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. Here’s an introduction from The Guardian:

Parking in Yarra

The market price for parking in Yarra is approximately $3,000 per year, as shown in Parkopedia, Parkhound or Kerb websites and apps. This 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 the availability of the land is not guaranteed. 3% of 14 m² times $7,900 per m² = 3% of $110,000 = $3,300.

Yarra’s parking subsidy

A service is subsidised if the price is kept lower than the market rate. The City of Yarra charges $40 for an annual resident parking permit, which is less than 2% of the $3,000 market price. This is a 98% subsidy. Yarra is choosing to not collect the charges that it could easily collect, simply by charging the market rate. If Yarra has 90,000 residents, 40,000 vehicles and 30,000 permits that are subsidised by 98% of $3,000, then Yarra is subsidising parking by $88 million per year. Similarly, the City of Yarra charges nothing for roughly 34,000 parking bays throughout Yarra:

Number of parking bays in Yarra. Source: City of Yarra.

This is a subsidy compared with the $10 per day market price shown by parking apps. The absence of parking meters on on 34,000 parking bays means that Yarra is subsidising parking by $68m per year ($10 per bay for 200 days per year).

Free parking is subsidised parking.

Problems

The presence of a 98% subsidy creates several problems:

  • No available parking bays on residential streets. 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.
  • No available parking bays near shopping streets. Demand for any free (or time limited) park is much 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.
Image credit: City of Yarra

Solutions

Yarra can solve its parking problems by decreasing the subsidy for parking.

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. 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 selling a new type of visitor parking permit, able to be purchased online by anyone, valid for all non-metered spots in the City of Yarra, and tied to a vehicle’s registration number. The permit could be available in daily, weekly, monthly or annual versions. If Yarra auctioned 1,000 annual permits each year they could sell for up to $10,000 each, which establishes a price benchmark. 

Yarra’s fiduciary responsibility

Council has a fiduciary responsibility to ratepayers to reduce subsidies, i.e. price on-street parking services at market rates:

Source: Planetizen

Yarra’s Pricing Policy

Indeed, the process described in Yarra’s own Pricing Policy suggests 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. Following the flowchart, statutory pricing does not apply but competitive neutrality does apply, thus the recommendation is to charge market pricing:

Image credit: City of Yarra Pricing Policy

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.

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.

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: