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You’re paying for ‘free’ parking

Hidden in plain sight is a huge nonuser subsidy for driving, one that researchers say rivals U.S. spending on Medicare and national defense. But it’s so engrained in our motoring behavior that it’s practically invisible, at least until it’s used up:

“Free” parking.

Somewhere around 99 percent of auto trips in the United States — to shopping, work, church, recreation or whatever — make use of 9-by-19 foot chunks of real estate for which motorists pay nothing directly. That doesn’t mean the spaces are actually free; the costs of acquisition, paving and maintenance are spread among drivers and nondrivers alike in taxes, store prices and other economic mechanisms that emit no price signals to curtail demand for parking.

Not surprisingly, then, there’s a whole lot of that demand. City planners even stoke it with requirements that new commercial developments provide enough parking to meet peak use. As one economist has put it, that’s like defining the demand for food as the most ever consumed at free buffets.

Estimates of the annual capital and operating costs of “free” parking have ranged into the hundreds of billions of dollars, hardly an exaggeration when you consider that parking spaces in the United States probably cover more area than the state of Connecticut. No one knows for sure, but a recent Purdue University survey of just four states — Wisconsin, Illinois, Michigan and Indiana — counted 43 million parking spaces covering up to 673 square miles, not including curbside, residential driveways or more than one level of multistory ramps. That’s 1.8 parking spots for every adult resident.

Annual projection for Twin Cities area: over $1 billion
A dozen years ago, the University of Minnesota’s Center for Transportation Studies estimated the annual costs of parking in the Twin Cities region at $1.1 billion to $3.9 billion. It projected the costs in 2020 at $1.7 billion to $6.1 billion. Of those totals, paid parking comprised no more than 6.4 percent.

Nationwide, it’s been shown that the value of all parking places may exceed that of all U.S. roads or, alternately, all the cars on them.

Of course, all our cars wouldn’t be worth much if we had no place to park them at our destinations. That’s because, as UCLA economist Donald Shoup has pointed out in his book, “The High Cost of Free Parking,” every transportation system requires three things: vehicles, right of way and terminal capacity. For rail transit, that’s passenger cars, tracks and stations. For air travel, it’s planes, FAA-regulated airspace and airports.

In these cases, passenger fares pay for at least part of all three elements. For motorists, the cost equation is much more complex. Drivers pay the full price of private vehicles, about half the costs of right of way (according to a recent Pew SubsidyScope report) and next to nothing for terminal capacity, AKA parking, even though it’s practically everywhere and greatly valuable as a result.

Economists tell us this price imbalance leads to inefficiency, inequity and the environmental ravages of unchecked car culture. For example, if your employer lets you park free at the office or factory, you receive a subsidy that commuters who walk to work don’t enjoy. And guess what? “Employer-paid parking encourages solo driving,” Shoup says.

Subsidies make a difference
Research over more than two decades in seven urban areas showed that 60 percent more employees drive solo to work if the employer picks up the parking than when workers pay. Employer-paid parking also increases by 36 percent the number of cars driven to work. But Shoup found that when employers gave equal cash subsidies to motorists and pedestrians alike, the number of cars driven to work declined by 11 percent, employees drove 652 fewer miles a year on average and burned 26 fewer gallons of fuel.

Shoup also recommends that cities increase meter rates for curb parking to levels that will produce 15 percent vacancy, enough to eliminate the needless congestion plus wasted time and fuel resulting from drivers cruising for bargain-priced parking. Studies in many cities have attributed an average of 30 percent of all downtown traffic to such cruising.

“Because motorists pay nothing for parking, they own and use cars as if parking costs nothing, and traffic congestion results,” Shoup writes. He adds: “Minimum parking requirements are a hidden tax on development to subsidize cars. If urban planners want to encourage housing and reduce traffic, why tax housing to subsidize cars?”

Little has changed in decades
The invisible subsidy for parking was noted by scholars as early as the 1920s. But over the decades little has changed to reduce drivers’ sense of entitlement to free parking. If government and businesses act to get all the prices and incentives for driving and parking right, there’ll be lots of angry motorists.

But eventually, once we’re weaned of the dole of “free” parking, we’ll have a multimodal transportation network that’s more efficient, equitable and able to meet the economic challenges of the 21st century.

Conrad deFiebre is a fellow at Minnesota 2020, a nonpartisan, progressive think tank based in St. Paul. He spent 34 years as an editor and reporter at the Star Tribune, the last 11-plus years covering Minnesota politics and government from the State Capitol. This article originally appeared on Minnesota 2020’s website.

Related: Video by Julian Spindell

Comments (11)

  1. Submitted by Thomas Swift on 06/16/2010 - 07:17 am.

    Wait, what?

    We need to be “weaned” from the “dole of free parking” and teh choo-choo’s will make rainbows appear?

    Honestly, this is the most bizarre bit from MN2020 yet; and that my friend, is saying something.

  2. Submitted by Richard Schulze on 06/16/2010 - 09:26 am.

    Most all of the external costs are well hidden when it comes to our energy and transportation policies. It would be nice if folks knew what the actually costs were to drive a car and bring petrol to market. Unfortunately the costs are not itemized. Bottom line, we pay for these external costs in our taxes.

  3. Submitted by Thomas Swift on 06/16/2010 - 10:11 am.

    What are the external costs attributable to a box of crayons; or a 6 piece order of chicken McNuggets?

    Bottom line, liberals could care less about accounting for costs, financial or otherwise, that do not add leverage to their ability to pile taxes on them. We get it, but man, you’re grasping now.

    Free parking spaces…ouch, my aching head.

