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PARKING: Searching for the Good Life in the City

A good little video from Streetfilms and the non profit Institute for Transportation Development Policy on the issues of parking, particularly parking minimums.

Streetfilms is proud to partner with ITDP to bring you this fun animation that’s sort of a cross between those catchy Schoolhouse Rock shorts and a 1960s-style, Saul Bass film credits sequence.

For too long cities sought to make parking a core feature of the urban fabric, only to discover that yielding to parking demand caused that fabric to tear apart. Parking requirements for new buildings have quietly been changing the landscape of how people live. Chipping away at walkable, mixed-use neighborhoods has been a slow process that finally turned cities across the U.S. into parking craters and a few in Europe into parking swamps.

Many cities around the world are now changing course by eliminating the requirements while also investing in compact walking, cycling and public transit oriented neighborhoods. Soon cities in the developing world will follow, providing many new lessons of their own.

At Streetfilms, we realize that while parking is a difficult topic for most to comprehend, it is at the core of the transportation problems of most cities. We all hope this film helps change some minds and enlighten others

Perhaps this is something the Hibiscus and Bays Local Board need to watch after they had the Council submit this on the Unitary Plan.

UP council submission on minimum parking reqs

City centre parking rates: economic literacy versus special pleading

This weekend the NZ Herald’s motoring correspondent Matt Greenop published an article denouncing the “insult” of parking fees. Now, at Transportblog we’re always up for a good debate over the merits of different parking policies, but this doesn’t add much to the conversation:

Parking used to be a doddle. Now it’s just another cost of car ownership that makes us feel we’ve committed a heinous crime against humanity by daring to buy and use our own vehicle.

Every little bit that gets added on to the cost of driving a car in the city is an insult — and the next insult we’re facing is another hike in parking fees.

From an economic perspective, this is a totally absurd statement. It completely ignores the supply and demand dynamics at play in urban areas. Parking takes up space, and as anyone who’s been downtown in the last decade has noticed, there’s a limited amount of space in the city centre. Demand for commercial and residential space in the city centre is increasing. The residential population tripled from 10,200 to 31,300 between the 2001 and 2013 Censuses; over the same time period, employment in the city centre rose by a quarter, from 81,000 to 100,100.

Using prices to manage demand for scarce resources is an efficient and sensible response. This is basic Econ 101 material, and we accept it in most areas of life. City centre office space is priced, and priced highly, due to the fact that a lot of people want to locate there.

It would be ridiculous if companies leasing space in the city centre to complain that a rent increase was an “insult”. And if they insisted on paying no rent at all, we’d recognise it as special pleading for a market-distorting subsidy.

It’s the exact same thing with parking. Essentially, the Herald’s using emotive language to demand a costly, distortionary subsidy for a small number of people.

If the Herald wants to avoid printing such embarrassing nonsense in the future, I strongly recommend that they run their articles by an economist first.

Photo of the Day: High St- low value use

The top of High Street is interrupted, dominated, and devalued by the double-laned exit from the Victoria St car parking building.

High St_4694

The footpath on the east side is frequently blocked by impatient drivers….

High St_4681

…while on the west side it is so narrow that the high numbers of people there are forced onto the oversized carriageway with the jammed traffic.

A classic example of the prioritisation of the driver over the walker. Some traffic engineer has greedily taken way too much of this public resource for only one type of user.

Furthermore the floods of traffic that this sadly over-expanded vehicle store generate lead to gridlock at the intersection as it is really too close to both the Queen St and Kitchener St intersections for the sudden volumes that this exit at times produces [people still tend to head out all at once].

At the very least the cars could be rationed out the exit by taking it down to one lane, but much better would be to move the exit up the hill onto Kitchener St where the entrance is.

Victoria St parking building

No problem adding an exit to this entrance here with a bit of reworking, the left hand space used to be the entrance before it was doubled. And AT would then have to sort out this intersection and its poor pedestrian phasing.

Vic park entrance

And best of all the High St ground floor could be repurposed for a human use: It’s the kind of hip industrial concrete interior that Prada love, but failing that: A pool hall, dingy nightclub, dungeon? ….. PingPong centre!

High St Big Mouth.

Anything would be better than that gapping maw and adjacent pissoir, and on the street that has pretensions to being the country’s preeminent fashion shopping strip. Well I suppose it did have those pretensions until the retailers there threw their coat hangers out of the cot and stopped it becoming a shared space, and now the action has gone elsewhere….

Note how wide those lanes are at the intersection; really they could be car width, and the rubbish truck could just hog one and a half  lanes occasionally. Until of course the car park exit is gone and High St becomes the Shared Space it obviously ought to be.

How better parking policies will help Auckland become the world’s most liveable city

I’m proud of Auckland in particular and New Zealand in general. The city has come a long way in a short time, even if much work remains to be done to become the “world’s most liveable city.” One area where Auckland is doing relatively well, but might potentially do even better, is parking policy.

