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:

Context

Yarra has an estimated 47,000 on-street parking bays:

Estimated number of on-street parking bays in Yarra. Source: City of Yarra.

Market price for parking

The market price for parking in Yarra is approximately $3,000 per year, as shown in Parkopedia, Parkhound or Kerb websites and apps. For example, in Cremorne, off-street parking is priced at $23 per day. If there are 250 working days per year, this is equivalent to $5,750 per year, well above the stated average.

Example market price for parking, $23/day or $5,750/year. Image credit: Streets Alive Yarra.
Market price for annual parking in each LAPM area. Image credit: Streets Alive Yarra.

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.

From a parking policy perspective it would be of value to be more explicit about the broader value and the subsidy offered via residential permits.

City of Melbourne Transport Strategy Refresh Background Paper Car Parking, May 2018

The City of Yarra charges $41 for an annual resident parking permit, which is a subsidy of roughly 99%. Similarly, the City of Yarra subsidises on-street parking for visitors by 100%, by offering roughly 33,800 parking bays for free (unrestricted or time restricted) instead of charging the market price.

Residential parking permits are 99% subsidised. Image credit: Streets Alive Yarra.

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 99% of $3,000. Similarly, the total subsidy of free parking bays is over $100 million per year, based on 33,800 on-street parking bays each worth $3,000.

Problems

Subsidies 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.
  • 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.

Solutions

Yarra can solve its parking problems by decreasing its subsidy of on-street parking.

Identifying policy options that understand and anticipate the longstanding reliance on residential permits by these groups, while moving toward a long-term reduction both in the use of these permits and in the amount of subsidy offered, is recommended.

City of Melbourne Transport Strategy Refresh Background Paper Car Parking, May 2018
Image credit: Streets Alive Yarra.
One part of the solution is to increase the price for parking permits, e.g. to $1 per day or $365 per year. Image credit: Streets Alive Yarra.
Another part of the solution is to convert free parking to metered parking that earns $10 per day. Image credit: Streets Alive Yarra.

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.

Proposed reallocation of on-street parking bays. Data for ‘2020 status’ is from the City of Yarra. Image credit: Streets Alive Yarra.

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.

Gradual reform

The subsidy doesn’t have to be eliminated in one step, just gradually reduced. For example, Yarra can reform parking by:

  1. Gradually converting all time-limited parking bays to either metered parking bays or residential parking zones.
  2. Gradually introducing demand responsive parking charges for parking meters, which target 85% occupancy (i.e. there is usually a free spot on each block).
  3. 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.
  4. Establish a benchmark price by following the lead of the City of Moreland, and 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. 

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) the target determines the price, instead of a person determining the price, so Council can’t be accused of increasing fees to increase revenue.

Yarra’s Pricing Policy

Yarra’s Pricing Policy indicates that on-street parking should be priced at market rates:

Image credit: City of Yarra

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.

Image credit: City of Yarra Pricing Policy

This outcome aligns with Council’s fiduciary obligation to ratepayers:

Source: Planetizen

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.

Image credit: Streets Alive Yarra

Outcomes

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.

Image credit: OCULUS

Ethics

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 the City of Melbourne

The City of Melbourne is directly adjacent to the City of Yarra, and examined parking in detail as part of its Transport Strategy Refresh. The background paper on parking recommended decreasing the subsidy of on-street parking.

Image credit: City of Melbourne

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
Image credit: Austroads

Further information

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

Or, read the free summary chapter of the book Parking and the City, edited by Donald Shoup:

Image credit: Routledge

Local champion

Your local champion for parking is David Balding – Yarra resident. View all of Streets Alive Yarra’s champions on our supporters page.

Parking is a big issue for green and lively streets and a vital public realm. Our instincts to want more of it and cheaper lead to bad outcomes – the big subsidy has a distorting effect on undermining public transport, discouraging walking and cycling because of traffic congestion, more toxic pollution and less space available for greenery and public social spaces. This is one area where we need a big dose of the free market: councils should not be trying to put private parking providers out of business, or undermining the business model of car sharing and taxi providers by taking away customers through under-price parking. Fair-price parking is good for those who need parking because it will nudge many to try alternatives such as car sharing, creating more spaces for those who really need them. There is an equity issue as well: the current free/cheap parking on Yarra streets represents a huge subsidy to about half the residents, with many of those missing out on this hand-out being among  the least well off. Rates are too high because council fails to price parking fairly. If you want vibrant Yarra streets with flourishing businesses and a fairer society, help us campaign for a fair price for parking in the public realm.

David Balding