Parking Charges

This measure was fully updated by INSTITUTE FOR TRANSPORT STUDIES (ITS) in 2014 under the CH4LLENGE project, financed by the European Commission.


Parking charges are financial charges paid by motorists for the use of parking spaces, either in dedicated car parks or in identified on-street parking bays.  They can be used as a means of fiscal demand management, with an aim of reducing pressure on limited parking spaces, or as means of raising revenue which can offset costs of providing parking space, or as a means of attempting to mitigate external costs of motor traffic.  Uniquely among parking control measures, they enable demand to be kept below the supply of parking space, thus reducing time spent searching.

Despite their potential role in reducing a range of problems associated with high traffic volumes, parking charges are often politically contentious, and there can be a reluctance to implement the measure.  A major component of the political reluctance to use parking charges is a fear that to do so will harm competitive advantage of a city. However this concern is not well supported by evidence (Marsden 2006).

Parking charges are simply charges levied on motorists for the use of parking spaces, either in dedicated car parks or in identified on-street parking bays. They provide one of the most widely used forms of parking control. They act to suppress the demand for parking and they enable demand to be kept below the supply of parking space, thus they can reducing time spent searching, and have the potential to contribute to demand management (Kelly and Clinch 2006).  However parking charges can be a politically fraught area, with politicians reluctant to set charges sufficiently high to be viable mechanisms for demand management (Marsden et al. 2013).

Terminology

There are three commonly used terms to describe this policy of requiring motorists to pay to park their vehicle: Parking charges; parking pricing; and parking fees. We view these three terms as being inter-changeable with one another.
The ability to apply charges for parking depends on the type of parking space in question. Types of parking space fall into the following categories:

  • Public spaces
    On-street - identified parking spaces on the highway (usually adjacent to the footway but sometimes in the central reservation)
    Off-street - dedicated car-parks operated by local authorities or private companies
  • Private spaces (off street)
    • Residential
    • Non-residential.

In general, policy-makers have direct control over public on-street parking spaces and public off-street, local authority operated parking spaces. Hence, it is charges for the use of these categories of parking spaces which may be most readily used as a policy instrument.

Privately operated public parking spaces are commercial services for which commercial charges are made. In general, policy-makers have little control over these charges; there are exceptions to this though: legislation is available in some countries to permit the licensing of privately operated public car parks, but often this requires that operators must be compensated for losses.

The normal expectation is that private parking spaces - residential and non-residential - are not charged. However, there are exceptions to this Charges for private parking space, e.g. legislation exists in the UK to permit local authorities to introduce a 'Workplace Parking Levy' which would represent a charge for private non-residential parking at the workplace, though the levy would be on the employer who would not necessarily pass it on as a charge to individual users. In addition, some employers in the US have introduced charges for workplace parking as part of their 'Commute Trip Reduction' programmes and in the UK under Company Travel Plans.

Types of Parking Charges

For public parking spaces, it is usual to distinguish between 'short stay' parking and 'long-stay' parking. Short stay parking charges are often defined as an hourly rate, allowing the user to park up to a maximum number of hours. For example, the charge may be one USD per hour, up to a maximum of three hours. Long-stay charges are often defined as a fee per day, or sometimes per half day. Separate short and long stay car parks are often defined, with a minimum charge for the latter which is similar to the maximum charge for the former. Another approach is to have an hourly rate which rises or falls with duration.

Variable parking charges may be fixed rate, whereby hourly rates do not vary by the hour or by time of day, or may be variable, whereby there are higher hourly charges for peak periods within a day and lower hourly charges for off-peak periods or different rates for week days as opposed to weekends.
For private parking spaces, charges for customers may be differentiated from charges to employees so as to give priority to one or the other. This prioritisation may be reinforced by locating parking spaces for customers separately from parking spaces for employees.

Parking on residential streets is often not charged. However residents’ permits, for which a fee may be payable, are increasingly used to control the over-demand for parking in residential areas see parking controls. A further potential use for charging for parking on residential streets is described by Shoup (1995) and involves charging for parking on residential streets and using the revenues to benefit local communities, as part of a 'parking benefit district'.

Another means of charging for private residential parking spaces is to 'unbundle' parking from housing purchase or rental, so that parking spaces can be purchased or rented separately as required. In the US, this can form part of 'Location Efficient Development'.

Payment of parking charges is usually at point of use, i.e. via meters, pay and display machines, pay on exit barriers or similar devices. However in some cases monthly or annual passes or permits are available for users to purchase; this may be provided as an alternative, more convenient means of payment or may actually be the prime means of paying for parking, e.g. where payment per hour or per day is not provided for.

