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Contemporary Approaches to Parking Pricing: A Primer

1.0 Introduction

United States drivers were introduced to the concept of paid, on-street parking in 1935 when the first parking meter was installed in Oklahoma City. In the ensuing decades little was done to improve the basic tools or processes of parking pricing. Many cities arbitrarily set fixed parking rates that resulted in excess demand for a finite resource. The failure of cities to price parking based on demand has resulted in an underperforming parking system, the impacts of which include lost revenue, increased congestion, decreased access to businesses, environmental harm, and inconveniences to travelers.

Underpriced and free parking also distort travel decisions. Studies have found that free parking can increase the drive-alone rate for commute trips by as much as 50 percent (Hess, 2001; Willson and Shoup, 1990a; San Francisco County Transportation Authority, 1996) and work by Donald Shoup (2006) reported that approximately 30 percent of cars in congested downtown traffic may be looking for parking, adding unnecessary vehicle trips to already congested areas. Correctly pricing parking can help address these issues.

Today, technological advances offer the opportunity to effectively manage and price parking. Improvements in parking management infrastructure and tools combined with innovative thinking by politicians, transportation and parking professionals, and researchers are advancing the field of parking management. New technologies are making it possible to collect and analyze large amounts of data about parking utilization. That in turn allows cities to define clear policy goals and accurately adjust pricing to meet those goals. Better technology has also improved revenue management, provided users with more payment options, and improved enforcement while lowering associated costs.

Because of the opportunities brought about by these new technologies, cities across the United States are able to improve their parking pricing policies to address congestion, improve customer service, increase availability, and address safety concerns for non-motorized travelers. For example, San Francisco and Seattle have both established occupancy goals for on-street parking. San Francisco aims to achieve occupancy rates between 60 to 80 percent and Seattle has a goal of two open spaces per block. Each city now regularly adjusts meter rates to meet the identified goals. Chicago and San Francisco are exploring the use of parking pricing as an alternative to cordon charges. Boulder and Aspen, Colorado have residential parking permit programs that allow commuters to purchase parking passes on a space-available basis. New York City is testing peak-hour parking charges, and Washington, DC is using license plate reader technology to support and analyze its performance-pricing program. Recent experiences in these cities and others provide lessons and opportunities for practitioners interested in advancing parking pricing policies.

This primer discusses advances covering a broad array of parking pricing applications, available technology, preferred user accommodations, and strategies for gaining public acceptance for policy changes. The information provided is meant to increase awareness of innovative approaches, help communities design strategies that are applicable to their unique needs, and encourage new innovations in the field of parking pricing.

The programs and policies discussed here are likely just the beginning of what will be transformative changes to parking management across the United States. Parking professionals will find ways to use technology that have not yet been considered, parking managers will push for more advanced equipment, parking technology will become more affordable, and consensus builders will advance new policies. The Federal Highway Administration (FHWA) hopes that this primer helps to further discussion and innovation during this exciting period.

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