Parking Prohibitions and Time Limits
Commuter parking spillover is not a concern in most central business districts, where curb parking is either prohibited
or metered for short term rather than all-day use. Therefore,
if employers offer employees the option to cash out their
existing parking subsidies, employees cannot simply take
the cash and park free on the street. This barrier to spillover
permits cities such as Boston, Chicago, New York, Portland,
San Diego, and San Francisco to cap the number of parking
spaces in new development, without worrying about spillover
Residential Parking Permits
Residential Parking Permit (RPP) districts that reserve
curb spaces for residents and their guests can also prevent
commuter parking spillover. RPP districts have spread rapidly
throughout the country since 1977, when the United States
Supreme Court upheld the ordinance that established the
country's first RPP district, in Arlington, Virginia. RPP
districts have also evolved by creative adaptations. For
example, the City of West Hollywood, California, sells RPP
permits allowing daytime parking by employees of nearby
commercial areas. Most residents drive to work during the
day and park on their own streets only in the evening, and
fees that commuters pay for daytime parking subsidize the
fees that residents pay. Vancouver, British Columbia has
RPP districts that reserve some but not all spaces exclusively
for residents, with metered spaces mixed in to accommodate
visitors to adjacent commercial uses.
Pricing Curb Parking
Where curb parking is free, commuters who are offered
cash in lieu of their free off-street spaces can take the
cash and park on the street, continuing to drive to work.
Stated in this conventional way, employers must provide
free off-street parking so their employees will not park
on the street. Rather than provide free off-street parking,
however, another way to deal with the problem of commuter
spillover is to charge for curb parking. Indeed, charges
for curb parking and limits on the length of stay are what
allow some cities to impose parking caps in central business
districts to reduce congestion on the routes to downtown
without creating curb parking congestion in downtown. But
is pricing curb parking to prevent spillover feasible in
areas other than central business districts?
Consider what it means to set a price that clears the market
for curb parking. Traffic engineers usually recommend that
at least one in seven curb spaces should remain vacant at
all times to ensure easy parking access and egress (Witheford
and Kanaan 1972; Brierly 1972; May 1975). Thus, the appropriate
price for curb parking would limit the demand for parking
so that at least one in seven spaces remains vacant. This
strategy is not new; all commercial parking operators set
prices high enough to maintain vacancies For entering cars.
The last thing a commercial operator ever wants to do is
to put out the "full" sign, because it means that
the price is too low.
Although the conventional image of charging for curb parking
is a meter at every space, several alternative technologies
now widely used in European cities have eliminated unsightly
and inconvenient curbside parking meters. One particularly
promising new system employs personal in-vehicle parking
meters that are similar in size and appearance to a small
pocket calculator, and operate like a debit card. Cities
in California, New York, and Virginia have already begun
to use the in-vehicle parking meter, which in Europe is
called an "electronic purse."(10) Several other
unobtrusive payment systems can also resolve any aesthetic
or practical objection to charging for curb parking.
Although cashing out employer-paid parking can cause a spillover
problem, the root of the problem is not the market's failure
to provide enough free off-street parking. Rather, the root
of the problem is the government's failure to charge for
scarce curb parking.
Parking Benefit Districts
Minimum parking requirements emerge from a political,
not an analytical process, and better analysis alone will
scarcely affect the outcome. In the politics of zoning for
parking, planners must weigh the interests of residents
against the interests of developers. Residents want no on-street
parking but their own; developers must pay for off-street
parking to prevent spillover. The minimum parking requirements
born of compromise and political expediency cannot be characterized
as a coherent system that takes into account the effects
of parking on traffic, land use, air quality, and urban
form. Minimum parking requirements have never been used
as a long-run strategic instrument, but are instead reactive,
tactical responses to solve immediate and intensely local
What can be done to change the fundamental political calculus
that produces minimum parking requirements? And if solving
the spillover problem by charging for curb parking, rather
than by imposing minimum parking requirements, is as simple
as I have proposed, why was it not done long ago? The answer
to both questions lies, I believe, with what happens to
parking meter revenue. Money put into a parking meter seems
literally to disappear into thin air.