The type of parking charge to be introduced will depend on the objectives being pursued and the type of parking space in question. For example, if the objective is to reduce commuting by car then priority amongst public parking spaces would be given to short stay over long stay parking, or if there was a more general objective to reduce peak period congestion then there may be higher charges for parking during the peak period.

Technology

The technology of parking charges relates to the method of payment and enforcement used. The different methods may be characterised as follows:

  • Attendants 
    No technology is provided, but instead users pay an attendant either for a pre-specified fixed period of parking, usually paid on entry, or for the period elapsed since entering the car park, paid on exit. Enforcement is via the attendant monitoring entry and exit to the car park.
  • On-street Meters
    A mechanical or electronic meter is sited at each parking space, into which users insert payment based on being parked for a fixed period of time. The more sophisticated electronic meters allow the user to pay for the exact duration required, as opposed to a fixed unit of time, e.g. an hour. Enforcement is via roving inspectors monitoring the meters and imposing penalty fines where appropriate.
  • Pay and Display Ticket machines 
    Often, though not exclusively, used for off-street parking spaces, whereby one or more machines will serve an entire car park. The user inserts payment for a specified period of parking and the machine prints a ticket which the user displays on their car windscreen. Enforcement is generally via roving inspectors monitoring the displayed tickets, imposing penalty fines where appropriate.
  • Pay station machines
    Often used for off-street parking spaces, whereby one or more machines will serve an entire car park. On entering the car park the user picks up a ticket stating their time of arrival and on exit they insert this ticket into the pay station machine which records the time of departure and, accordingly, calculates a charge. The more sophisticated, electronic machines allow the user to pay for the exact difference between arrival time and departure time, as opposed to rounding that to the nearest unit of time, eg an hour. Enforcement is generally via carefully controlled entry to and exit from the car park.
  • In-vehicle meters
    Users pre-pay to use a small electronic meter, displayed in the vehicle whilst parked, which counts down minutes and registers the period of time parked. Enforcement is via roving inspectors monitoring the meters, imposing penalty fines where appropriate.
  • Automatic detection
    Vehicles are automatically detected by the system, e.g. via number-plate recognition, when entering and exiting the parking area. A bill is then either presented to the user on exiting the parking area or sent to the user's home address. Enforcement is generally via carefully controlled entry to and exit from the car park.

Why introduce parking charges?

The two underlying reasons for introducing parking charges are to influence the demand for parking and to raise revenue. There are a number of reasons why policy-makers might wish to influence the demand for parking:

  • To reduce parking problems in a particular area
  • To reduce traffic in an area
  • To reduce the occurrence of traffic circulating searching for car parking spaces
  • To discourage people from driving into the area, for example for environmental reasons.

There are two principal reasons why policy-makers may wish to use parking charges to raise revenue:

  • To cover the costs of car parking provision (including enforcement)
  • To raise revenue for other purposes.

Demand impacts

The responsiveness of the demand for vehicle travel in relation to parking charges varies depending upon the availability of alternatives. Figures for price elasticity of demand for parking activity with respect to parking charges are quoted as being in the range -0.1 to -0.4 (Feeney, 1989; Pratt, 1999), meaning that a 10% increase in parking charge will result in a 1%-4% reduction in parking activity. Introduction of parking charges designed to recover the costs of provision, where parking was previously free, can result in reductions in car commuting of up to 30% (Hess, 2001). However, introduction of parking charges in just one area may simply divert traffic to other areas (Hensher and King, 2001). Kelly and Clinch (2006) report that price sensitivity is higher for non-business than business trips.  Much political and public resistance to increasing parking charges stems from a fear that this would damage retail or business investment. This fear can be especially acute in towns and cities perceiving that they have economies which are relatively weak compared to neighbours (Marsden et al. 2013). However there is no evidence to support these concerns, except in the case of a city or town competing with out-of –town shopping centres offering free parking (Marsden 2006).

Parking charges enable demand to be kept below the supply of parking space, thus reducing time spent searching. The suggestion that meter prices should be pitched so that one space in seven is free was developed with this in mind. Charges which increase with duration can also influence the length of time for which people park, thus further reducing occupancy of parking spaces. However, it should be noted that a parking place used for short stay parking will generate more traffic than a long stay one.