  4. Submitted by Charles Holtman on 06/16/2010 - 11:13 am.

    First, the problem with automobile use is not just externalized costs (of which free parking is a small contributor), it’s also fixed costs. Both features contribute substantially to the market failure surrounding our transportation system and settlement patterns. Second, some of the external costs of automobile use are reflected in our taxes (including, predominantly, federal taxes for the military, energy and national security budgets), but a huge proportion is in the form of social, environmental and other nonquantifiable forms (Gulf oil gusher, anyone?). If fossil fuels were priced to internalize external costs and convert fixed costs to variable, our world would look very different indeed. Some fairly comprehensive studies have pegged the actual cost of a gallon of gas in the range of $12-15 (and even that excludes some of the costs that are most difficult to quantify, but also potentially the most substantial).

  5. Submitted by Richard Schulze on 06/16/2010 - 01:28 pm.

    @Tom, I’m you almost shocked that you don’t use your engineering background to make more salient points instead of the political rhetoric.

    @Chuck, I wonder how much of our military budget is spent just to keep the Strait of Hormuz open for the shipping of petrol?

  6. Submitted by dan buechler on 06/16/2010 - 04:17 pm.

    Recently finished reading “On the grid” and “Infrastructure: a field guide to the industrial landscape” Most civil engineers would say this article is spot on.

  7. Submitted by Rolf Westgard on 06/17/2010 - 05:16 am.

    If Mr. Swift would travel to major cities in Europe and Japan, he would see the virtues of choo-choos.

  8. Submitted by Karen Sandness on 06/17/2010 - 12:58 pm.

    In Japan, parking is scarce and expensive, and Tokyo residents are not even allowed to buy a car unless they can prove that they have off-street parking for it.

    Some Tokyo residents do buy cars, but I can’t imagine why. The transit system in Tokyo and indeed, throughout Japan, is so good, so complete and well-timed, that I have never felt the need for a car. In fact, it is a LIBERATING experience to live a whole year without ever needing a car.

    I know a family who spent a year in Japan. At the end of the year, the children, ages 10 and 12, didn’t want to come back to the States, because in Japan, they could run around with their friends freely and go anywhere in town, instead of having to be chauffeured to “play dates” and organized sports.

    Portland, Oregon is another place where a person can live comfortably without a car. I did so for ten years, and it was not only liberating but kind to my budget. A $58 monthly system pass met all my transportation needs on the extensive, well-planned, well-timed system of trains and buses.

    When I moved here and had to start driving again, I suddenly felt poor, even though my income hadn’t changed and there is little difference between Portland and Minneapolis in terms of cost of living. It wasn’t until income tax time, when I was going over my list of expenses, that I realized the reason. Simply by owning a car, I had lost $3000 a year in disposable income.

    Yes, the Twin Cities have a bus system, but it is chaotically unplanned, doesn’t go everywhere, doesn’t run often enough, and doesn’t allow easy and reliable transfers.

    Mr. Swift, far from “forcing people out of their cars,” the U.S. federal and local governments have forced people INTO cars. Between the subsidies for highway construction, the auto-friendly zoning laws, free parking, and suburban building patterns that make is literally impossible to walk between points that within a few hundred feet of each other, this society is so auto-centric that you’d think it was designed by General Motors.

  9. Submitted by Richard Schulze on 06/17/2010 - 01:07 pm.

    I’d say the difference is sufficiently explained by the prior existence of a government built and maintained road system allowing for heavily subsidized auto transport. How can private industry compete with publicly funded infrastructure? Add to this a slight existing prejudice against mass transit aside from air travel (much higher for buses but I have seen some aversion to trains as well), regulatory hurdles, the possibility of right of way problems requiring eminent domain, and extremely high upfront costs and it is not hard to see why rail may be an overall good idea that doesn’t happen to meet the specific requirements of investors due to external factors.

    Add to this that there are many other advantages of rail that are not internalized through existing market mechanisms and it is easy to see how the interests of investors in regards to rail diverge significantly from the interests of the nation at large.

    I don’t really see the argument that because the interests of investors are not well served by a particular idea that the idea itself doesn’t make economic sense. It may be that there are confounding factors that mean that investor’s interests diverge from broader economic interests.

  10. Submitted by Mike Hicks on 06/22/2010 - 06:05 pm.

    In many cases, parking spaces are mandated by local zoning codes, and I’m not sure the businesses really want as much parking as they’re required to have. Some do, certainly, but it would be better if we forced businesses to get a variance for wanting an oversized lot rather than needing one for a lot that’s designed for January through October.

    Of course, in Minnesota, we require parking lots to be oversized partly because of the snow that gets piled up in the winter. I’d like to see a better way of handling that, like more widespread use of snow melting machines.

    Other things can be done too, like requiring overflow parking to be kept as green space or only covered with gravel rather than being paved. It might also be possible to configure the overflow areas as plazas or outdoor seating most of the year (particularly if segments are placed near the central buildings).

    It might not be bad to simply force businesses to go on a parking lot diet — it wouldn’t take much advertising to encourage people to share a ride to the mall in the busier months.

  11. Submitted by Dan Gerber on 07/05/2010 - 02:34 am.

    To Karen S: You may not be too far off. Try a Google
    search on “minneapolis st. paul street car history”
    and you’ll find it was alleged that G.M. had a hand
    in dismantling the street car system here. You can
    still ride a preserved street car at Lake Harriet in

    I commute by bus to work downtown, and walking from
    my stop to work on 4th Avenue past the Hennepin County
    Gov’t Center I have to dodge around news vehicles (TV, typically) lined up and parked on the sidewalk, not on the street. What kind of perk is that?

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