According to the only survey I have been able to locate,
60 percent of all cities deposited their parking meter revenues
into their General Funds, and 40 percent deposited them
into special Parking Funds that typically were used to provide
public off-street parking (Robertson 1972). If parking meter
revenue goes into the General Fund, the neighborhood sees
no direct benefit; if the money goes to pay for more of-street
parking, many residents will not see that as worth the cost
of paying for their own curb parking. Neither of these fund
uses is politically so popular that residents of any neighborhood
would argue in favor of market prices for their own curb
parking. An easier way to prevent parking spillover has
been to require developers to provide "enough"
Installing parking meters on a city street is analogous
to enclosing a commons in a rural village. It is a political
act that creates benefits and costs, and unless citizens
can see obvious benefits from the resulting revenue, why
would they support paying market prices for their own curb
parking? But, to change the political calculus, suppose
market prices for curb parking are introduced by creating
"Parking Benefit Districts" that differ from existing
Residential Parking Permit Districts in two ways. First,
residents continue to receive permits to park in their District,
but nonresidents will be charged the market price for parking.
Second, the resulting revenue will be spent for additional
public services in the neighborhood where the revenue is
collected, such as sidewalk and street repair, street tree
planting and trimming, street cleaning, street lighting,
graffiti removal, historic preservation, or putting overhead
utility wires underground.
A Parking Benefit District is a compromise between the
one extreme of free curb parking that is overused by nonresidents,
and the opposite extreme of Residential Parking Permit Districts
that flatly prohibit nonresident parking. When cities establish
conventional RPP districts that prohibit nonresident parking,
they are overreacting to the problem of spillover parking,
and are overlooking important benefits that a more market-like
solution can offer to both residents and nonresidents. Nonresidents
should prefer a Parking Benefit District to an RPP district,
because it offers them the option of parking at a fair market
price (rather than simply prohibiting them from parking).
Residents should also prefer a Parking Benefit District,
because it offers them neighborhood public revenue derived
Seen from the resident's side of the transaction, charging
nonresidents for curb parking and spending the money to
benefit the adjacent property resembles Monty Python's scheme
to "tax foreigners living abroad." The purpose
of a Parking Benefit District would be to collect and spend
curb parking revenue to make the neighborhood a place where
people want to be, rather than merely a place where anyone
can park free.
Can market-priced curb parking really yield sufficient
revenue to make it worth collecting? One way to suggest
the revenue potential of curb parking is to compare it to
the residential property tax. In 1991, the median property
tax on single-family houses was $922 (U.S. Bureau of the
Census 1993). At a modest price of fifty cents an hour for
only eight hours each weekday, and an 85 percent occupancy
rate, one curb parking space would yield $884 a year. Many
single-family neighborhoods have two curb spaces in front
of every house, so, even at a modest price, curb parking
revenue could easily exceed current property tax revenue
in neighborhoods subject to spillover parking.(11)
The revenue potential of curb parking can also be related
to the value of the privately owned land that it fronts.
A standard curb parking lane is eight feet wide. Where private
property lines extend 100 feet back from the street (an
unusually shallow lot), curb parking occupies about eight
percent as much space as the privately owned land it fronts.
Where private property lines extend 160 feet back from the
street (an unusually deep lot), curb parking occupies about
five percent as much space as the privately owned land it
fronts. Curb spaces yielding the same rent per square foot
as the privately owned land they front would thus yield
between five and eight percent of total urban land rent.(12)
Citizens may doubt a city's ability to charge a price for
curb parking that ensures vacancies, but experience alone
can guide curb parking prices to their market-clearing level,
just as it now does for commercial off-street parking. Short-term
demand shifts would cause the vacancy rate to vary about
its average, but the cure for systematic overoccupancy or
underoccupancy would be evident and simple: adjust the price.(13)
Commercial parking operators always charge prices that ensure
vacancies, so if public agencies find it difficult to do
so, why not contract out the task to private enterprise?
