Common Sense Public Policy
Edward J. Dodson
[Reprinted from
GroundSwell, January-February 2005]
Along with the core effort to show elected officials and other
community leaders the wisdom of raising revenue by "land value
taxation" rather than the taxation of property improvements,
there are several important peripheral issues that need to receive
greater attention. These involve the utilization of public places for
private benefit.
The construction of our cities has long accommodated the presence of
private automobiles. Larger cities have created parking authorities to
manage parking garages, surface parking lots and curbside parking
along city streets. Most cities impose fairly taxes on top of base
parking fees charged by private garage and lot owners. And yet,
remarkably, demand continues to outstrip supply. Many commuters, even
when there is a significant financial benefit to using public
transportation, continue to choose the daily use of their private
automobile. A consistent result is congestion on the streets,
particularly at peak times of arrival and departure.
These dynamics have not gone unnoticed by researchers. An important
study on the subject by University of California Professor of Urban
Planning, Donald Shoup, is available on-line at
http://www.sciencedirect.com. Professor Shoup's paper, "The ideal
source of local public revenue," provides very common sense
advice to city officials seeking to raise revenue and at the same time
reduce congestion on city streets. His abstract succinctly states the
case:
"Free or underpriced parking creates a classic
commons problem. Studies have found that between 8% and 74% of cars
in congested traffic were cruising in search of curb parking, and
that the average time to find a curb space ranged between 3 and 14
min. Cities can eliminate the economic incentive to cruise by
charging market-clearing prices for curb parking spaces.
Market-priced curb parking can yield between 5% and 8% of the total
land rent in a city, and in some neighborhoods can yield more
revenue than the property tax."
Congestion is only one problem that can be greatly mitigated by
market-clearing prices for curb parking spaces. Huge savings in
reduced consumption of gasoline as well as its addition to air
pollution can be achieved. In most cities today, the driver chooses
between "sav[ing] money by parking on-street, or sav[ing] time by
parking off-street." Short-term on-street parking is most often
priced far less than in lots or garages. In New York City, for
example, one hour of parking on the street costs $1.50 but over $14
off-street. "If a city charges prices that are just high enough
to keep a few spaces open on every block," writes Prof. Shoup, "drivers
can always find an available place to park near their destination."
The failure in understanding, he notes, is a failure "to manage a
scarce resource."
Admirers of the economic writings of Henry George will be pleased by
the credit Professor Shoup's gives to George for pioneering the
advocacy for public collection of rent associated with resource
scarcity, curb parking being one form thereof:
"Curb parking spaces are bare land in fixed supply,
so the revenue derived from them is rent. Demand determines the
rental value of curb spaces, the revenue comes from public land, and
the city can use it to pay for public services. Charging for curb
parking fits well with Henry George's proposal, and is actually far
simpler than taxation as a way to collect land rent."
The case for market-clearing pricing for automobile parking on public
streets is clearly made by Professor Shoup. We can think of other
public spaces that should be allocated similarly. The one that occurs
to me most readily is that of sidewalk locations taken by food vendors
each day. They drive into the central business districts each morning,
set up their food carts to serve breakfast and lunch, then close up
shop, hook up their cart to an automobile and drive away. Cities issue
vendors' licenses to the owners but the vendor association works out
the distribution of locations. The city government gets a flat license
fee, and the location rents are privatized. When a vendor decides to
retire and "sell out," the informal claim the vendor has to
the location carries a price. Cities need to take a close look at this
system and create a process for awarding locations based on
competitive bidding by the vendors, so that the location rent comes
back to the community. This is only one additional example. Can you
think of others?
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