Economic Analysis Charlie Johann

There are a few options when examining altering municipal parking minimums to

lower rental costs; however, the best choice is rightsizing without pricing. Rightsizing

without pricing entails using municipal policies and codes to match parking demand with

parking supply without decoupling parking and home costs. But how do we know that

rightsizing without pricing is the best option? To do this, we will examine the

effectiveness and delivering the intended outcome (i.e., lower rental price), the scope

and effect of predicted unintended outcomes, and fairness (i.e., who receives the

benefits and who pays the costs).

Rightsizing without pricing involves municipalities revising zoning codes, land use

regulations, and parking requirements to ensure parking policies match actual demand

instead of overbuilding parking. Beyond codes, municipalities can implement

management strategies such as time-limited parking or permit parking zones. Lastly,

municipalities can attempt to encourage behavioral changes by altering the available

infrastructure by adding bike storage, walkability, and public transportation accessibility

while reducing the number of available spots to nudge users to seek such alternative

transportation. Municipalities may achieve more balanced, sustainable, and equitable

parking policies that reflect actual demand and support rental price goals by rightsizing

parking without pricing.

The benefits of rightsizing without pricing are decreased construction costs since

it enables the construction of fewer incredibly costly parking spots, and those costs are

passed onto renters. However, by reducing the amount of parking, the cost of parking

can be reduced, thus reducing rental costs.

 A second benefit of rightsizing without pricing is that it can prioritize equity, as

municipalities can ensure that those who need access to parking, such as individuals

with disabilities, can still have adequate access to parking spaces. This approach

promotes accessibility, aligning with the principles of fairness within urban planning

initiatives. By strategically allocating parking resources based on need, municipalities

can create more inclusive environments for users.

The last benefit that comes from rightsizing without pricing is found with

environmental benefits. Parking lots inherently take up lots of space and, in doing so,

create broad open areas typically out of asphalt or concrete, both of which have a low

albedo, thus absorbing more solar energy than natural surfaces such as grass or dirt

(Karimi et al., 2022)). Since these surfaces absorb more energy, they contribute to the

heat island effect, significantly contributing to warmer urban microclimate. This warmer

microclimate increases energy consumption and carbon emissions, worsening global

warming (Xi et al., 2023; Pinheiro et al., 2023). Beyond the environmental concern, the

heat island effect will significantly impact the global economy as the heat island effect

amplifies the impacts of global climate change. Once the heat island effect is accounted

for, the percent GDP loss for the median city is anywhere from 1.4% to 1.7% in 2050

and 2.3% to 5.6% in 2100 based on differing climate models (Estrada et al., 2017).

However, rightsizing without pricing does not come without drawbacks; some of

the major concerns that come from this system are known as the Spillover Effect, which

is the phenomenon where those seeking to park where spaces are scarce or expensive

may park in nearby areas where they impede traffic, take parking space from other

users, and thus create an externality (Olus Inan et al., 2019). An example of this from
the case study of the 1304 Apartments in Durango, Colorado, is the increased demand

for parking on Richard Dr. [LOOKING TO DO SAMPLE STUDY LOOKING AT WHERE

RICHARD DR. PARKERS ARE GOING (1304 or home on Richard Dr.)] as well as

trespass parking in the neighboring 1322 Florida Rd. Apartments. [WAITING TO HEAR

BACK FROM 1322 OWNER FOR POSSIBLE QUOTE ABOUT PARKING].

The next drawback is that without pricing to act as a proxy for demand, there is

an increased administrative cost since the municipality must identify demand instead of

the more efficient market identifying demand. This is made more difficult since, in

residential parking settings, the number of spots is identified prior to or during

construction before residents have moved in and established a demand level.

Finally, a lesser-discussed drawback of rightsizing without pricing is inadequate

infrastructure. As stated above, often, rightsizing without pricing uses nudges so that

users can seek alternative modes of transportation; however, if the infrastructure for

those alternative modes of transportation does not exist, then there is no offset for

demand. However, this proposal of pushing for rightsizing without pricing for residential

units assumes that alongside parking code reform via rightsizing without pricing,

municipalities increase funding and expand access to multimodal and public

transportation, which is both driven by the supply side by municipalities but also the

demand side via citizens who may find it challenging to park and are looking for

alternative modes of transportation.

It is important to note that this proposal of rightsizing without pricing has

only been applied to residential parking, whereas rightsizing with pricing is best used in

non-residential cases such as malls, city centers, other businesses, and commercial
parking structures such as parking garages. The reason that rightsizing with pricing

does not work well in a residential setting (considering our intended goal of lowering

housing costs) is that it raises the cost of housing by having to pay for parking and

housing. Some have argued against this and state that by making people pay for

parking separately from housing, the market will level parking supply and demand, thus

saving renters money by eliminating overbuilding. However, the incentive structure for

this does not work out; instead, what is likely to occur is the gradual exclusion of

low-income residents from some neighborhoods, economic disparities, and contributing

to gentrification. Examples of this can be seen in New York City, which has moved to a

predominantly rightsizing pricing model, and based on data from SpotHero (a digital

parking marketplace), the average cost of parking for one month in New York was

$5741. While NYC is a more extreme example than what might be experienced in a

town, even cities with ample free parking, such as Houston, TX, or Denver Co, still say

a monthly cost of $120+, which would only go up as more demand was driven to paid

spots via rightsizing with pricing.

Overall, rightsizing is the best option when addressing the excess parking we

have overbuilt in this county. Its branches serve different ends and help to enable more

dynamic and well-used city spaces. Rightsizing without pricing is the most fair and

effective option to lower rental costs. However, rightsizing without pricing may bring

consequences that can be addressed through improved, human-scale infrastructure.

1
$574/month was based on a sample of 120 monthly parking rentals across New York City's 5 boroughs.
On March 31st 2024
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