Using a neighborhood-generated land rent to finance neighborhood
public services should appeal especially to advocates of
greater neighborhood self-government. By encouraging grass-roots
action and fostering local choice, the proposed Parking
Benefit Districts closely resemble existing Special Assessment
Districts, which are often used to finance the same sorts
of neighborhood public services that Parking Benefit Districts
could finance. A Special Assessment District is usually
organized by a neighborhood's residents to tax themselves
for neighborhood services such as street lighting and sidewalk
repair, and property owners commonly pay special assessments
in proportion to their street frontage, just as curb parking
would provide revenue in proportion to street frontage.
Indeed, the chief difference between a Special Assessment
District and a Parking Benefit District seems to lie in
who pays: the resident property owners pay a special assessment;
the nonresident motorists would pay for curb parking. Since
most cities already use special assessments (local governments'
special assessment revenue totalled $2.3 billion in 1990),
they must already have the accounting systems necessary
to allocate district-specific revenue to pay for neighborhood
A Parking Benefit District could be tried in any neighborhood,
without requiring any changes outside the neighborhood that
tries it. Residents could petition for a Parking Benefit
District, just as they now petition for a conventional RPP
district, so a Parking Benefit District would be formed
only if the residents wanted it. Citizen demand rather than
government initiative explains the rapid spread of RPP districts
throughout the United States, and if Parking Benefit Districts
were successful once tried, they could spread in exactly
the same way, by petition from residents.
Parking Benefit Districts might even make neighborhood
streets safer, because the link between parking revenue
and public services should encourage residents to take a
proprietary interest in ensuring the safety of visitors
and their cars. Anyone parking illegally would be stealing
from neighborhood public revenues, so residents would have
an incentive to cooperate with the police and parking enforcement
officers in supporting parking regulations. And if market-clearing
prices created vacant legal spaces, no one would ever "need"
to park illegally by a fire hydrant, at a bus stop, or in
a handicap space. Although collecting market prices for
curb parking may sound complicated, it should be far simpler
than enforcing the existing nonprice time limits on curb
parking. Surveys often show that more than half of all cars
parking in time-limited zones either violate the time limit
or are in an illegal space.
In summary, the proposal is: charge market prices to allocate
curb parking efficiently, and spend the revenue to make
the parking charges politically acceptable. The real obstacles
to market prices for curb parking are political, not technical,
and the political acceptability of pricing curb parking
depends on a politically acceptable distribution of the
revenue. Dedicating each neighborhood's parking revenue
to that neighborhood's highest public spending priority
could be the key to creating a political constituency for
pricing curb parking and reducing or eliminating off-street
Is It Fair to Charge for Parking?
To some, parking meters are ethically akin to pay toilets.
If people "need" parking, won't pricing it necessarily
harm the poor? But the fairness of charging for parking
has to be considered in comparison to the alternative, which
is "free" parking made possible by minimum parking
requirements for all land uses. Minimum parking requirements
can make parking appear free, but the cost does not disappear;
rather, it reappears as higher costs for all other goods
and services, especially housing.
A case study from Oakland, California shows how minimum
parking requirements raise the cost of housing. Wallace
Smith (1964) studied a sample of 64 rental housing projects
developed within four years before and two years after Oakland
introduced its first off-street parking requirement for
rental housing. Before 1961, Oakland's zoning ordinance
did not even mention off-street parking in residential districts.
In 1961 the zoning was changed to require one off-street
parking space per dwelling unit for all apartments developed
after that date.
As a result of the parking requirement, the number of dwelling
units per acre in new developments fell by 30 percent, and
the construction cost per dwelling unit rose by 18 percent.