Responses and situations
Response Reduction in road traffic Expected in situations
Where parking charges are higher in the peak period, some trips may be diverted into the off-peak.
Where there is no longer a need to circulate around several different car parks in order to find a space.
Where the parking charge discourages people from travelling to their previously preferred destination, in favour of somewhere with no or lower parking charges.
Where the charge encourages people to ride-share or to avoid making some optional journeys.
Where the charge encourages motorists to consider public transport, walking or cycling.
Where the charge results in the main driver in a household deciding they no longer need a car of their own.
Where the household decides that there are benefits from living closer to public transport facilities.
= Weakest possible response = Strongest possible positive response
= Weakest possible negative response = Strongest possible negative response
= No response

Short and long run demand responses

Demand responses
Response - 1st year 2-4 years 5 years 10+ years
Peak time charges might encourage spread of departure time
  Where there is no longer a need to circulate around several different car parks in order to find a space
  - /
  Where the charge encourages people to ride-share or to avoid making some optional journeys
  Charge may encourage mode shift
  -
  -
= Weakest possible response = Strongest possible positive response
= Weakest possible negative response = Strongest possible negative response
= No response

Financing requirements

Parking charges are a source of finance. This is some indication that this finance can be significant, for instance DfT (2013) state that for English local authorities total income “parking rose from £608 million to £1.3 billion” (s1.3).

Expected impact on key policy objectives

The wider impacts of parking charges depend on the alternative used by the car driver; parking on the fringes of the charged area, or in private parking spaces, will inevitably have less impact on improving the environment and congestion than switching to public transport. Parking on the fringes of charged area can adversely affect residents living at the fringes. A recurring concern with the introduction, or increasing, of parking charges, is that it will encourage drivers, and particularly those shopping, to go elsewhere, thus adversely affecting the urban economy. There is only weak evidence that this happens, and where it does, it tends to be as a result of competition from out-of–town shopping centres (Marsden 2006). A review of aggregate studies found no significant relationship between parking restraint levels and urban economic vitality (Still and Simmonds, 2000). Parking charges will affect low income drivers more than those on higher incomes, and thus can have some equity implications. They may as a result have some minor effects on accessibility. Nevertheless, if they are effective at limiting demand for driving, parking charges can contribute to alleviating problems of equity such as ill health associated with poor air quality, death and injury in collisions on roads, and severance.

As with parking controls, parking charges can readily be applied to publicly controlled parking space. Parking charges, by definition, do not apply to through traffic and, as noted above, cannot usually be imposed at private car parks. These represent major loopholes in the effectiveness of parking charges and, indeed, any form of parking control.

Contribution to objectives

Objective

Scale of contribution

Comment

  Charges can cover some of the opportunity cost of space taken by a parked vehicle, and some of the externalities of motor vehicles.
  Residents’ parking permits can prevent over-demand for parking on residential streets.
  / Limiting demand for use of motor vehicles can reduce poor air quality and emissions, and limit loss of space given to vehicles. Charges within an area may create harm at the fringes if people park just outside the charging area.
  / If they are effective at limiting demand for driving, parking charges can contribute to alleviating problems of equity such as ill health associated with poor air quality, death and injury in collisions on roads, and severance. Reduced traffic in residential areas can bring social benefits (Appleyard 1981). However charges might have detrimental impacts on accessibility for those on low income.
  Reduced searching for parking will reduce traffic and driver distraction.  Reductions in overall traffic should reduce accidents. Since parked cars are associated with increased danger of collision with child pedestrians and cyclists (Petch and Henson 2000), reduced parking might improve child safety.
  There is weak evidence on a relationship between economic growth and charges.
  Charges typically more than cover the costs of parking supply and enforcement.
= Weakest possible positive contribution = Strongest possible positive contribution
= Weakest possible negative contribution = Strongest possible negative contribution
= No contribution

The impacts on policy objectives outlined in contribution to objectives when promoted to increase accessibility will all be more severe if the increased access to cars encourages people to purchase vehicles of their own. There is a greater risk of this where the increased access to transport has resulted in access to a higher income. Impacts may be further increased where abstraction from public transport results from increased car use and marginal service are no longer operated, thus, forcing further increases in car use.

Expected impact on problems

Contribution to alleviation of key problems

Problem

Scale of contribution

Comment

Congestion

By reduction in vehicle traffic in the charged area and reduction of traffic circulating searching for parking spaces; the extent will depend on the level of charges and alternative travel options available.
Community impacts Reduced parking may bring safety benefits for children, and enhance liveable streets. Reduced use of motor vehicles can bring benefits including reduced severance for pedestrians and cyclists, improved social interaction, improved health and environmental quality.
Environmental damage / Limiting demand for use of motor vehicles can reduce poor air quality and emissions, and limit loss of space given to vehicles. Charges within an area may create harm at the fringes if people park just outside the charging area.
Poor accessibility / See community impacts above. However charges might have detrimental impacts on accessibility for those on low income.
Social and geographical disadvantage / There can be health benefits and accessibility for areas subject to high levels of traffic volume and parking if that is reduced. Low income car-users will be disproportionately affected. Charges within an area may create harm at the fringes if people park just outside the charging area.
Accidents Parked cars are associated with increased danger of collision with child pedestrians and cyclists (Petch and Henson 2000), reduced parking might improve child safety.  Reducing overall traffic through charging may bring safety benefits.
Poor economic growth There is weak evidence on a relationship between economic growth and charges.
= Weakest possible positive contribution = Strongest possible positive contribution
= Weakest possible negative contribution = Strongest possible negative contribution
= No contribution

