Public-Housing Parking Lots Make Everyone Poorer

Originally published in Bloomberg News

August 7, 2012
Edward Glaeser (Glimp Professor of Economics, Harvard University)

(Corrects 11th paragraph to say New York City attempted to impose a congestion pricing plan in 2008.)
On First Avenue in Manhattan, right before the 96th Street entrance of FDR Drive, there is a large open parking lot, in front of the Stanley M. Isaacs Houses, a public-housing project.
The residents of New York’s public housing pay no more than $45 a month for reserved parking, which is a pretty good deal because daily parking fees in midtown Manhattan average $40.
I find it somewhat bizarre that New York provides a luxury good -- parking in Manhattan -- to public-housing residents at almost no cost. But many government policies favor parking.
In much of the U.S., including New York outside of Manhattan, land-use regulations require new developments to build a minimum number of parking spaces. Employers can provide their workers with as much as $240 a month in parking as an untaxed fringe benefit. In New York, tens of thousands of public workers still receive free parking permits, and watchdog groups claim many of them are used illegally. Street parking is often provided at low or no cost in cities where every square foot is precious.
Parking for public housing sits in the middle of three separate problems: the scarcity of on-street parking, the congestion of city streets, and poverty. The first problem -- lack of supply -- has led to the minimum-space regulations and has justified subsidies. These policies, in turn, encourage extra driving, and each new motorist imposes congestion costs on other drivers, and pollution and infrastructure costs on everyone else.
Modern Privilege
But taking this benefit away from the most vulnerable city residents would seem to single them out and amount to expropriation.
In the early days of the automobile, leaders of American cities were loath to give away valuable space, and curbside parking was often banned. For example, according to a recent survey of parking policies, “Parking was banned in ‘The Loop,’ Chicago’s Central Business District, in 1928, and overnight parking was banned in Manhattan, New York City, until the late 1940s.” Into the 1970s and early 1980s, when I was a kid in Manhattan, cars and parking spaces seemed both unaffordable and unnecessary.
But motorists and business owners wanted low-cost parking, and they got it, and drivers, rich and poor, grew used to cheap or free street space. Metered parking in Manhattan now runs at $3 an hour, which is far less than the value of 100 square feet of city land, or the cost of off-street parking, which is typically $20 for the first hour.
New building means more drivers and more competition for street parking. The land-use regulations in cities, including New York, that require minimum parking areas for new construction artificially boost the supply of spaces. The parking subsidies for public-housing projects do the same thing.
But such policies worsen the traffic problem by lowering the total cost of a car trip. When I drive, I slow down other motorists, and if I don’t pay that price, I’ll drive too much.
The sensible approach is to follow the lead of London and Singapore and charge drivers for the costs of traffic congestion. Electronic congestion pricing was first dreamed up for New York in 1952 by William Vickrey. But the politics of congestion pricing are so impossible that I doubt we will ever see much of it in the U.S., except on newly built roads and highways. New York’s most recent attempt to impose a congestion pricing plan was killed by the state Legislature in 2008.
Employee Subsidies
Unsurprisingly, employees who have access to subsidized parking drive to work more often. The national tax code should stop giving any deductions for parking expenses. Eliminating the traffic deduction may have the added benefit of narrowing the U.S. budget deficit by more than $3 billion a year, according to one study.
New York, and everywhere else, should stop requiring developers to provide a fixed number of parking spaces. Downtown Manhattan switched its land-use regulations from minimum parking requirements to maximum parking allowances in 1982, but the other boroughs still have minimum parking rules, and they appear to significantly increase the costs of new construction.
We can’t punitively tax parking, as a backdoor means of discouraging traffic, because, without congestion pricing, drivers will be encouraged to circle, rather than pay more, and that’s also bad. But parking isn’t some crucial public good, such as medical knowledge, that needs subsidizing. Let the market determine the supply and the price.
The parking guru Donald Shoup, a professor at the University of California, Los Angeles, argues that meter rates should be set high enough so that 15 percent of parking spaces stay vacant at any time, which represents something like a market-clearing price. That price would ensure that drivers looking for street parking could count on getting a spot, which would reduce the time wasted and congestion created by drivers cruising for spaces.
A market solution could work for public-sector parking, as well. There is little to like about free parking for city employees. But it is a bit abrupt to remove their privileges, and the Public Employment Relations Board won’t let that happen anyway.
One path forward is to buy the workers out, giving them the option of selling their parking benefits back to the city for cash. If the employees have the option of being paid not to use their space, then they will face a trade-off that recognizes its real cost.
The same approach makes sense for public-housing residents. Let them give their parking spaces back to the city in exchange for cash. The city can rent the space at full market rates to whoever will pay, and give the net proceeds back to the resident. The resident who takes the deal will be better off. Even if we didn’t want to be that generous, we could still give the residents some compensation for giving up the space.
When public-housing parking spaces fall empty, they should be rented at market rates, and the earnings should be shared among the projects’ residents or spent on common amenities. If enough spaces are freed up, the city should continue allowing more building on parking lots. Land on the island of Manhattan is enormously valuable, and should never be given away.
But we can eliminate subsidized parking in a fair and reasonable way, by allowing current beneficiaries to get some of the cash generated by more efficient use of city space.
(Edward Glaeser, an economics professor at Harvard University, is a Bloomberg View columnist. He is the author of “Triumph of the City.” The opinions expressed are his own.)