Even including the cost of the newly required parking spaces,
housing investment per acre declined by 18 percent. Land
values fell even more (by 33 percent), because the land
was suddenly burdened with a new requirement to provide
parking that residents did not pay for. Property tax revenues
also declined, because both land values and construction
Why did developers reduce housing density by 30 percent
in response to a minimum parking requirement of one parking
space per dwelling unit? First, developers said the requirement
made previous densities impossible without expensive underground
garages, so the cost of development at the previous density
greatly increased; therefore, they reduced density and devoted
more land to surface parking. Second, developers said that
adding a dwelling unit required another parking space, but
enlarging a dwelling unit did not; therefore, they built
fewer but larger units. All architects and developers know
of similar situations where minimum parking requirements
dictate what can be built, what it looks like, and what
it costs. Form no longer follows function, fashion, or even
finance; instead, form follows parking requirements.(15)
It is doubtful that "free" parking benefits
the poor when the hidden costs of the consequent minimum
parking requirements are considered. Because the cost of
providing the required "free" parking is incorporated
into the cost of all other goods and services, parking requirements
force the poor to pay for parking regardless of whether
or not they own a car. A recent transportation survey in
Southern California found that the richest 20 percent of
the population owned one car for each person, while the
poorest 20 percent owned only one car for every three persons
(Cameron 1994). In this environment, it would be misleading
to argue that reducing off-street parking requirements and
charging nonresidents for curb parking will harm poor people.
Some may argue that automobiles already pay for public
roads through gasoline taxes, so charging for curb parking
is unfair "double taxation." But automobiles use
gasoline only while they are moving, not while they are
parked (unless evaporative emissions, which pollute the
air, are considered). The more a car is parked, the less
it pays in gasoline taxes, so gasoline taxes clearly do
not pay for parking spaces, and charging for curb parking
is not unfair double taxation.(16)
Pricing Curb Parking: the Implications for Business
A separate equity issue is whether it is fair to charge
market prices for curb parking in older commercial areas
where small businesses rely on curb parking for their customers.
Recall that the goal is to price parking to yield about
an 85 percent occupancy rate so motorists can quickly find
a place to park near their destination. A lower price is
called for if there are too many vacancies, and a higher
price if there are so few vacancies that motorists must
drive around to find a place to park. The total number of
curb spaces will not be reduced. Instead, market-clearing
prices will reduce the number of parked cars by only enough
to create a few curb vacancies, so a parking space will
never be hard to find.
Those who arrive in higher occupancy vehicles can split
any parking charge, so their cost per person will be low,
and those who stay a short time will pay little even if
the price per hour is high. Thus, market prices for curb
parking will ensure that everyone can park quickly, will
favor higher occupancy vehicles, and will encourage parking
turnover. The adjacent shops should end up with more customers
per curb space than when curb parking is free but taken
by solo drivers who are willing to spend the time (and gasoline)
necessary to hunt for a space, and who will park longer
once they find it.
Finally, by allocating the available curb spaces to those
who are most willing to pay for them (without having to
search for them), rather than to those who will come only
if parking is free (but difficult to find because there
are no vacancies), market-clearing parking prices should
attract customers who will spend more, per hour they are
parked, in the adjacent shops. By attracting more, and higher-spending,
customers per curb parking space, market-clearing parking
prices should help rather than harm small businesses whose
customers rely on curb parking. The resulting revenue will
also be available to spend on public improvements in the
business districts where it is collected.
Employer-paid parking subsidizes about a third of all
automobile travel in the United States, and about two-thirds
of all automobile travel during the morning peak hours.
To reduce traffic congestion and air pollution, California
has recently enacted legislation that requires employers
who subsidize employee parking to allow employees to take
the cash value of the parking subsidy, in lieu of the parking
itself. By shifting subsidies from parking to people, cashing
out employer-paid parking will encourage commuters to do
what planners have long exhorted them to do: carpool, ride
mass transit, bicycle, or walk t work.
California's new legislation also requires cities to reduce
their minimum parking requirements for developments that
implement a parking cash-out program. But a potentially
serious problem with cashing out parking subsidies and reducing
parking requirements is that employees may take the cash
and park free on nearby streets, thus congesting surrounding
areas with spillover parking. If curb parking is free, cashing
out employer-paid parking can cause spillover, but I have
argued that the root of the spillover problem is the government's
failure to charge for scarce curb parking, not the market's
failure to provide free off-street parking.
