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Parking Cash Out Parking Cash Out DONALD C. SHOUP, FAICP TABLE OF CONTENTS Acknowledgments iii Chapter 1. An Invitation to Drive to Work Alone 1 Ubiquitous Free Parking 2 Effects of Employer-Paid Parking: Seven Case Studies 4 Effects of Employer-Paid Parking: A Mode-Choice Model 5 Other Evidence of the Effects of Employer-Paid Parking 10 Employer-Paid Parking Discourages Carpooling 13 Commuter Parking in the Context of All Parking 16 Conclusion: An Invitation to Drive to Work Alone 17 Endnotes 17 Chapter 2. Cashing Out Free Parking 25 Parking as a Status Symbol 26 California’s Parking Cash-Out Law 27 Benefits of Parking Cash Out 28 Daily Cash Out 36 Partial Cash Out 39 What Will Happen to All the Empty Parking Spaces? 40 The Potential for Parking Cash Out 41 Conclusion: Free to Choose 44 Endnotes 44 Chapter 3. Parking Cash Out: The Tax Angle 49 Asymmetric Tax Exemption for Employer-Paid Parking 50 Is Employer-Paid Parking Wage Discrimination? 51 The Tax Expenditure for Employer-Paid Parking 52 Parking Cash Out: Two Tax Penalties 52 Removing the Tax Penalties 54 A Revenue Windfall for Federal and State Governments 54 Paying for Parking with Pre-Tax Income 55 Paying for Transit and Vanpools with Pre-Tax Income 57 Transportation and Tax Equity 57 Conclusion: Slow Advances 57 Endnotes 58 Chapter 4. Parking Cash Out: Evaluating the Effects 63 Eight Case Studies 64 Case Study Methodology 64 Summary of Travel Changes after Cash Out 65 Emission Reductions and Gasoline Savings 69 Consistency with Previous Research 70 Cost of Parking Cash Out 71 Benefit-Cost Analysis of Parking Cash Out 74 Distribution of Benefits 76 Employers Praise Parking Cash Out 79 The Legislative Analyst’s Report 81 Conclusion: Subsidize People, Not Parking 82 Endnotes 83 Chapter 5. Parking Cash Out Compared with Five Alternatives 89 Alternative 1. Offer Transportation Demand Management Programs 90 Alternative 2. Require Employee Trip-Reduction Programs 92 Alternative 3. Remove the Tax Exemption for Employer-Paid Parking 94 Alternative 4. Increase the Tax Exemption for Transit Subsidies 94 Alternative 5. Tax Workplace Parking Spaces 95 The Brightest and the Best 95 Conclusion: Truth in TDM 97 Endnotes 97 Chapter 6. The Politics of Parking Cash Out 99 Rationale for a Cash-Out Requirement 100 Why California Enacted the Parking Cash-Out Law 100 How California Enacted the Parking Cash-Out Law 102 Failed Attempt to Repeal the Cash-Out Law 103 Require Cash as a Condition for Tax Exemption 104 Allow Employer-Paid Parking in Cafeteria Benefit Plans 109 Conclusion: Align the Tax Code with Our Objectives 110 Endnotes 111 Appendix A. Converting Traffic Congestion into Cash 113 Appendix B. List of References 123 Figures 1-1. Parking Prices and Mode Choices 7 4-1. Commuter Mode Shares Before and After Parking Cash Out 66 4-2. Commuter Mode Shares in Southern California, 1990-1996 68 Tables 1-1. Share of Automobile Commuters Who Park Free at Work 3 1-2. Employer-Paid Parking Increases Solo Driving: Seven Case Studies 4 1-3. Employer-Paid Parking Increases Driving to the Los Angeles CBD 8 1-4. Employer-Paid Parking Reduces the Rewards for Carpooling 14 2-1. Employer’s Cost of Offering Free Parking (For 100 Employees) 30 2-2. Transfer Cost versus Real Cost (Costs and Benefits Per Employee Per Month) 31 2-3. Changes in Travel to the City Center after Parking Prices Are Doubled 33 2-4. Comparing the Cost of Partial versus Full Cash Out 34 2-5. Employer-Paid Parking Spaces in the United States in 1994 42 3-1. Equal After-Tax Wages with Employer-Paid and Driver-Paid Parking ($Per Month) 55 3-2. Paying for Parking from Pre-tax Income: Tax Savings at the University of California 56 4-1. Commute Subsidies Before and After Cash Out ($Per Employee Per Month) 64 4-2. Summary of Travel Changes after Parking Cash Out 65 4-3. Emissions Reductions after Parking Cash Out (Per Employee Per Year) 69 4-4. Cash-Out Results Compared with Previous Research (Cars Driven to Work Per 100 Employees) 70 4-5. Subsidy Per Employee Before and After Cash Out ($Per Month) 72 4-6. Benefits and Costs of Parking Cash Out (Per Employee Per Year) 75 4-7. Demographics of Travel to Work 77 5-1. Distribution of Subsidies in a TDM Program 90 6-1. Effects of Offering the Option to Cash Out Six Million Rented Parking Spaces 108 Acknowledgments have accumulated many intellectual debts in my research on employer- paid parking. First, I want to thank my wife Pat, who is the best editor a husband ever had. She has read and reread all the many versions of the manuscript, and contributed many ideas as well as unfailing Iencouragement. I am also indebted to the Ph.D. students I have worked with at UCLA. Don Pickrell and Richard Willson both wrote their dissertations on employer-paid parking, and I gratefully acknowledge all they have taught me. Jeffrey Brown, Daniel Chatman, Gregg Doyle, Daniel Hess, Hiro Iseki, Eugene