Here are some local examples of what I would consider to be “good” parking initiatives:

  • In the late 1990s, Auckland City Council removed minimum parking requirements (MPRs) from the city centre (discussed in Chapter 2 of this report). By lowering the costs of development in the city centre this policy change is likely to have contributed to increased residential and employment growth, as well as the trend towards lower vehicle ownership.
  • In 2009, Papakura District Council consulted on charging for park and ride at the Papakura train station. This was in response to the excessive demand for P&R, which was an understandable response to improved rail services. Part of the P&R revenue was reinvested into finding lighting and security improvements for the P&R.
  • In 2012, Auckland Transport announced new initiatives for managing parking in the city centre. These initiatives identified demand-responsive prices are the primary management tool. Time-limits for on-street parking have been progressively removed, and people can now park for as long as they want – provided they are prepared to pay for the privilege.
  • In 2013, Auckland Transport opened the McCrae Way car-park in New Lynn. This car-park is intended to support consolidation of parking in New Lynn and also provide P&R access to the adjacent PT interchange. This P&R, however, is not free, with daily prices of $4 being charged. Anecdotally it seems that people are using the facility for P&R.

These initiatives have collectively demonstrated:

  1. Removing minimum parking requirements does not cause the sky to fall on our heads;
  2. On-street parking can be effectively managed with prices, rather than time-limits; and
  3. Charging for P&R generate revenue to improve/expand parking facilities.

They also support abandoning the “predict and provide” approach to parking that has characterised the last 50 years. This approach has sought to shield drivers from paying for parking and, in the process, resulted in highly inefficient transport and land use outcomes (NB: If you’re interested in knowing more about these outcomes then I recommend starting with this presentation by Donald Shoup). For this reason, Auckland – and indeed many other cities around the world – are increasingly choosing to charge drivers for the parking they use, just as they pay for the cars they drive and the roads they drive on.

Over time we can expect Auckland Council and Auckland Transport to implement policies that “unbundle” parking costs from the wider economy, with drivers, households, and businesses paying directly for the parking they use. Ultimately, these explicit price signals can be expected to stimulate a market for parking resources, in which people who have parking make it available for those people who need it. A nascent market for parking already exists in Auckland; my quick look at TradeMe found 20 car-park listings.

Trademe parking search

Earlier this year, Auckland Council’s draft Unitary Plan (dUP) took the first (tentative) steps towards better parking policies, by proposing to remove MPRs from some parts of the city. Under the dUP, the proportion of Aucklanders living in areas *not* covered by MPRs would increase from 0.2% (i.e. just the city centre) to approximately 12% (c.f. page 9 of this report).

More recently Auckland Transport have come to the parking party with their “draft Parking Discussion Document”. In general terms, the PDD seeks to generate discussion on how Auckland Transport might manage parking more consistently and effectively. The PDD (rightly) acknowledges prices are the most effective tool for managing on and off street parking, including P&R.

The PDD is, in my opinion, a small step for Auckland Transport but a giant leap for Aucklanders. It wipes away a rag-tag collection of parking management policies that had been pursued by the previous Councils. It recognises parking, whether it is on-street, off-street, or park and ride, is a valuable resource that should be priced so as to ensure it is used most efficiently.

However, I believe there is one key weakness in the PDD as it currently stands: It falls into the trap of seeing (heavily subsidised) residential parking permit schemes as an enduring policy. For reasons I discuss here and here, I don’t believe this is the case. But does this mean there is no role for residential parking permits to play in the new parking paradigm?

Not quite. Instead, my suggestion is that residential parking permit schemes are a useful *transitional policy*. They can help us shift from where we are now, i.e. social expectation that parking will in general be free, to the situation where we want to be, i.e. widespread acceptance that parking will, in situations of consistently high demand, be priced.

The key policy change to the PDD is this: Auckland Transport only offers residential parking permits to those residents who live in the area at the time it transitions from free to pay parking. These are the people who are potentially the most negatively affected by the change, as they made their decision to live their prior to the implementation of pay parking.

Over time the number of (heavily discounted) residential parking permits will decline as people move out of the area. New people moving into the affected area do so in full awareness that on-street parking is priced and can adjust their locational decisions accordingly, i.e. choose to live somewhere that has sufficient off-street parking for their needs.

Voila. Problem solved.

As it stands, Auckland Transport proposes making residential parking permit schemes a permanent feature of Auckland’s parking landscape. This would, I believe, be a grave and unnecessary mistake. If you agree with me, then I’d encourage you to not only comment on this post, but also submit your feedback to AT here.

Of course feel free to comment on other aspects of the Parking Discussion Document; I’m sure AT appreciate all the informed and considered feedback they can get.