The fear of spillover parking is a legitimate but not unanswerable
objection to cashing out employer-paid parking and reducing
parking requirements. To deal with spillover parking problems
that may occur if cities reduce parking requirements, I
have proposed creating Parking Benefit Districts where the
revenues from market-priced curb parking are dedicated to
paying for neighborhood public set-vices. At relatively
modest parking prices, curb parking revenue can easily exceed
the current residential property tax in neighborhoods subject
to spillover parking from nearby commercial development.
With market prices for curb parking, and a commitment
to spend the resulting revenue to benefit the neighborhood
where it is collected, spillover parking can become an important
source of public revenue, rather than a source of annoyance.
That is, spillover parking can be converted into an additional
advantage from cashing out employer-paid parking and reducing
or eliminating minimum parking requirements.
1. This result was calculated from the 56,733 responses
to the parking question in the 1990 Nationwide Personal
Transportation Survey's "Travel Day File." The
parking question was not asked for automobile trips that
ended at home.
2. Ninety-seven percent of the lowest-income employees
park free at work, while only 89 percent of the highest-income
employees park free at work. This finding does not necessarily
imply that lower-income employees are more likely to be
offered free parking at work. Another explanation is that
lower-income employees are less likely to drive to work
if they have to pay for parking. Sample sizes for the 16
individual CMSAs ranged from 146 commuters in Pittsburgh
to 1,954 commuters in New York.
3. These percentages are calculated from data in the 1990
NPTS "travel day file," and refer to automobile
travel to and from work as a share of total personal automobile
travel for all trip purposes.
4. The number of cars driven to work includes the cars driven
by carpoolers as well as those driven by solo drivers. The
case studies included information on the share of employees
who carpooled, but not on the average carpool size. In the
table, an average of one vehicle per 2.62 carpoolers is
used to estimate the number of cars driven to work by carpoolers.
This figure was calculated from the 1988 Commuter Survey
(Commuter Transportation Services 1988). Moderate changes
in the assumed average carpool size have little effect on
the estimated number of cars driven to work per 100 employees.
5. The cash-out requirement applies to employers of 50
or more persons in areas that do not meet the state's clean
air standards. California's cash-out legislation was based
on the research reported in Shoup (1992), which contains
the full text of the legislation.
6. Because cash in lieu of a parking space is taxable for
the employee, cashing out employer-paid parking will reduce
parking demand by less than would occur if employer-paid
parking were eliminated altogether. See Shoup (1992, 58-63)
for an estimate that cashing out employer-paid parking will
reduce parking demand by about two-thirds of the reduction
caused by eliminating employer-paid parking.
7. In particular, parking demand depends crucially on
office occupancy density. In a survey of 57 of the largest
suburban employment centers in the United States, Robert
Cervero (1988, 26) found that average office occupancy density
ranged from 0.5 to 6 employees per 1,000 square feet; the
standard deviation was almost as large as the mean. Given
this broad range of office occupancy densities, it is impossible
to imagine that any planner can know how many parking spaces
per 1,000 square feet an office building "needs."
8. The parking requirement was calculated for an assumed
10,000-square-foot, three-story office building. Rex Link
carried out the 1975 survey. A few cities included in Link's
1975 survey were not included in the comparison to 1993
because the city's 1993 requirement was difficult to interpret.
For example, in 1993, for a corporate office building, the
City of Banning required "one parking space for each
employee on the largest shift plus one space per 350 square
feet of floor area." Therefore, building size alone
is insufficient information to calculate the required parking.
The results of both surveys are available from the author.
9. When the office space in a building was less than fully
leased, Willson adjusted the observed parking occupancy
upward to estimate peak parking demand for a fully leased
building, so the empty parking spaces were not explained
by empty offices in the buildings themselves.
10. See Public Technology (November/December 1990, 4). Motorists
prepay a municipal authority for a total value of parking
that is programmed into the motorist's personal in-vehicle
meter. After parking, the motorist keys in a secret "PIN"
number and the code of the parking zone, switches on the
meter, and leaves it inside the car with its LCD display
visible from outside the car. The meter deducts the appropriate
parking charge per minute from the meter's prepaid balance,
until the motorist returns and switches the meter off. Motorists
do not need to carry coins, and do not suffer the "meter
anxiety" associated with conventional parking meters
that require prepayment for a fixed amount of time despite
uncertainty about how long the motorist will want to remain
parked. Enforcement personnel can easily see whether a parked
car's meter is running; with adequate fines for violation,
motorists who have prepaid for parking will always find
it cheaper to use their in-vehicle meters than to risk a
ticket. Arlington, Virginia was the first local government
in the United States to introduce the in-vehicle parking
meter. Users report an overwhelmingly positive response.
