Parking spots as price controls

But not everywhere:

San Francisco is trying to shorten the hunt with an ambitious experiment that aims to make sure that there is always at least one empty parking spot available on every block that has meters. The program, which uses new technology and the law of supply and demand, raises the price of parking on the city’s most crowded blocks and lowers it on its emptiest blocks. While the new prices are still being phased in — the most expensive spots have risen to $4.50 an hour, but could reach $6 — preliminary data suggests that the change may be having a positive effect in some areas.

There is much more here.


But but poor people!

For whom public transit is provided.

What about their self respect?

Won't someone please think of the poor?

This is San Francisco. Do you really think that they'll stop at the socially efficient price? Once government realizes that it charge for something, they realize that they can charge MORE for something.

It will be pretty obvious if they start charging too much because there will be lots of empty spots. This isn't a tax where it's hard to see the distortions.

They won't stop at socially efficient prices. They'll stop at revenue-maximizing prices. The latter may be considerably higher. If income inequality is high and there exists a class of super-rich people (e.g. internet entrepreneurs or venture capitalists), the city might discover that it can raise more revenue by charging one rich guy $25 per hour than by charging five middle-income people $4.50 per hour.

And trying to maximise revenue from their expensive asset (prime real estate) is bad how?

Also private parking garages will put a reasonable price cap on what the government can charge.

Instead of that revenue going to the government, wouldn't it be better if it were distributed as a citizen's dividend?

Bob: It is in that all government funds are returned to the people in the form of services, in this case public transportation.


That isn't a case of it being directly distributed as a citizen's dividend.

And if the services suck and are higher than cost-price, then that rent is not being "returned to the people" but going into the pockets of public-sector bureaucrats, politicians, private contractors, etc.

There was nothing stopping SF from charging $25 per hour before this new system was implemented as the technology for credit card parking kiosks has been around for a while. Where this line of argument fails is that there are enormous political pressures to not maximize revenue from parking. The norm is not cities overcharging for parking but rather creating all sorts of arcane rules about who can park where and when and then sometimes allowing free parking in areas where it makes no economic sense to do so. Also, SF currently charges residents $100 to park -- that almost certainly is not the revenue maximizing price. Of course, if SF politicians proposed charging a lot more, they might get voted out of office.

Charging market prices for parking spots is a huge improvement over the status quo. Even if the prices are higher than the market clearing price, that's still probably a big improvement.

My point was that people would complain loudly enough to get things changed if half the spots were always empty. I know how monopolies set prices, I'm saying people wont let it happen.

Also, at some point their prices would no longer be competitive with private parking lots and garages, even after including street parking's convenience factor, so there's a limit to how how prices can go. Of course the city could just ban private lots and garages through zoning, anyway.

I hadn't realised that parking was so cheap in San Francisco. If you think thats dear don't come to London.

You need new technology for this? My experience of the Third World is that some old peasant (if you're lucky) or some young street gang (if you're not) is perfectly capable of managing this without any new technology at all.

There is an obvious solution - most of these parks are in the Inner City. Most Inner Cities have large numbers of mainly idle young men. Give them a concession for a block or so of parking spaces. Let them charge what they like. They will presumably find the benefits of running at 90% capacity. Not much more, not much less.

Everyone who wants a park and can pay for it will have one, it will provide valuable low skill jobs, it will be strongly redistributive from the (mainly) wealthy White people who program computers to the (mainly) poor Black people who do not. A bit of a win-win really.

Mexico City has just started converting from the system you describe to the system San Francisco is implementing. The ritzy Polanco neighborhood was first but other high rent districts are coming soon.

Apparently the franeleros, as they are called, are considered to be unreliable and untrustworthy with others' property. The local citizens don't trust them to keep streets clear because they collect extra revenue with double and triple parking. They don't coordinate well enough to keep others franeleros from double charging people. They don't do a good job keeping cars undamaged or preventing vandals. And they don't pay taxes or cooperate with the civic authorities to organize and legalize their businesses.

It's a shame that the franelero model doesn't work better. I agree with you that it has potential to be a superior solution to smart meters. But if it isn't working in entrepreneurial and spontaneous-order oriented Mexico City, notoriously bureaucratic and corrupt San Francisco is unlikely to pull it off.

To be fair, in more community-oriented parts of Mexico City with more active street life and less vertiginous wealth inequality than Polanco, the franelero system still does work. That obviously doesn't offer any hope for San Francisco.

