In Lieu of Required Parking

Americans learn about free parking early, when they play Monopoly. Players buy property, build houses and hotels, pay rent, or go to jail at a toss of the dice – but in one toss out of 40 they land on "Free Parking." When they grow up and drive cars, the odds of landing on free parking increase dramatically; American motorists park free for 99 percent of all their trips. If motorists don't pay for parking, who does? Initially, developers pay for parking. Providing all the spaces necessary to meet minimum parking requirements in zoning ordinances raises the cost and reduces the density of development. The cost of parking is then shifted into higher prices or lower values for everything else – so everyone pays for parking indirectly. Residents pay for parking through higher prices for housing. Consumers pay for parking through higher prices for goods and services. Employers pay for parking through higher office rents. Workers pay for parking through lower cash wages. Property owners pay for parking through lower land values. Because motorists park free for 99 percent of all trips, only in our role as motorists do we not pay for parking. Everyone but the motorist pays for parking. Minimum parking requirements in zoning ordinances collectivize the cost of parking, while market prices for parking individualize this cost. Unless the price of parking gives motorists an incentive to economize, the cost of parking does not influence decisions on whether to own or drive a car. With the cost of parking hidden in the prices of other goods and services, people cannot choose to pay less for parking by using less of it. Parking requirements generally hide the cost of parking within the cost of development, but in one case this cost is explicit: Some cities offer developers the option of paying a fee in lieu of providing the required parking. For example, Palo Alto, California, allows developers to pay the city a fee of $17,848 for each required parking space that is not provided. The city then uses the revenue for public parking spaces to replace the private parking spaces that developers would have provided. In this paper, I use cities' in-lieu fees to estimate the developers' cost of complying with parking requirements. I then examine another promising in-lieu option: allow developers to reduce parking demand rather than increase the parking supply. Examination of an Eco Pass program in California shows that paying the transit fare for commuters who arrive by bus costs far less than providing the parking required for commuters who arrive by car.