Innovations in Parking Pricing as Transportation Demand Management

Keynote Speaker: David Zavattero, City of Chicago

David Zavattero is Deputy Director of the Chicago Department of Transportation where he is responsible for Intelligent Transportation Systems (ITS) technology, traffic engineering, and planning. Zavattero focused on the details of Chicago’s recent metered parking concession. He also covered parking, transportation, and transit trends in Chicago, which is known as one of the City’s most congested cities. Zavattero addressed two topics of interest to the transportation community: Chicago’s transition to private management of on-street parking as well as their experiments with congestion pricing.

Presentation: "Notes on Chicago's Metered Parking Concession."

 

 

Second Speaker: Frank Douma, U of MN State and Local Policy Program

Frank Douma presented second, focusing on the results of the SLPP’s recently completed federally-funded study on innovative parking pricing strategies. The study introduced a range of incentives and flexibility into parking contracts in order to shift commuter behavior. The study found that the level of incentive positively correlates to commuter mode shift, and alternative parking pricing strategies that provide both incentives and flexibility to choose modes other than driving were most effective. In this study’s case, the PayGo module in which commuters were provided a credit for each day they took transit, and a slightly larger credit for taking modes other than driving or transit, was most effective at shifting commuter behavior.

Presentation: "Innovative Parking Pricing Demonstration in the Twin Cities: Introducing Flexibility and Incentives to Parking Contracts."

 

Reaction Panel

Following the two speakers, the event ended with a reaction panel including public officials and advocates. The panelists included Steve Elkins from the Metropolitan Council, Dave Van Hattum from the transportation advocacy group Transit for Livable Communities, and Lisa Austin from the Minnesota Department of Transportation. Allen Greenberg with the US Department of Transportation also joined by phone from Washington, DC. The panel was moderated by Frank Douma.

A key theme that emerged from the panel was the identification of PayGo as an attractive product due to the flexibility it allows the consumer. Steve Elkins mentioned that as an IT professional, teleworking is accepted as common. This parking “product” would be attractive to consumers have similar commuting practices. Lisa Austin mentioned that as a practitioner, the products such as PayGo that offer flexibility are interesting. Allen Greenberg took the big picture and reiterated that once a commuter purchases a fixed contract, their parking behavior is essentially locked in. Products that offer flexibility help break the “locked in” commuting behavior. Several challenges identified in PayGo were that PayGo would be the most costly to administer and how the management of such a program would work. If a number of people have parking contracts but only use them three-quarters of the time, can a provider simply sell more contracts? With this situation the challenge would be peak days where everyone wants to park (i.e., Mondays, sporting events, etc.).

Some related issues are the complexity of these innovative pricing strategies and packages. One panelist mentioned that a factor that must be considered is how well consumers understand alternative pricing packages. When looking at these packages, another noted, an aspect of what is being sold is simplicity and complexity. Parking contracts, for example, are not really that good of a deal, but they are simple. Frank noted that the free transit pass was a good aspect of this tension of simplicity versus complexity. There was a much higher recruitment rate for the module that simply offered a free transit pass, but people were less enthusiastic about modules that were better in terms of incentives but also more complex. Allen noted that this arises in more places than just parking: As a general matter people like to budget something and then forget about it, not necessarily crunch the numbers to find what is most economically efficient.

Another common theme was the consensus from the reaction panel that prices matter, as does culture. David commended the City of Chicago for “putting prices where they should be.” Within the context of the SLPP study, the results showed that the modules that provided the most incentive had the most impact on commuter behavior. At the same time, culture and habit are equally important. We are creatures of habit and have institutionalized the culture of driving and the expectation of cheap or free parking (i.e., validating parking at events, etc.).

Lastly, a number of policy issues and implications were addressed. David Zavattero spoke briefly to the simplicity versus complexity issue. He mentioned that the complexity can happen behind the scenes whereas it can appear simple to consumers on the surface. David Van Hattum talked about various policy options and how we should be careful about extrapolating the SLPP study’s conclusions. Our participant base was important, and depending on the intended audience the policy solutions could be pricing, car-pooling, more transit, etc. These issues will arise locally soon. One example is Target making plans to move 3900 employees to Brooklyn Park. This presents a significant regional policy question: What will be our transportation policies to adapt to these situations? The policies examined by the SLPP study were again highlighted as most effective for a parking-constrained market.

Closing: Lee Munnich, Director of the State and Local Policy Program, provided closing remarks.