Residential parking permits – Paraphrasing opposing views

For those who have not heard, AT recently released a draft parking discussion document (PDD). The PDD has stimulated considerable discussion on parking issues in general and residential parking permit schemes (RPPS) in particular. In this recent post I outlined four reasons why I consider resident parking permits to be unwise, specifically:

  1. RPPS are unfair, insofar as they prioritise a public resource for a particular group of people based simply on where they live;
  2. RPPS are inconvenient, insofar as they make it easy to park your car in the area where you reside, but less convenient in other areas where you might travel;
  3. RPPS create poor incentives, insofar as they subsidise residential parking and thereby encourage residents to make inefficient use of on-street parking; and
  4. RPPS are not an enduring solution, insofar as they do not tackle the underlying problem (excess demand) and instead ration demand based on location (and often first-mover advantage).

In this post I will now list some of the opposing views which emerged in the comment thread to my earlier post. Ultimately, these arguments haven’t swayed me from my original position: I still consider (heavily discounted) residential parking permit schemes to be unwise. Nevertheless, I think it’s worth paraphrasing opposing views, if only so we can confront them head on. In the following sub-sections I present the most common opposing views.

View #1 – Respecting different definitions of fairness

Perhaps the most surprising opposing view was the suggestion RPPS were in fact “fair” because they provided inner-city residents with the same opportunity as suburban residents to park on-street for free in the area where they live. One commentator, for example, argued thusly:

” … They [RPSS] allow inner suburb residents the same option as residents in suburbs further away – a park outside your house.”

There’s a couple of interesting issues here, most importantly how one defines “fair”. In my previous post, I suggested RPPS were *unfair* because they restricted access to a public resource based solely on a person’s place of residence. Hence, I have defined fairness as everyone having the same opportunity to access on-street parking, irrespective of where you live and where you want to park.

In contrast, the comment above suggests an alternative definition of fairness, specifically paying the same price to access on-street parking close to where you reside.

So in essence, the fairness debate boils down to one of subjective values: If you think that everybody should have equal access to on-street parking across the city, no matter where they happen to reside or drive, then you will likely agree with me that RPSS are “unfair”. On the other hand, if you think everybody should pay the same (zero) price for on-street parking in the area where you live then you might support RPSS. Respecting different definitions of fairness is important, if only because it helps us to understand what people value (image source).

Fairness

Personally I think the suggestion that everyone should pay the same (zero) price for on-street parking in the area where they live is somewhat unworkable. It would require on-street parking permits schemes in the city centre, for example, for which demand would quickly exceed supply. More generally, it rides roughshod over natural spatial variation in supply and demand and also ignores the potential for people to choose the area where they reside, and indeed the house they live in, based on their need for on-street parking. More on this below …

View #2 – Limited off-street parking

Several commentators suggested RPPS were warranted in areas with limited off-street parking. This argument goes something along the lines of:

  • Premise: Suburb A has limited space for off-street parking
  • Conclusion: Residents of Suburb A should have a parking permit scheme, which allows them to park their cars on-street for free.

The sheer weakness of this argument is overwhelming. Let’s try this for size:

  • Premise: Suburb A has limited space for bedrooms
  • Conclusion: Residents of Suburb A should have a bedroom permit scheme, which allows them to “park” their children on-street for free.

Imagine how popular that would be?!? I can see all the parents out there jumping up and screaming “right you little turd burgers – there’s no space for you here tonight. You’re out on the street.”

More seriously though, why are we prepared to cover for people’s inability to find somewhere to park their car? We don’t do that in a range of other areas of life. For example, if someone decides to save money and rent a house with three bedrooms when they actually needed four, we don’t turn around and say “hard luck Jim, why don’t we let you put a shipping container on the street for you to sleep in”. Seriously: Why are we prepared to dedicate space to provide subsidised car-parking, rather than subsidised housing? Surely there’s more need for the latter? As the infographic below suggests, the costs of providing free parking (on and off street) are enormous (image source).

Free parking

I’m generally flabbergasted by the temerity of the people who argue for residential parking permit schemes and minimum parking requirements. More on this in the following section …

View #3 - The eleventh commandment: Let there be parking

This is really a collection of “views”, which ultimately culminate in “more free parking reserved for me”. First I would like to quote from Oscar Wilde:

Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live.

