Contemporary Approaches to Parking Pricing: - FHWA Operations

• Disincentive Removal, where a monthly transit pass was provided for free to purchasers of monthly parking passes;
• Marginal Rebate, where a monthly transit pass was provided free to purchasers of monthly parking passes, and
those taking transit instead of parking any day of the month received a $2 rebate, which is reflective of the marginal
parking cost of $7 per day and the marginal transit cost of $5 per day; and
• PayGo Flex-Pass, which is the same as Disincentive Removal, except that a rebate of $7 would be provided on days
where neither parking nor transit was used (with the total monthly rebate capped at half the cost of the monthly
parking pass).
The most flexible and successful of the incentive programs studied, PayGo Flex-Pass, led to a decline in driving days
from 78.5 percent to 56.5 percent, a large reduction (Lari, et al., 2011).
Travel allowances have also proved successful at changing travel behavior. Los Angeles County replaced free parking
for its employees with a travel allowance and saw solo driving decrease from 53 to 47 percent of commute trips.
CH2M Hill in Bellevue, Washington, replaced free parking with a travel allowance and saw solo driving decrease
from 89 to 64 percent of commute trips (USDOT, 1994).
As with any changes made to parking, cash-out programs and travel allowances can present challenges, but they
may be overcome with careful implementation. The programs are also likely to increase costs slightly for employers;
if employees do not use their payments for tax-deductible transportation expenses, employers must pay employment
taxes on the amounts. Employers will also incur administrative costs. All these costs could, however, be offset
by small reductions in travel allowances or parking subsidies (i.e., charging employees who decline a cash-out offer
a small fee for parking).
The United States Government has developed a number of documents to assist governments and
employers that are interested in implementing cash-out programs. The FHWA’s Non-toll Pricing: A Primer
(2009) provides an overview of parking cash out. The Federal Transit Administration’s (FTA’s) TDM Status
Report: Parking Cash Out (1994) provides travel reduction benefit estimates and implementation steps for
government agencies wishing to implement parking cash out. The EPA’s Parking Cash Out: Implementing
Commuter Benefits as One of the Nation’s Best Workplaces for Commuters (2005) is a how-to guide for
employers wishing to implement a parking cash-out program. The EPA’s report also includes information
on employer benefits and tax considerations. Less information has been published regarding travel allowances;
however, the two strategies do not differ significantly in terms of implementation or cost.
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