Market Rate Parking is Worth Paying for

Drivers circling the streets of San Francisco looking for a place to park their cars currently constitute 30% of on-street traffic. That number may be dropping very soon. The city has announced a pilot project to adjust the prices of thousands of parking meters in high traffic areas to reflect the demand for the spots. San Francisco intends to fine tune the prices, adjusting them monthly, with the goal of each block having at least one open space.  By further constraining the effective supply, the city could raise its metered prices by up to $6.00 an hour each year this pilot remains in effect. The price of parking will vary not only on a block by block basis, but by the time of day as well.

Other cities have created similar pilot projects on a smaller scale, but this is the most ambitious attempt at rationalizing the market for parking by an American city.

Many progressives will be immediately skeptical of a scheme that involves rationing a scarce resource like parking according to a driver’s ability to pay.  Increasing prices could put a serious dent into the already constrained budgets of poorer drivers or potentially price them out entirely. At first blush, market rate parking pricing seems like a way to ensure that the wealthy will have all the best parking spots too.

These concerns are misguided.

First, the poorest individuals are less likely to own cars or to be able to afford San Francisco’s current parking rates. The priced out marginal driver will probably be a tourist forced to keep her car at the hotel or a suburbanite driving into the city to run an errand. San Francisco is a walkable city with substantial public transportation available as a substitute for driving. This public transportation could be even better if it had a larger base of funding available. Raising meter funds can provide a financial cushion against the deep cuts to municipal transit funding that have been sweeping the nation. Since public transit provides transportation for many lower-income individuals, raising parking prices turns into a form of progressive wealth redistribution.

More importantly in the long term, raising parking to market rates should reduce the number of people driving into San Francisco, decreasing greenhouse gas emissions and helping protect the planet. With the recent spectacular failure of Mayor Bloomberg’s proposal to bring congestion pricing to New York City, policy makers must look for new creative methods to reduce congestion.  Since almost every car entering a city needs to park near its destination, market rate parking can raise the costs of driving into the city in the same way as pricing the roads, but without the need to involve the pesky state assembly. Other cities should watch carefully to see if they may have a new source of revenue and a remedy for traffic rolled into one.