In Auckland the “eleventh commandment” views are most clearly articulated by a group with the rather eloquent name “Auckland Inner City Suburb Parking Alliance” (AICSPA, which is pronounced with a hacking sense of disdain). Now when I first heard of this group I presumed it was the the new company resulting from the merger of Wilson’s and Tournament’s off-street parking businesses. But alas no, it’s a far more serious treat than a rapacious corporate monopoly.  According to this recent presentation to Auckland Council, AICSPA is actually …

ICPA (2)

The AICSPA presentation lists the following issues with commuter parking:

  1. Destroying community amenity
  2. Stressing heritage streets not designed for public parking
  3. Reducing safe access/egress to homes
  4. Stressing elderly and young who don’t have access to off-street parking
  5. Compromising the economic viability of local commercial/shopping areas

Let’s tackle these issues in turn:

  1. Community amenity – This has absolutely nothing to do with commuter parking. If cars parking on-street are detracting from amenity, then reduce the amount of on-street parking. Cars owned by residents will reduce amenity just as much as cars owned by commuters (although I do acknowledge that members of AICSPA are likely to have fancy new European cars).
  2. Inadequate street design – Again, this has nothing to do with commuter parking. If the street is unsafe for parking, then remove on-street parking. You cannot argue one type of car is more dangerous than another. That’s just silly.
  3. Reducing safe access/egress to homes - same as above. If lack of on-street availability is the issue, then we can solve that with pricing. We don’t need to ban commuters to increase availability.
  4. Stressing elderly and young who don’t have access to off-street parking – pricing parking would free up spaces for everyone, including elderly and young. Again, this issue arises in instances of too much demand, where old/young people can’t park close to their house. In which case pricing is the answer.
  5. Compromising commercial/shopping viability – Seems to presume that commuters don’t contribute to commercial/shopping viability, at least not as much as residents. At the very least this argument is not supported by surveys of relative expenditure levels. My experience is that commuters (more commonly known as “employees” or “workers”) do spend quite a lot of money.

Too easy. In terms of underpinning principles, AICSPA seek: “Agreement that commuters to the inner-city must bear the full cost of taking their vehicle to the city …” Let’s replace the two words in bold in that sentence: “Agreement that residents and commuters in the inner-city must bear the full cost of taking their vehicle to the city …”

And a couple of slides later they start to be more explicit, and it’s not looking good:

AICSPA

The last two points provide the most significant insight into how these people “think”. AICSPA argue for securing “residents” rights, without acknowledging that commuters are residents too. The only difference is that the latter originate from other parts of Auckland. Their rights as residents of Auckland Council are no less relevant than yours.

Indeed, the dispersed, inter-connected nature of travel patterns in large cities like Auckland is one of the very reasons why AC/AT were formed (rightfully I think too). AICSPA need to realise that, from a transport planning perspective, integration across space is more important than integration across planning documents. In fact, I’d argue AT’s parking discussion document is, almost by definition, better integrated than what we have: Because what we currently have is a rag-tag collection of parking policies created by the former councils which is disintegrated across space.

And then the Moses punch: AICSPA want “sufficient on-site parking” in the city centre. What the flaming koala hell? Why?!? I live in the city centre and have done so for almost a decade. I live in a building with zero off-street parking. I have sufficient parking, i.e. none, because I DON’T OWN A FLAMING CAR. Requiring parking in the city centre is forcing people like me to live like AICSPA people. And I don’t want to. You people are crazy. That aside, my apartment was *cheaper* because it did not have parking. That enabled *me* to buy it.  If not then I’d likely still be renting.

Again to quote Oscar Wilde:

Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live.

Anyone who advocates for minimum parking requirements needs to read that quote over and over and over and over again until it sinks in. Some people argue that removing minimums is actually removing choice. To which I say balderdash. Removing minimums does not prevent developers from providing parking if people want it. Hence, in a situation with no minimums people who don’t want parking don’t have to pay for it, while people who want parking can still get it. Everyone gets what they want, and what they pay for.

The moral of the story is that residential parking permit schemes and minimum parking requirements are unwise public policies. In the next post I’ll outline what I think is the better direction for Auckland to head in with regard to on-street parking policy … just so y’all don’t start thinking I’m an overly negative Noddy.

Photo of the Day: Star Site

Hard not to agree with the the agent quoted in the Herald commercial property section “that there’s no doubt this is Auckland city’s stellar building site”. The double fronted site, facing both lower Shortland St; long Auckland’s grandest commercial address, and onto the old beach front of Fort St, commanding an uninterruptable view down Commerce St to the sea, is now even more valuable because of the upgrades to the surrounding public realm. A fantastic site in a much improved downtown. But for the last 25 years it has one of the city’s more regrettable ‘parking craters‘.

This is even more the case as it is slowly getting surrounded by shared spaces [it's directly opposite O'Connell St currently being rebuilt]. Parking generates traffic movements so it is utterly mad if, as it is rumoured, the Council have consented a parking building for this site. Does one end of the Council not understand what the other is doing?  Increasing adjacent parking supply is totally inconsistent with the spread of Shared Spaces and the other public realm improvements. Instead the lower Shortland St and Fort St area should be high on the Council’s list for parking removal.

