Contemporary Approaches to Parking Pricing: - FHWA Operations

Employer and Developer Focused
Parking Pricing Strategies
4.0
Previous sections of this primer discussed pricing policies and tools that can be used to manage city-owned parking
spaces and facilities. In most communities city-owned or controlled parking represents only a small proportion of
the total parking available, and privately owned parking is often made available at no cost to drivers. Shoup estimates
that 95 percent of commuters receive free parking at work (1997), and this free parking is not limited to
suburban and rural locations; over 50 percent of automobile commuters in the central business districts of cities
like Los Angeles, New York, and London receive free parking paid for by their employer (Wilson and Shoup 1990b,
Schaller Consulting 2007, Department of Transport 1992).
While cities cannot directly control whether an employee receives free parking, a number of strategies exist to encourage
employers and developers to charge for parking or, minimally, make employees more aware of the true cost
of parking. Applying a cost to parking can reduce the number of people who drive alone, maximize the utilization
of transportation facilities, and encourage more efficient land use.
Cities have the opportunity to influence three primary areas of commuter parking. First, cities can work with employers
and developers on employee trip reduction programs that include parking pricing strategies. These can be
voluntary or mandatory, depending on the severity of the problem. The transportation demand management field
has found that parking cash out and transportation allowances can be used to raise commuter awareness of parking
costs and encourage employees to walk, bike, carpool, or take transit to work. Parking cash out provides a payment
that can be used to purchase transit fares or kept as cash to employees who elect to give up their employer-owned
parking space. Transportation allowances are stipends provided directly to employees who can then choose to purchase
parking, buy transit passes, carpool, or pocket the money for another use. There are many supporting strategies
in the transportation demand management field that are not discussed in this primer, but can also influence an
employee’s commute behavior.
Cities have a second opportunity to influence commuter parking through zoning and development regulations.
Cities are able to encourage developers to charge for parking separately from office space, a strategy often referred
to as “unbundling” that allows employers to see financial benefits when they stop paying for employee parking.
Unbundling in residential developments can also influence commute behavior and vehicle ownership levels. In addition,
zoning codes can be written to encourage the allocation of parking for car-share vehicles, 2 free or discounted
parking rates for carpools and vanpools, and the establishment of secure bicycle parking.
Cities can also design and charge parking taxes to encourage employers and developers to charge for parking, discourage
the construction of excessive quantities of parking, and encourage more efficient land use. These strategies
are detailed further below.
2
Car sharing is a business model wherein users sign up for a membership and are able to rent cars by the hour. It is
particularly suited for urban areas where car ownership is less desirable due to the prevalence of public transportation. This
demand management mechanism is discussed in greater detail in section 5.
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