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The Parking Subsidy

I have hinted in a few posts recently about how the transport system is distorted by the provision of “free” parking, particularly at workplaces and shopping centres – and even more distorted by council rules known as “Minimum Parking Requirements“. I have posted on this matter before, but I think that this is such a tremendously significant issue that I really do need to fully explore the subsidies towards car users that minimum parking requirements provide. For a start, it’s very useful to watch this Youtube Video on the issue:

I think the best motto we can really use here is that “there is no such thing as free parking”. Parking costs money, as it eats up land that could be put to another use. If you look at your average shopping mall, the land dedicated to carparking is usually bigger than the mall itself; if you look at your average office park the carpark is just about always bigger than the office block it serves… and so on. Just look at Manukau City, or Botany Town Centre, or Smales Farm on the North Shore. Big malls like the Albany Westfield are generally valued at around $200-300 million. Although a lot of that value is clearly in the building itself, one could easily hazard a guess that the land the Albany Westfield is built on could be worth something like $50 million. If over half of that is set aside for parking, it’s easy to see how the numbers begin to stack up about the true cost of forcing developers to provide all this parking.

Julie-Anne Genter, who is the main expert in the video above, has also put together a very interesting research paper on the effect of minimum parking requirements. Here’s the abstract:

District plans continue to mandate the provision of vast amounts of parking for most new developments. Parking standards are based on the demand for free parking at the peak hour of each individual site, which creates an oversupply and fails to recognise the value of land used for car parks. This approach reduces the supply and thus drives up the price of urban land available for economically productive uses (residential, commercial and retail) and distributes the costs throughout the economy. Minimum parking standards undermine sustainable city development by inhibiting compact growth and subsidising single-occupant vehicle trips. In this paper, we outline the history of minimum parking requirements and their unintended consequences on our sprawling urban form. We refer to a case study in a New Zealand town centre, and explain the negative impacts – economic, social and environmental – of the current approach to parking management, including how district plan parking requirements act as a barrier to the goals of sustainable growth and transport strategies.

We present a number of regulatory responses that can reform parking standards and result in low cost, “win-win” approaches to parking management – which will facilitate smart growth and sustainable transport modes, reduce compliance costs, and provide a range of modest benefits to everyone, even those looking for a convenient car park. Finally, parking is often a contentious political issue. We consider the difficulties of implementing parking reform in an environment where people are accustomed to ample free parking. Public education and involvement in the process of instituting new parking management policies will be essential to ensure that communities understand the benefits and welcome a sustainable approach.

What is interesting here is that the solution (or at least a big part of it) to many of the problems that we face in Auckland, such as auto-dependency, urban sprawl and their ill effects, could be quite as simple as getting rid of a few rules. Usually complicated problems have incredibly difficult solutions, which often involve putting in a whole pile of new rules and having to be really really careful to ensure you get those rules right. Of course it’s not quite that simple, as getting rid of off-street parking would put pressure on street parking, although that can always be managed through either charging for on-street parking, or regulating it through limiting the time a car can be parked.

While there are a lot of issues relating to parking that I will, over time, get around to explaining and exploring further, I really want to focus on the economic cost of minimum parking requirements, and how this “free” parking is a huge hidden subsidy for road users that is generally completely ignored when working out whether road users pay their way or not. So, what is wrong with minimum parking requirements (MPR) in an economic sense? Here’s an extract from Julie’s paper:mpr-problems While it’s difficult to ascertain in dollar amounts what the economic cost of minimum parking requirements are, there are a few hints that we can get from parts of the city that don’t have these District Plan Rules – most notably the CBD. Generally parking in Auckland’s CBD will cost you at least $12-15 a day, and that’s on a “once in, once out” basis which generally requires you to be “in” before a certain time of the morning. Going by a 48 week working year, that’s around $3120 a year that someone would spend on parking in Auckland’s CBD – which they generally do not have to pay when working in other parts of the city (although obviously parking charges are likely to be lower out of the CBD due to lower land values). Interestingly, a year’s worth of unlimited public transport travel on Auckland’s buses or trains (not ‘and’ trains yet due to the stupid lack of integrated ticketing) would cost around $1920.

Even if it really costs $5 a day to provide someone with a parking space at their work (quite a conservative figure for someone working in one of the smaller centres, or at an office park somewhere), that’s a $1200 a year subsidy that could be going to your pay-packet instead of to a parking space. If people actually had the choice between the two, I wonder if they’d take the extra cash and ride the bus? The real problem is that council rules don’t allow that choice – they instead anticipate that everyone will want to drive and then force the building’s developers to provide parking for each an every person wanting to work there. If you took away those rules then I think there would be a far greater incentive for companies to locate in areas with good public transport (after all, they do want their staff to be able to get to work) so they can get away with not having to spend so much money on providing parking. This would both increase public transport use, and curb sprawl.

Taking an average of $1200 per worker, and let’s say there are around 500,000 people working in the Auckland Region who don’t have to pay for parking (just over a third of of the population seems a reasonable estimate), we’re talking about a potential $600 million a year subsidy to road users from minimum parking requirements. That’s a LOT of money.

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