DOWNTOWN_3365

DOWNTOWN_3420

Star Building Burton Bros Te Papa Collection

Star Building, Fort St. Burton Bros Te Papa Collection

Once home to the city’s other paper, the Auckland Star, and a centre of frantic activity as each of the three daily editions of the paper were distributed directly from the ground floor presses on Fort St. The upper floors also supplied most of the drinkers at the Vulcan Lane pubs and of course the De Brett’s Corner Bar just across Shortland St. Well certainly many of the more colourful ones- editorial deadlines for even the late edition closing by 3pm meant the writers were free to pursue their own ‘research’ pretty early in the day.

Weakened by the rise of television Star owner NZ News was acquired by corporate raider Brierley Investments Ltd who demolished the the building in 1989. It has been a car park ever since, just like the Royal International site on Elliott St, and of course the ‘parking stump’ on the other side of Shortland St. Amazing that 25 years later the city still bears the scars of the carnage wrought by that regrettable phase.

What a fantastic opportunity for a really high quality new building, one big enough to repair the broken built ‘cliff face’ on both Shortland and Fort Streets but also to include a grand atrium at the Shortland St level encompassing both elevations to connect the High St and Britomart areas together. Bringing more people and business into this critical and increasingly urbane part of the Central City.

We really need the Council to fully front up to its stewardship role with its whatever any private owner proposes on important city sites like this one and the others now barren because of the earlier neglect of duty by previous City Councils, especially in the cowboy years of the 80s and 90s. They are important opportunities for the future of the city, all decisions taken on these issues have very long lasting consequences.  Parking is simply not an acceptable use for such an important site.

More detailed property information on this and nearby even larger site at 28 Customs St in this NBR article both are on the market.

Photograph [undated] by the Burton Bros of Dunedin, from Te Papa’s online collection.

Four reasons why residential parking permits are unwise

The release of Auckland Transport’s draft Parking Discussion Document has stimulated some much-needed debate on parking issues. Various aspects of this debate has been covered in a number of media articles and blog posts. This article  from Friday, however, caught my attention.

It discussed a topic that is close to my heart, namely residential parking permit schemes. I feel passionately about residential parking permits because they seem – at least to me – a very, very unwise public policy. But first a necessary disclaimer: I am employed as a transport consultant by this company, which provides parking advice to many wonderful clients across Australia and New Zealand. As such, the views expressed in this post must not be construed as representing those of my clients or even my colleagues. They are mine and mine alone.

In the rest of this post I will present four reasons why I think residential parking permits are unwise. First let’s define what we’re talking about, i.e. what do I mean when I say “residential parking permit scheme“? The concept is pretty simple and probably well-understood by most of us: In areas with high demand for on-street parking, Councils will often provide preferential access to on-street car-parks for people who happen to reside in the surrounding area. This is typically managed by way of a permit that people display on the windscreen of their car. The area covered by the St Mary’s Bay parking permit scheme (where permits cost a ridiculously cheap $155), for example, is illustrated below.

st-marys-bay-map

The AT website explains the purpose of residential parking permit schemes as follows:

Central Auckland’s residential parking policy provides a way to fairly share on-street spaces between different users, especially in areas where parking is in short supply. The goal is to establish a balance that accommodates the needs of all users, including residents, visitors, business and commuters.

But what does AT mean when they say “fairly share”? In my opinion there is nothing “fair” about residential parking permit schemes. Indeed they are the opposite of “sharing”. What these parking permits do is reserve, or quarantine, on-street car-parks for a select group of people. And in the process cause a lot of issues that may only crop up years down the track.

Let me present four reasons why residential parking permits are unwise, at least when they are heavily discounted from the market value of the on-street car-park.

First, residential parking permits are unwise because they are unfair. More specifically, they take a public resource (on-street parking) and reserve it for a particular group of people who have no more right to that resource than anyone else. Think of the public opposition if we tried to manage public off-street parking this way, i.e. we took the Victoria Street car-park building and – instead of being open to the public – we reserved it solely for local residents at a cost of $155 per year.

victoria-st-carpark

Think of all the employees, businesses, and shoppers who would be adversely affected by these car-parks being taken out of the public pool and instead dedicated to residents. Think of the revenue that would be lost to council, revenue which would then need to be covered by higher property rates on everyone else. But the key message residents need to understand is this: You don’t own the street in front of your house; it is a public resource that needs to be managed in the interests of wider society, not just you.

The second reason I think residential parking permit schemes are unwise is because of the inherent “first mover advantage”. Put another way, residential parking permits are great when 1) your area is the only area that has them and 2) not many other people in your area want them.

Consider the St Mary’s Bay example, and now think about a situation where Herne Bay, Ponsonby, and Freeman’s Bay also had their own parking permit schemes. The end result, when you generalise parking schemes across the inner-city, is that it becomes very cheap and easy to parking your car close to your house, but very difficult to drive it anywhere – therein undermining the very reason why you want to own a a car in the first place! In my experience the people who advocate for residential parking permit schemes never consider this “end game”, where they get in their cars and go to drive somewhere else that also has a parking permit scheme, only to find they can’t park and are subsequently hugely inconvenienced. Think also what would happen if the number of applications for parking permits exceeded supply? Yup, we’d need to find another way to ration the allocation of permits (which is discussed in more detail below).