Kim, David King, Jianling Lee, Lewison Lem, Michael Manville, William Pitkin, Lisa Schweitzer, and Paul Sorensen have read the manuscript with keenly critical eyes and have made many important contributions. I also want to thank colleagues who have commented on the manuscript. I have learned much from Kiran Bhatt, William Francis, Laura Gottsman, Jon Kessler, Thomas Higgins, William Menczer, William Schroer, Richard Steinman, Brian Taylor, Peter Valk, Martin Wachs, Melvin Webber, and Jeff Weir. The South Coast Air Quality Management District provided all the data for the case studies of parking cash out in Chapter 4. The California Air Resources Board, European Conference of Ministers of Transport, Univer- sity of California Transportation Center, United States Department of Trans- portation, and United States Environmental Protection Agency provided funding for my research on employer-paid parking. I have used much of their money to employ students to edit my manuscript, which has taken many years to straighten out. If you find anything easy to understand in this report, you can thank, as I do, Aaron Bernardin, Amy Ford, Simon Fraser, Susan Herre, Kevin Holliday, Douglas Kolozsvari, Christopher Lock, Jeremy Nelson, Todd Nelson, Thomas Rice, Michael Sabel, and Alexander Smith. Easy reading is hard writing, and my student editors have spent many hours helping me say what I mean. It has been a joy to work with them, and I hope they have learned as much from me as I have from them. Several parts of this report have been adapted from articles that were previously published in Access, Journal of the American Planning Association, Traffic Quarterly, Transport Policy, Transportation, Transportation Quarterly, Transportation Research, and Transportation Research Record. An earlier ver- sion of this report appeared in 2002 as a chapter in Managing Commuters’ Behaviour, a New Role for Companies, published by the European Conference of Ministers of Transport. Finally, I would like to thank my editor at the Planning Advisory Service, James Hecimovich, for his encouragement, enthusiasm, and wise advice in converting my manuscript into a PAS Report. And thanks to Jim’s editorial assistant, Rhonda Smith, for her impeccable copyediting of the many figures, tables, and references. Parking Cash Out was originally intended to be included as a section in The High Cost of Free Parking, published by APA’s Planners Press. When that book grew too long, it was decided to publish the section on parking cash out as a separate PAS Report, which is therefore a sort of apocrypha to The High Cost of Free Parking. Taken together, these two publications suggest new ways to think about parking. Parking Cash Out explains how we can achieve enormous economic, environmental, and social benefits at almost no cost simply by subsidizing people, not parking. iii CHAPTER 1 An Invitation to Drive to Work Alone If we understand what is happening, and if we can conceive and explore alternative futures, we can find opportunities to intervene, sometimes to resist, to organize, to legislate, to plan, and to design. —WILLIAM MITCHELL lmost every commuter with a car will drive to work if there is free parking available at work. Free parking is the most common fringe benefit offered to work- Aers in the U.S., and 95 percent of American automobile com- muters park free at work. Free parking thus helps explain why 91 percent of commuters drive to work and why 93 percent of their vehicles have only one occupant.1 1 2 Parking Cash Out Many solo drivers who park free at work would drive to work alone even if they had to pay for parking. For these commuters, employer-paid parking merely replaces a payment they would otherwise make on their own, and it does not change their travel choices. But employer-paid park- ing is like a matching grant for commuting by car: employers pay for park- ing at work only if commuters drive to work. This matching-grant feature of employer-paid parking invites additional commuters to drive to work alone. Some solo drivers who park free at work, for example, would carpool, ride public transit, walk, or bike to work if they had to pay for parking. Employer-paid parking therefore changes these commuters’ travel choices: they drive to work only if they can park free. This chapter examines how free parking affects commuting. Seven case studies and a statistical model suggest that when compared with driver- paid parking, employer-paid parking increases driving to work by about one-third. UBIQUITOUS FREE PARKING Employer-paid parking is a tax-exempt fringe benefit you qualify for only by driving to work, and the 1995 Nationwide Personal Transportation Survey found that 95 percent of commuters who drive to work park free.2 As shown in Table 1-1, most commuters park free at work regardless of their age, gender, income, education, or residence.
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