Choose Your Weapon

In my world, Shoupistas are favorite people. These are followers of Professor Donald Shoup, who argues that free parking harms our cities by encouraging driving thereby contributing to congestion and pollution. Shoup is right, of course, and there is ample proof. Get his book, The High Price of Free Parking, and you may even come away thinking that Shoup could solve Global Warming if he had his way.

Shoup’s prescription for street parking (among a catalogue of solutions) has become known as the “15% solution” – price on-street spaces so that a 15% vacancy rate assures that a visitor can find a spot without circling round and round the block (there’s your congestion and the pollution all in one…)

At a guess there are a thousand, maybe two, Shoupistas in the world. Parking does not excite many beyond people in the industry or urban planners.

One of my favorite Shoupistas, beyond the professor himself, is John Van Horn, editor and publisher of “Parking Today” a long-standing US parking industry monthly magazine, and a proselytizer for Shoup’s thinking.

In his print editorial for August 2007, John asked some questions about Mayor Bloomberg’s plan for congestion pricing in Manhattan, that come from such a unique perspective that I am compelled to reply to them. Regarding the Bloomberg plan to charge motorists at an EZPass beacon to enter Manhattan:

But what is really going to be accomplished? It seems to me that this is a plan to collect another tax. Look at it this way. The city can't raise its income and property taxes any higher (they would be pilloried), so they are looking for a tax that doesn't seem like a tax. In this case, it's a tax on drivers. The charge would be $8 a car.

Many cities are indeed desperate to find new tax revenue (my beloved Toronto is a dramatic case in point). While I cannot say how desperate NYC is for new funding, Bloomberg’s intention is clearly to address congestion. When the cost of the collection system and the required additions to transit are taken into account, he will have to raise the $8 just to break even – as happened in London. This is not a tax grab.

People living on the edge of the congestion zone fear that folks will drive into the city, park in their neighborhoods, and then take public transportation to work. Well, of course they will. So [Bloomberg] is proposing a permit program for the area just outside the congestion zone to handle this unintended consequence. The money from the permits will go into the general fund (another tax?), and the amount of the permit costs is going to be discussed later.

I do not know the amount Bloomberg intends to charge for these permits, but most such permit systems are fairly minor revenue generators. The money is made in enforcement of the expected spillover. If a huge amount were to be charged for the permits themselves, then John has a case – that would be a tax-grab.

It seems the city is simply creating a large bureaucracy to collect money to pay for that large bureaucracy. Why not charge market rates for on-street parking in New York? Wouldn't that have the same effect? Wouldn't people think twice about driving into the city if they knew they were going to have to pay $30 or $40 to park on-street? Off-street rates would go up in kind. Legitimate residents could pay a lower fee or whatever. Set the rates so there is a 15% vacancy factor. This could be done with the infrastructure that is in place. A new taxing plan would not have to be implemented. No one would have to pass laws. There would be no need for "congestion police" to go after those who haven't a clue, and we wouldn't be creating a whole new class of lawbreaker.

Seems a perfectly sensible Shoupista viewpoint. But it has a problem. Not everyone is driving in only to park 8 hours. Some are shopping, selling, or servicing. Some have parking paid by their employer (there is a separate solution to that problem). So this form of “proxy taxation” is pretty uneven and while maybe collecting greater revenues with existing infrastructure, it would have less effect on congestion coming into the city. Charging a lot for parking may discourage some from driving in, but has no influence on the amount of driving one is willing to do once in.

But this also carries a bias. We in the parking business would naturally prefer any scheme that raises parking revenue in particular.

This isn't a problem unique to the uninformed who actually want to drive in Manhattan. Gov. Schwarzenegger wants to do something like congestion pricing in California, and other cities are eying the prospect.

Correct, about 30 of them in the US alone, if you count the number of original applicants to the USDoT’s recent Urban Partnership Agreement awards. Worldwide this number is quadrupled. The distant buzzing sound of London and Stockholm congestion charging is about to become a worldwide juggernaut.

To be most fair and effective in a market economy, one would pay for what they use. They would pay fairly for the use of a parking spot – i.e., depending on demand and length of stay. And they would pay fairly for the use of a road – i.e. depending on when, where and how long they use it. That is how market economics work. Otherwise you have the tragedy of the commons, or as some congestion-pricing advocates view it – communism (more).

By these criteria, then, charging a hefty fee for parking is only a proxy to a congestion charge and that proxy will be unfair to some and completely miss others. As well, Bloomberg’s proposed $8 flat fee is also unfair, and indeed it can be argued, that once paid it actually encourages driving.

There is only one effective and fair way to manage traffic congestion in Manhattan or in California (finally something in common between East and West) and that is to charge by the mile and to vary that charge by the degree of congestion. Mayor Bloomberg’s approach although better than continued inaction is nearly as crude an approach as was Mayor Livingstone’s in London. It is for this reason that London continues to seek technology to replace the current system.

John van Horn and my readers should also know that the end-goal of pervasive congestion pricing is to replace the fuel tax. Naturally, one might ask how we navigate from “mostly fuel tax and a few tolls” to “all tolls and no fuel tax”. Schemes to do this involve tax rebates and pay-distance-charges-at-the-pump in the interim, to a full change-over some years from now. The GPS-based German truck-tolling system provides fuel-tax rebates to German truckers (but not foreign truckers).

All of this has mostly been worked out, and will simply take a couple more years and a ton of political will. Bloomberg’s work will seem both pioneering and primitive 15 years from now.

There is no other acceptable solution to congestion and road finance.