The third reason I think residential parking permit schemes are unwise is because they create poor incentives and are difficult to administer. By this I mean they enable people who qualify for the permit to use a very valuable resource very inefficiently. Think of households that go on holiday and leave their car parked on street for weeks. Instead of reconsidering how many cars they actually need, new residents might simply bring vehicles with them and park them on-street. When confronted with artificially low prices for on-street parking permits, residents might decide to redevelop their garage into a detached unit and park their car on-street. Administration is also a major headache, mainly because permits create a massive incentive for scamming. Compare the cost of parking downtown (say $2,500 p.a.) to the cost of a parking permit (say $100-$200 p.a.).

There will surely be residents who don’t need parking permits but who apply for them anyway on behalf of friends/visitors, or even worse sell them to a commuter. Examples of parking permit scams abound in the U.K. and Australia. Of course, attempts to scam the parking permit system could be managed through increased enforcement and administration, but these create further costs for Council.

Fraud

 

The fourth and final reason why I think residential parking permits are unwise is because they don’t tackle the underlying problem. That is, calls for parking permit schemes usually arise in cases of high demand, especially where commuters are competing with residents. What parking permits do is simply displace commuter demand with residential demand. Of  course the latter will be happy because they have been bumped up the preferential parking pecking order. Nonetheless the underlying demand (and difficulty involved in finding a space) will likely remain – it’s just that now people will be competing with residents rather than commuters.

This is why way residential parking permit schemes are almost always accompanied by pay parking. And it’s the latter which actually maintains demand at reasonable levels, rather than the permit scheme itself. In this context, the primary effects of residential parking permit schemes is to force up the price of parking that must be paid by everyone who does not qualify for a permit, i.e. the residual non-preferred users. And as inner-city areas intensify, then the demand for permits will only increase, which in turn increases 1) the price paid by everyone else who parks and 2) the value of the permit subsidy to residents (which in turn will exacerbate the incentive issue mentioned earlier).

To provide an extreme example of just how resident parking permit schemes can go wrong, we only have to look to places like Amsterdam. There, some inner-city areas have a five year waiting list for a parking permit. The iAmsterdam website (which is generally designed to promote Amsterdam to visitors) provides the following warning for new residents:

Please note that in some districts, for instance in the centre of Amsterdam, the waiting list for a parking permit can be so long that it takes several years before a permit is issued. 

I checked out the wait list for parking permits in Amsterdam and found that they actually ranged from 6 months up to 4.5 years (core blimey!), as illustrated below (NB: “Geschatte wachttijd ” and “jaar” translates as “wait time” and “year” respectively).

Cition CV

Think of how incredibly inconvenient this situation is for new residents. You move into a new suburb and want to get a permit but must wait 4.5 years. People may argue that Auckland is nothing like Amsterdam. But I tend to disagree: Auckland’s inner-city suburbs are very much at densities that are not too dissimilar from Amsterdam. The latter also has lower vehicle ownership, which would in turn reduce the demand for on-street parking. Moreover, Amsterdam is not intensifying greatly, whereas Auckland is – hence our need to manage on-street parking efficiently will increase in the future.

So whenever I hear calls from resident groups asking for a parking permit scheme I just shake my head and try and emphasise the following points:

  1. Residential parking permits are unfair, insofar as they prioritise a public resource for a particular group of people based simply on where they live;
  2. They are also inconvenient, insofar as they make it easy to park your car in the area where you reside, but less convenient in other areas where you might travel;
  3. They also create poor incentives and are difficult to administer, insofar as they discourage residents from managing the demand for on-street parking and encourage cheating; and
  4. They also are not an enduring solution, insofar as they do not tackle the underlying problem (excess demand) and instead ration access based on location and first-mover advantage.

So you may well be wondering what I would do instead of parking permits?

Well, in situations of high demand I’d simply implement pay parking and set the hourly price at a level that kept demand at a high but not over-saturated level. This would mean you could almost always find a park when you needed it, but you’d just have to pay for it. Payment need not be made via meters, which are expensive, but could instead be processed by a much cheaper “phone and pay” system. Under such a system you would be required to text your number plate to a special-number after you’ve parked. You then text when you leave and subsequently get charged the appropriate amount (possibly to your AT HOP account).

In such a situation I would allow people (anyone, not just residents) to buy an annual parking permit, but the price of this permit should not be discounted too much from the market price, i.e. what can be earned from casual users. Instead, it should be discounted to reflect lower collection/administration costs for Council.