What's a good quantitative metric to judge a parking program by?

"At least one spot free in each block" sounds a bit simplistic (but I can't come up with anything better!).

Average amount of time it takes to find one in the city. Adjusted for particular times/areas.


When all the spots are full do they kick some one out?

Parking in downtown Seattle (including the old "Chinatown") recently jumped from $2.00 to $4.00, and the paid-parking hours were extended out into the evenings, as well as Sundays.
And while it is true that parking's become easier, so has finding a table at a restaurant. But I'm sure that will only be a temporary, as the number of restaurant tables will eventually re-equilibrate.

Is this one of those neat things that happens at the margins?

"The parking costs are too damn high!"

Seem like a good idea unless you lived in SF the last 10 years and have watched as the MTA has eliminated thousands of parking spaces and limited private garages making it necessary to raise rates to "relieve congestion" The MTA is openly hostile to car traffic eliminating lanes and un-timing lights to create traffic in order to force people from their cars and ride heavily subsidized buses. This is why everyone with kids is leaving SF if they can afford it.

Your last sentence here is quite false.

FWIW the SF Chronicle had a story supporting that last sentence just last week.

Supporting the claim the families with kids are leaving; one cause was rising expenses generally, but not transit specifically.

The Chronicle article supports the opposite conclusion.

Everyone with kids leaves SF if (or rather because) they can't afford it. No one is staying in SF because it's too expensive to live elsewhere.

(or, see MG's comment below.)

Exactly. They leave for better schools if they can't afford private ones, period. Street parking? Nothing to do with it.

And this isn't just SF, this is the story of cities and suburbs all over.

@Bill: "heavily subsidized buses"

If you think cars aren't heavily subsidized, you're crazy.

Private cars are certainly not as heavily subsidized as public transport.

The cars themselves, no. The roads, though....

The ones the buses also use?

Road subsidies are trivial. Maybe 3% of the total cost of driving.

Total VMT per year (from Federal Highway Administration): about 3 trillion
Total cost of driving per VMT (from AAA): about $0.5
Total cost of driving per year: about $1.5 trillion
Total road subsidies (total road spending - total revenues from gas and vehicle taxes): about $30 billion

Subsidies as a fraction of total spending = 30/1500 = about 2%

You can quibble about the exact numbers, but under no serious analysis are road subsidies more than a tiny fraction of total spending on road transportation.

In contrast, subsidies pay for about 70% of the total cost of mass transit. Only about 30% is covered by fares.

People don't leave SF if they can afford it: They leave SF because they can't.

I left SF in 2008 (less than 10 years ago) but I remember the traffic lights on Fell St. being almost perfectly timed to allow a continuous flow of traffic. Provided I wasn't trying to drive downtown during rush-hour, driving along this corridor was a breeze and I'm not someone who usually enjoys driving in big cities. Did MTA change this or is it possible that your anecdotal evidence does not generalize to every area?

As a SF resident and car owner I can give you a little insight on the SFpark "smart meters."

First, they're more like greedy meters. I can't remember the last time I noticed the price wasn't at the high end.

Second, they are supposed to project real time data so one can see the demand for parking before she embarks on her trip. An app for this would be helpful.

Third, most of the locations with the meters are in desirable commercial locations, not the inner city. In trendy boutique/retail neighborhoods with them it is still like a competitive sport to find a spot.

Finally, maybe it is working? Just yesterday I found a parking spot open directly in front of the restaurant I went to for lunch. My friend attributed it to his "inherent luck with these sorts of things." Or maybe not everybody is willing to pay $4.50 an hour. However I can tell a difference on Sundays when parking is free and there is no time limit; there are also no parking spots :-/

They have an app. It doesn't predict demand but it does tell you the number of spots currently available and the price.

Why increase supply when you have a monopoly?

What monopoly? SF has banned parking garages?

Wow, San Francisco taking the lead in doing something market-based that might be replicated elsewhere. I suspect the reason they could pull it off is that car driving is somewhat antithetical to the liberal mindset that pervades that city. Now if only they'd realize that free markets work in other areas too, like residential rents.

Still, it was interesting reading the first few comments on the NYT web site - all worrying about how "poor people" will be "priced out" of parking. Never mind that, first of all, not many poor people can afford to have a car and all its operating expenses in the big city at all. And second of all, this benefits the poor, or anyone wanting to save money on parking - go to the less in demand spaces and you'll find both empty spaces and cheap places to park.

I would love to see something similar done to fix parking on San Francisco streets in residential areas. On most streets where there are no meters, typically in more residential areas, there is a 2 hour limit for parking unless you have a parking permit. Each household can buy up to 4 of these permits which cost an unbelievably cheap $100/year each.

As a result, on the same street where a reserved spot under your building might cost $3,000/year (not a made up number - this is a quote from an apartment I looked at), for 1/30th the cost you can park your car on the street and at selected meters for 24 hours a day, 7 days a week, with the exception of street cleaning.

I would gladly pay a much larger premium for a pass if it meant I could actually park on my street. However, the surplus of these cheap passes means that street parking is difficult to find even in areas that are only sparsely populated.

Now if the bay area would just apply the same market thinking to something much bigger than parking: housing. There are so many stories of how tenants can hold landlords hostage for years and years with below-market rents. I read through the comments on the SF newspaper article on their absurd tenant laws and anyone pointing out that this was the reason for extreme housing costs was met with pure vitriol by the residents who benefit from these laws.

Everyone responds to incentives, even people who are against them.

Usually, the argument against rent control is that it discourages development and discourages people from renting out their property thereby causing a shortage. But the way to address a shortage is typically by allowing "extreme housing costs" to rise even higher so that premium real estate is auctioned off to the highest bidder.

Anecdotally, SF appears to be full of properties owned by absentee landlords. Often they take what used to be a single-family house and subdivide it into several different apartments -- there is a reason why San Francisco county has the second-highest population density in the country. There is (or at least was recently) a fair amount of development as well. High-rises and luxury condos have been going up with price-tags even more extreme than the average. You may think there should be even more high-rise construction but this involves lots of issues that don't have much to do with tenancy law (such as preserving historic houses, mandating earthquake-safe structures, not blocking the view someone paid a premium for, making sure density in an area is not higher than the width of the roads and access to public transit will permit, etc.).

As a SF resident who lives in the Marina, I can make the following comments:

-Parking is definitely easier now that these meters are on Chestnut Street
-Half the reason is probably due to the price and the other half that it is impossible to keep enough change to feed a meter (and although you can buy parking cards,it is a hassle and they last about a week)
-I'm shocked that our supervisors have done anything market-based.
-But of course they have done so by ignoring the voters. It is supremely annoying that the anti-car lobby has been so effective that millions in bonds to pay to build out parking has not been spent. Meters wouldn't be nearly as high if the money taxpayers have voted to spend on parking had actually been spent.

This is signaling, rather than genuine price discrimination. Yesterday I parked downtown at 225 Bush st. and the rate was 3.50 every 15 minutes. The maximum daily amount was $35, but at the relevant margin, this was still $14 /hr.

In SF, a max price of $4.50 or even $6.00 /hr for publicly-controlled parking spaces is insufficient to truly clear the market (evidence provided from the private market above). But it does allow civil servants to affiliate with high status academics at Stanford or Berkeley.

Policy isn't about efficiency.

Or is your post just more mood affiliation? Maybe try reading the posts from San Francisco residents (Jenny, one comment above you for example) who say the the scheme does seem to be achieving its goal before claiming otherwise without a shred of evidence.

The closest thing I've personally seen to a parking system that works well is Disney World.

I've been hoping for a similar pricing for fast food and retail: The longer the line the higher the price. I assume that this isn't implemented because customers react negatively to stress of changing prices.

@Ben or anyone living in SF: I am interested in knowing if there is an active secondary market for the $100 residential permits, either in the open or underground as a black market?

not really - your parking permit has your cars plate number written in large characters on it.

They could presumably build off of this infrastructure to implement a futures market in parking revenue... could be done at very low cost and the data could be used to predict parking trends rather than react to the parking situation at that moment, increasing revenue in the process. For example, as I understand the system now, the first person to show up for a Giants game gets a great deal at below-market prices. A futures market where spots were auctioned off by SF a week ahead would generate more revenue by not giving the first folks to show up for guaranteed sell-outs a break.

It's amazing how much people hate on San Fransisco. They did something really cool here that is making it easier to find a parking space by letting the market set the price. (a) it's a good thing and (b) it's working, whatever your irrational hatred of San Fran is telling you to the contrary.

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