by Ed Dodson
Cherry Valley, NJ
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 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 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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Ed Dodson may be emailed at ejdodson@comcast.net