Voila! We have an effective, efficient, and comparatively sustainable policy for managing demand for on-street parking. Aside from pricing, there’s other innovative things AT could do to encourage a well-functioning market for parking resources. Some of which I discuss in this paper, which was written a few years ago for a Canadian public policy institute. I think the paper provides a useful synopsis of many of the issues discussed in this post, if I do say so myself.

Appreciate hearing your thoughts, even if you disagree. But I can’t help but warn people how residential parking permits appear to be a real minefield that Auckland would do well to avoid.

Sell the Downtown carpark?

An interesting development yesterday as the owners of Tournament Parking turned up to the council with a check for $7.5 million as a deposit to try and buy Auckland Transport’s Downtown carpark  for $75 million.

The operators of Tournament Parking have made a surprise offer of $75 million today to buy the downtown carpark from Auckland Council.

James Brown and Simon Rowntree made the unconditional cash offer of $7.5 million upfront with a settlement date for the remaining $67.5 million on July 1.

The downtown carpark has 1900 spaces and sits on prime waterfront land a block away from Queen St.

The offer includes a legally binding commitment not to increase casual parking rates above the rate of inflation for at least five years, and to maintain existing free public access from the carpark building to Customs St West, Lower Hobson St and Albert St.

The offer represents a $10 million premium over the current valuation of $65 million however it needs to be remembered that the last valuation occurred three years ago in in 2011. To put some perspective on things, Precinct Properties brought the Downtown Shopping centre in September 2012 for $90 million with the centre having council valuation of $75 million. That suggests the carpark offer by tournament is probably way undervalued.

downtown-carpark

But there’s another and probably even more important reason the council should not accept this offer. The site is listed as being one of the key opportunities as part of the City Centre Master Plan (CCMP). The plan suggests eventually redeveloping the site into other uses and creating public space outside tied in with the removal of the Hobson St flyover.

downtowncarpark-redevelopment

From this

hobson-viaduct

To this

hobson-viaduct-after

The Tournament proposal suggests locking the site in a state of suspended animation for decades which will do nothing to help the long term development of the city centre. As I’ve said here it’s a cheeky offer and undoubtedly it’s being made with the understanding the site will appreciate in value hugely as a result of the City Rail Link. In my view the council should fix the anomaly that sees them holding down the market on the pricing of parking, get on with the CCMP and over time redevelop the site away from its current use. After that time then it could be considered for sale.

What is positive is that we now even have carparking operators in Auckland calling the CRL essential. The chorus of people calling for it to be built keeps growing and that pressure can only help.

What’s the market value of a carpark?

My last post looked at the question of how much carparks cost to build. This one looks at the other side of the equation: what is their value on completion? The answer being, of course, whatever people are willing to pay for them.

In my apartment building, the going rate for a carpark is around $50 a week, which doesn’t seem to have changed much in the four years I’ve been here. That works out to a gross income for the carpark owner of $2,600 a year, if they choose to rent it out. However, we apartment dwellers are a transient bunch, and in a given year there are probably going to be a couple of weeks (minimum) where no one’s paying rent on the parking space. So call it $2,500 a year.

2014-05-17 19.22.02 paint smallified

Looking at Trade Me listings for carparks in the Auckland CBD, this level of rent seems pretty common. Most of the carparks available are listed for $50-$65 a week, although it’s a fairly small sample I’m looking at. Auckland Transport has monthly parks available for up to around $80 a week, or more if you want to pay for the privilege of having a particular space rather than just the right to use one anywhere in the building. Even then, you’re not supposed to use it to store your car in all day (no “24/7 garaging option”).

You’d have to deduct your expenses from the gross rent you receive: the carpark would bump up your rates bill slightly, and presumably it would also add to your body corporate charges. I’m going to assume these costs are around $200 a year, for a net income of $2,300 a year. For a commercial operator like Auckland Transport or Wilson, GST would also need to be deducted, as well as staffing and security costs, and a whole bunch of other costs. For a private individual, speaking from experience here, you might want to deduct something for the ‘hassle factor’ of finding new people to rent the carpark, making sure their payment goes in every week and so on.

Back to my building, though. The value of this carpark as an investment depends on the “yield” you apply to it – that is, what kind of rate of return you want to get on your investment. I’m not sure what the prevailing yields are for apartment carparks, but let’s say they’re 8% – I’m probably being generous here, especially for my building where it’s leasehold and leaky, with water dripping through into the basement carpark.

At an 8% yield, this carpark is worth $2,300 divided by 8%, or $28,750. At a 10% yield, it would only be worth $23,000. Either way, that’s significantly less than what it would have cost to build. My building has two levels of basement car parking, and today it would cost around $50,000 to build each of those carparks.

For the market value of my carpark to be $50,000, it would have to be sold at a 4.6% yield, and I don’t think we’re seeing those kinds of figures in the Auckland market.

