Parking is too cheap!

10/09/2013 § Leave a comment

Now that I have your attention — it may be that we aren’t paying enough for parking in Wellington. This is NOT the message of the downtown retailers, of course, and the Dominion Post doesn’t explain the issues, but let’s run through the economics.

Say you are the mayor of Harbourside City. Your city has 1000 parking spaces available. The downtown workers, public and private, want to drive to work and park all day without breaking the bank. The downtown retailers want parking for shoppers from the suburbs, and figure that cheap parking with some turnover would be good. Downtown residents want to park whenever, wherever, for as long as they want. What are you going to do?

These 1000 parking spaces represented a limited supply. You have to figure out how to allocate the limited supply amongst the competing users. You could start by divvying them up — maybe 200 for cars with resident stickers, 400 short-term spaces for shoppers, 400 all-day spaces for workers. Then you have to allocate within each group — which workers? which shoppers? You’ll also have to deal with people gaming the system: a worker who buys a parking sticker from a carless resident, shoppers who parking in the all-day parking so they have enough time for browsing and lunch, etc.

So…you put a price on the parking spaces. That helps ration the limited supply. Workers and shoppers start taking the bus, residents decide not to bother with cars, etc. You have to be careful, though, with the relative prices. If daily parking gets really expensive but resident stickers are free, enterprising people will figure out how to arbitrage the difference.

Now that you have a price on the limited supply, what happens? Well, you might just collect $25 million in parking fees and fines.

That could raise a few eyebrows. It might look like the City is gouging residents because it controls the parking. How would you know?

Remember, first, that people have options. Shoppers can go to the malls in the suburbs. Office workers can take the bus or work from home. Residents can factor the cost of parking into what they are willing to pay for rent.

The question becomes, how full are the car parks? If they are always running at 95% to 100% occupancy, then the price isn’t limiting people’s use of parking. Shoppers are still shopping downtown, etc.

The Dominion Post, in repeating the complaints of the retailers, doesn’t actually tell us how full the carparks are, so it is impossible to know whether to be outraged at the $25 million or not. My few data points tell me that parking is tight. Last week, I was a bit late getting into work. At 9.20 am, the three parking buildings I tried were all full. I ended up working from home that day. It didn’t help that at least two buildings are closed because of the earthquakes and lots of buses were off the road because of maintenance issues.

The problem isn’t the $25 million. The problem is the limited supply of parking. If we aren’t going to build more, then we have to ration what we have.

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