How can we ensure a park is usually available?
Yarra’s streets can be better for parking if there is generally a free spot available near each shop or home. This can be achieved by using pricing to bring demand back down into balance with supply, with revenue used to improve public infrastructure in that local district. The key is to understand that Yarra doesn’t suffer from a lack of adequate parking, it suffers from a lack of adequate pricing:
The market price for parking in Yarra is approximately $3,000 per year, as shown in Parkopedia, Parkhound or Kerb websites and apps. In Cremorne, for example, off-street parking is priced at $23 per day, even when it is immediately adjacent to on-street parking that is available for $0 per day (in a 2 hour zone). If there are 250 working days per year, $23 per day is equivalent to $5,750 per year, well above the average value of $3,000 per year.
The ~ $3,000 per year shown in parking apps is similar to the $3,300 annual rental value of the public land occupied by an on-street parking bay.
- Land in Yarra has a value up to $9,000 per m² (e.g. Carlton North). For this calculation we can use the value of $7,900/m² for Richmond.
- A parking spot is 5.5 m x 2.5 m or 14 m².
- Annual value is 3% of land value, lower than the 7% typically used for rental properties, because on-street parking bays are shared. 3% of 14 m² times $7,900 per m² = 3% of $110,000 = $3,300.
On-street parking in Yarra is subsidised
A service is subsidised if the price is kept lower than the market rate. The City of Yarra charges $41 for an annual resident parking permit, which is less than 2% of the $3,000 market price. Across Yarra, the total subsidy of on-street parking permits is over $80 million per year, based on 30,000 permits that are subsidised by 98% of $3,000.
Similarly, the City of Yarra subsidises on-street parking for visitors, by offering roughly 34,000 parking bays for free, instead of charging the market price. This subsidy is over $100 million per year, based on 34,000 on-street parking bays each worth $3,000.
The presence of a 98% subsidy creates several problems:
- Parking bays on residential streets are almost fully occupied. Demand is higher than supply and streets are often full by 5pm. Yarra has a parking crunch, and it will only worsen as our population increases.
- Parking bays near shopping streets are almost fully occupied. Demand for free (or time limited) parking is higher than supply. This makes it difficult for people to access shops and services.
- Loss of productivity, as workers leave the office every two hours to shift their car.
- Growing black market for permits (example #1, #2, #3, #4).
- Growing class of residents & ratepayers who aren’t eligible for an on-street parking permit. This is discrimination – ratepayers without access to public land are subsidising ratepayers who do have access.
- Entrenched culture of expectation that parking should be free and that street space should be prioritised over other uses such as wider footpaths, bicycle paths, trees or place making.
Yarra can solve its parking problems by decreasing its subsidy of on-street parking.
Yarra can also reallocate the space used for on-street parking bays, as follows. The number of ‘permit only’ bays are doubled, which is a good outcome for residents. The number of ‘disabled only’ parking bays is tripled, which helps deliver equity of access. The total number of parking bays is reduced by 13,000 or 28%, to deliver space for trees and active transport.
Smart parking technology
Yarra can also use smart parking technology to help residents and visitors to find empty parking bays, as is being done in Mornington Peninsula Shire.
The subsidy doesn’t have to be eliminated in one step, just gradually reduced. For example, Yarra can reform parking by:
- Gradually converting all time-limited parking bays to either metered parking bays or residential parking zones.
- Gradually introducing demand responsive parking charges for parking meters, which target 85% occupancy (i.e. there is usually a free spot on each block).
- Gradually increasing the prices for parking permits, e.g. from 11 cents per day to $1 per day (still a 87% subsidy). Residents will only accept the price increase if their permit price is still well below an accepted benchmark price.
- Establish a benchmark price by selling a new type of ‘user pays’ permit, able to be purchased by any resident, including those ineligible for subsidised permits, valid for all non-metered spots in the City of Yarra, and tied to a vehicle’s registration number. If Yarra offered annual permits to any resident for $3,400 each (same price as in the City of Moreland), this would establish a benchmark price.
Yarra’s fiduciary responsibility
Council has a fiduciary responsibility to ratepayers to reduce subsidies, i.e. price on-street parking services at market rates:
Yarra’s Pricing Policy
Indeed, the process described in Yarra’s own Pricing Policy indicates that on-street parking should be priced at market rates:
The Pricing Policy contains a flowchart to provide guidance on how to set pricing. For on-street parking, (1) statutory pricing does not apply but (3) competitive neutrality does apply, thus the recommendation is to charge market pricing.
Return revenue to the local district
Using pricing to manage parking will result in increased revenue for Council. To prevent this being perceived as extortion, revenue should be returned to ratepayers as improvements to public infrastructure that address Objective 6 of the Council Plan, i.e. enable more people to live a fulfilling life with less dependency upon cars. Public infrastructure that helps people to choose other modes of transport include better footpaths, bicycle paths, trees, place making and safe routes to schools.
Occupancy determines the price
It’s important to note that using demand-responsive pricing to balance supply and demand is a method that follows an occupancy target, not a revenue target. With an occupancy target (e.g. 85% occupied) Council can’t keep increasing fees to increase revenue.
As the subsidy for on-street parking decreases, some families will downsize from three on-street cars to two, or from two on-street cars to one. This will free up space for the first 5-10 spots on each side street (near shopping streets) to be allocated to metered parking to support traders. In turn, this will allow shopping streets to replace on-street parking with wider footpaths, protected bicycle lanes and level access tram stops; making the shopping street better for business, and making the whole neighbourhood better for everyone, including children and seniors.
It’s ethical for the City of Yarra to charge for on-street parking because it helps deliver more mobility for more people. If Council increased parking charges it would represent a transfer of wealth and mobility from people on high incomes (who dominate the cohort of people who drive and park) to people on lower incomes (who dominate the cohort of people who use walking, cycling, public transport and car sharing). Learn more on our ethics page.
Guidance from Austroads
Austroads Guide to Traffic Management Part 11 Parking is available free online, offering guidance on how to manage and price parking, including:
Parking can affect traffic safety and the amenity of road users and adjacent properties. Safety of all road users should be given priority at all times when considering parking and stopping of vehicles.Austroads Guide to Traffic Management Part 11 Parking
Drivers cannot expect long-term free parking close to their destination.
There are environmental aesthetic and financial costs associated with unlimited supply of parking.
The user pay principle is fair and applies to most services and products as well as to every other cost associated with owning and using a motor vehicle.Austroads Guide to Traffic Management Part 11 Parking
Pay parking increases equity by charging users (user pay) for their parking costs and by reducing the parking costs imposed on non-drivers. Paying directly rather than indirectly benefits consumers because it reduces parking and traffic problems and allows individuals to decide how much parking to purchase giving them an opportunity to save money. Drivers may use a space as long as they want, as long as they are prepared to pay for it.Austroads Guide to Traffic Management Part 11 Parking
Further information is available in this video or podcast from Adam Ruins Everything:
Everybody wants to park for free, including me. But that doesn’t mean free parking should be a basic policy of urban planning or public finance or transportation planning, because free parking conflicts with almost all the other goals of urban planning or transportation.Donald Shoup