Apps point the way to higher prices for public parking

| August 12, 2014 | 0 Comments

Four apps — MonkeyParking, Sweetch, ParkModo, and Haystack — aiming to disrupt the parking industry may reach their goal, but in the public sector, not private.

Each app allows drivers to advertise the metered spots at which they’re currently parked. Other motorists then bid for the spots to avoid having to look for parking, a convenience in highly competitive markets, like the Mission neighborhood on busy weekend nights in San Francisco, where MonkeyParking, Sweetch, and ParkModo are based.

failed parking meter

Parking apps that allow for arbitrage will work until cities make an effort to charge market prices for parking, Cielo Lutino argues. Image from Compujeramey.

The apps also allow drivers a chance to earn extra revenue because they can earn $3 or more for holding their spots for other motorists; the startups behind the apps take a cut of the bid.

It’s a relationship underwritten by the environment and the public, critics argue. The business model encourages drivers to hoard parking spaces or treat public property as if it’s private. It also creates congestion, they say.

Not so, says Paolo Dobrowolny, a cofounder at MonkeyParking. “A lot of people started to theoretically talk about scenarios that didn’t actually happen and could be easily avoided,” he said.

Indeed, in Baltimore and Boston, where Haystack is available, roughly 1,000 parking spaces have been exchanged since the app launched. Many of the 10,000 users who signed up to join the Haystack marketplace use the app to find parking spaces, not offer them.

The existing model doesn’t “provide enough of an incentive to change folks’ behavior,” says Haystack founder Eric Meyer. Currently, the bidding for each parking space offered through Haystack begins at $3. Although drivers can offer more, they rarely go above that minimum. As a result, Haystack is exploring non-monetary incentives to entice drivers to auction their spaces.

If and when the apps do become popular, local governments will have no one to blame but themselves, says Donald Shoup, who teaches at UCLA and is widely sought for his parking-policy expertise. “I think cities have managed the politics very incompetently,” he says, pointing to what he calls “the mispricing of public services.”

Metered parking in most large cities is consistently underpriced, Shoup says. If drivers paid the true value of those spaces, there would be more turnover. Instead, cars tend to stay parked in place, causing other motorists to circle for parking. Those drivers cause up to 30 percent of the congestion clogging city streets, say urban planners.

What cities need is data on parking demand, which would allow them to more accurately price parking. Many, such as San Francisco and Boston, have turned to in-street sensors that give drivers real-time information on parking availability while providing cities with data on parking demand.

But installing and maintaining the sensors is pricey. According to Worldsensing, which manufactures and installs sensors, it costs between $200 and $250 to install each sensor and $3 to $10 monthly for the networking and data services for each.

So, if San Francisco, which has 275,450 street parking spaces, were to install sensors throughout the city, it would require a capital investment of up to $69 million and up to $2.7 million each month to cover the data services.

Instead of scrambling to pay such high figures, Shoup says cities should simply start charging higher rates for parking. While there would surely be a public outcry against such measures, places like Pasadena have done so successfully by highlighting how the extra funds have been reinvested in the community, he says.

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