See Shoup (1992, 95-97) for a description of the technology
available for collecting curb parking revenue.
11. Moreover, the operating cost plus amortized capital
cost of structured parking now almost always exceeds $922
per space per year, so at market prices each curb parking
space should earn more than $922 per year before it is economical
to build an adjacent off-street parking structure.
12. This calculation is approximate, because not all curb
space is available for parking, and additional curb spaces
are available along the sides as well as the fronts of blocks.
To obtain a more accurate estimate for one sample location,
I measured the area of privately owned land (excluding sidewalks
and alleys) on 12 blocks near UCLA, and compared it to the
area devoted to curb parking spaces surrounding each block.
The average ratio of curb parking space to privately owned
land was 5.1 percent.
13. Perhaps the simplest way to guarantee residents that
there will not be too many cars parked on the streets in
a Parking Benefit District would be to sell a limited number
of nonresident permits, perhaps only two or three permits
on each block, for commuters who want to park in an existing
RPP district, with the price set high enough to limit demand
to the fixed quantity of commuter permits. Later, when the
revenue potential of these nonresident permits has been
established, residents could make the tradeoff between the
inconvenience of more paying guests and the benefits of
more public revenue. Also, higher-tech methods of charging
for nonresident parking could be introduced, such as the
in-vehicle parking meters described earlier. In densely
populated neighborhoods, even residents would presumably
have to pay for parking to clear the market for he relatively
few curb spaces, but the resulting revenue spent on better
public services for the neighborhood could make these payments
politically acceptable, especially if residents without
cars outnumbered those with cars. Wherever curb parking
is scarce, there will be a necessary trade-off between how
many permits to allocate to residents, and at what price,
versus how much income can be generated by charging nonresidents
for parking in the curb spaces not used by residents.
14. See Shoup (1990) for an explanation of how special
assessments based on front-foot charges are used to finance
neighborhood public investments. In regard to what neighborhood
public purposes should be eligible for finance by a Parking
Benefit District, one simple answer is to specify that a
Parking Benefit District could finance any public purpose
that can already be financed by a special assessment.
15. If Oakland's modest requirement of one parking space
per dwelling unit had such a dramatic effect on land use,
try to imagine how today's much higher minimum parking requirements
must further reduce housing density and housing investment,
and raise housing costs, all for the purpose of providing
more "free" parking. For example, the Park Mile
Specific Plan in Los Angeles requires, "For dwelling
units, there shall be at least two and one-half parking
spaces for each dwelling regardless of the number of habitable
rooms contained therein" (City of Los Angeles 1989,
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Parts of this article are condensed from my report prepared
for the Federal Transit Administration, Cashing Out Employer-Paid
Parking. I am grateful to the Federal Transit Administration,
the University of California Transportation Center, and
the University of California Energy Research Group for financial
support. For their many suggestions for improving this paper
I am also grateful to Stephanie Babb, David Bergman, Mary
Jane Breinholt, Leland Burns, Marc Dohan, Jeanne Gilbert,
Leslie Goldenberg, Thomas Higgins, Maryanne Jones, Lewison
Lem, Jianling Li, Frank Mittelbach, Paul Ong, Richard Peiser,
Don Pickrell, Kathleen Recker, Patricia Shoup, Jesse Simon,
Srithip Sresthaphunlarp, Martin Wachs, Melvin Webber, Richard
Willson, Joel Woodhull, Roy Young, and two anonymous referees.
Shoup is a professor of Urban Planning in UCLA's School
of Public Policy and Social Research. This article is based
on his report, Cashing Out Employer-Paid Parking, prepared
for the U.S. Department of Transportation.