parking rates would deter customers but that, in fact, the revenue was used in ways that attracted customers.

“The revenue stayed in the community and was spent on upgrading sidewalks, removing graffiti and making bus stops cleaner and safer,” Shoup said.

I’m not entirely sold on this idea, but it does have some benefits relative to the traditional approach. But here’s my question: how well will this approach work in business districts that do not have parking lots or garages? I’m thinking of Wicker Park/Bucktown, or Armitage, or even my own Southport neighborhood, where we have one lot attached to a school. So you can’t use the lot during school hours, but only on evenings and weekends. The Hyde Park neighborhood is more like these neighborhoods, with limited parking lots and garages.

I think this is likely to work better in downtown suburb/exurb areas, but we shall see.


6 thoughts on “The Economics of Street Meter Parking

  1. Given the expense of building urban highways, and the costs of congeastion, why do we allow on street parking at all?

  2. It wouldn’t really be different; prices would adjust to reflect the comparatively smaller supply. Most “parking benefit districts” (Shoup’s term for these flexible pay parking districts) are in neighborhood commercial areas, with neighboring side streets restricted with resident permits that prevent spillover. Many of these areas already have metered parking, but the meters can’t adjust to match local variations in demand — like raising prices on Saturday evening and lowering on Monday morning.

    Should the supply prove insufficient for demand, the revenues from the street meters could be used to underwrite bonds to build parking garages. Or, residents could convert some side streets from permits to meters — a hybrid system could combine pay-and-display meters and resident permits (perhaps sold at annual auction) along the side streets.

    Re: the comment. Most businesses would argue that on-street parking facilitates economic activity as much as the roads do. After all, one can only engage in a few economic activities while driving; many more are possible when parked.

    “Subsidizing” transit with net positive externalities is no more stupid than “investing in” roads which have net negative externalities.

  3. When cities use parking money to SUBSIDIZE mass transit they are not using pricing signals they are sending anti-pricing signals. Mass transit is half as fast and 3-5 times more expensive than POV transportation.

  4. When cities use parking money to SUBSIDIZE mass transit they are not using pricing signals they are sending anti-pricing signals. Mass transit is half as fast and 3-5 times more expensive than POV transportation.

  5. When cities use parking money to SUBSIDIZE mass transit they are not using pricing signals they are sending anti-pricing signals. Mass transit is half as fast and 3-5 times more expensive than POV transportation.

  6. In highly dense markets like downtown Chicago, transit is vastly more economically efficient at moving the numbers of people necessary, from both the narrow perspective of total end-user costs of time and money, the broader perspective of social costs (including congestion), and particularly in the broadest sense (counting the social benefits of property prices). Also, the parking benefit districts established to date largely use parking revenues to subsidize walking (via enhanced amenities), not transit. Therefore, your point is both entirely unsubstantiated and moot, Mr. Cote.

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