So, what we have in my building is carparks which are now worth much less on the open market than it cost to build them. And this doesn’t seem to be an unusual situation – for example, Bob Dey wrote an article back in 2007 on the Luna apartments, up the top of Symonds St, which had to build far more car parks than there was demand for, and couldn’t sell them all to the residents. The developer then tried to lease them out to offices in the area. Quoting Bob:

“The owners & occupiers of the apartment units only require or have purchased 141 carparking spaces of the 196 spaces that are available.” Burton said it had offered the remaining 55 spaces to the apartment owners & occupiers for lease or purchase, but they remained unused.

According to the council planning report, “The current allocation of parking spaces on site appears to adequately service the needs & requirements of the current occupiers & owners of the residential units. It is noted that the site is located relatively close to the cbd and is within walking distance of a number of services & facilities, including public transport systems. As such, the requirement for private vehicles in this area may not be as high as expected for such a residential development.”

Told the council’s traffic engineers said “If the residents hadn’t taken up parks they considered they weren’t required”, Cllr Graeme Mulholland commented: “There’s a big difference between taking up a carpark and taking up an offer to purchase at $45,000.”

On the other hand, I should note that the value of a carpark will depend on the location and even on the building itself. My building has got a pretty generous parking allocation, and at a guess I’d say it has around 1.5 per apartment, with many of them being tandem parks. A Herald article reports that CBD carparks can certainly sell for more than $50,000, and there’s obviously a real range of sale prices. Last year I was talking to a real estate agent at an open home – I think it was at The Beach apartments – and she mentioned apartments in that building which had a carpark were selling for $100,000 more than apartments without.

So, the upshot of all this is that carparks can be a lousy investment, or if the building in question has a limited supply, perhaps they’re not such a bad one.

Increasingly, developers are selling carparks as optional extras, rather than bundling them into the price of an apartment. This is a positive trend as far as I’m concerned: it gives buyers more flexibility, and comes closer to illustrating the true marginal cost of a carpark. For two examples, carparks in the new Merchant Quarter Condominiums are up for grabs for $35,000, including GST. At SugarTree, I saw them advertised for $60,000.

Of course, things like Minimum Parking Ratios can throw a spanner in the works – it’s harder for developers to sell carparks individually when they’re obligated to provide a certain number.

Demand responsive parking pricing is awesome!

One of the key initiatives in Auckland Transport’s Parking Discussion Document is the expansion of “demand responsive parking pricing” beyond just the city centre and out into places where people struggle to find a parking spot at the moment. Here’s how it’s described in the document:

As Auckland grows, the demand for the limited supply of on-street space will intensify. It is important that this demand is managed to ensure customers can access parking and to avoid congestion. This is especially the case in centres, where pressure for on-street space will be most acute.

Internationally, 85% peak parking occupancy is the accepted benchmark that provides the ideal balance between use and availability. It means that the parking is well used but some spaces are still available (one in seven spaces should be vacant) so that vehicles do not cruise the streets looking for parking, thereby adding to congestion. Time limits will be sufficient in some areas to achieve this level of occupancy. However in busier areas priced parking will be more appropriate.

Prices make people consider their use of parking and encourages turnover. The use of prices without time limits is also more convenient for users as it gives customers the choice to park for as long as they need. Since people are able to pay for the time they require evidence shows that there will be a reduced likelihood of infringements.

This idea is based on the analysis of parking guru Donald Shoup. Under this approach the goal is to achieve a level of parking availability that’s around “one spot per block” (applied as 85% by Auckland Transport) and to use pricing as the key tool for achieving this level of availability.

There are a number of clever things about this, including:

  • It’s very clear how pricing is being used as a tool for demand management rather than a revenue raiser.
  • If the price is too high and it’s putting people off parking, then it will drop down over time so that utilisation returns to around the 85% mark.
  • If there are no parking spots available regularly, then the price will rise but only so far as to free up a few spots so that once again it’s possible to find a parking spot.

As noted above, Auckland Transport has been using this approach in the City Centre for quite a while now – and it’s been pretty successful, perhaps particularly in reducing the clutter of signage that was previously used to show where and how long you can park. The system still seem pretty low-tech, especially when compared to where San Francisco is going with their SFPark scheme – which shares many similarities with what’s proposed in the Parking Discussion Document:

Another approach that has been used internationally to grow support for demand responsive pricing is the reinvestment of money raised in the very communities where the parking charges occur. This is exactly what happened in Old Pasadena, in Los Angeles – as nicely described in this article - which essentially highlights how the parking revenue pretty much saved and revitalised the town centre. Providing local business associations with the revenue from paid parking, or clearly hypothecating the revenue to streetscape upgrades where the money is raised seems like a great way of growing support for the changes too.

For now though, what’s proposed in the Parking Discussion Document is a great start – as clearly the current approach to parking in Auckland doesn’t work well in those areas with highest demand.