Expected winners and losers

Winners and losers

Group

Winners/Losers

Comment

Large scale freight and commercial traffic

Through less congestion in centres when making deliveries at times when free access is allowed.

Small businesses

/ Through reduced congestion and availability of parking spaces near to destinations.

Low income car-users with poor access to public transport

/ People might benefit from improved conditions for walking and cycling, and from improved air quality, however parking charges could disadvantage low income car dependent households.
All existing public transport users / Beneficial for people walking or cycling.
People living adjacent to the area targeted Where traffic is reduced and public transport is subject to less congestion related delay.  But relocation of parking to fringe areas can be detrimental.
Cyclists including children Parked cars are associated with increased danger of collision with child pedestrians and cyclists (Petch and Henson 2000), reduced parking might improve child safety.
People at higher risk of health problems exacerbated by poor air quality Reduced parking activity and searching for parking can reduce pollution.
People making high value, important journeys Where parking is easier to find and searching traffic is reduced.
The average car user / Through reduced congestion and availability of parking spaces near to destinations. But car users needing to use public parking will pay more.
= Weakest possible benefit = Strongest possible positive benefit
= Weakest possible negative benefit = Strongest possible negative benefit
= Neither wins nor loses

Barriers to implementation

Scale of barriers
Barrier Scale Comment
Legal / Public authorities have legal control over charges in car parks they manage, but tend not to have control in private car parks. There may be legal means of public regulation of private car parks.
Finance Costs of implementation can be covered by charges.
Governance / As legal.
Political acceptability Parking charges can be contentious.
Public and stakeholder acceptability Parking charges can be contentious.
Technical feasibility -
= Minimal barrier = Most significant barrier

Parking charges have been advocated as a means of fiscal demand management.  Here we briefly outline findings relevant to parking charges arising from empirical work which sought to compare perceptions of local public authority transport officers with assumptions and capabilities of decision-support tools.  

The study asked transport officers about inter-city competition and its implications for prospects of implementing fiscal demand management, especially congestion charging and parking pricing.  There is a strong perception that parking charges are politically problematic and that they attract public opposition. The reasoning offered by opponents of charges emphasises concerns that they will damage competitiveness of an area by deterring business and shoppers.  The transport officers confirmed this perception, if not evidence (see Marsden 2006) of a correlation between parking charges and reduced retail competitiveness. However this perceived correlation is not uniform and there is a  “sharp distinction between those – usually major cities which consider their sufficiently attractive to bring in visitors from outside of their area as well as retaining the custom of their own residents, and places which understand their retail as something that serves more local demand” (Marsden et al. 2013).

Contribution to objectives
Objective Scale of contribution Comment
  Charges can cover some of the opportunity cost of space taken by a parked vehicle, and some of the externalities of motor vehicles.
  Residents parking permits can prevent over-demand for parking on residential streets. Since parked cars are associated with increased danger of collision with child pedestrians and cyclists (Petch and Henson 2000), reduced parking might improve child safety. 
  / Limiting demand for use of motor vehicles can reduce poor air quality and emissions, and limit loss of space given to vehicles. Charges within an area may create harm at the fringes if people park just outside the charging area.
  / If they are effective at limiting demand for driving, parking charges can contribute to alleviating problems of equity such as ill health associated with poor air quality, death and injury in collisions on roads, and severance. Reduced traffic in residential areas can bring social benefits (Appleyard 1981). However charges might have detrimental impacts on accessibility for those on low income.
  See liveable streets above.
  There are some perceptions that parking charges can be detrimental to business investment and retail, However there is weak evidence on a relationship between economic growth and charges.
  While charges may compensate for some externalities they are unlikey to bring substantial profit.
= Weakest possible positive contribution = Strongest possible positive contribution
= Weakest possible negative contribution = Strongest possible negative contribution
= No contribution
Contribution to objectives
Objective Scale of contribution Comment
  Charges can cover some of the opportunity cost of space taken by a parked vehicle, and some of the externalities of motor vehicles.
  Residents parking permits can prevent over-demand for parking on residential streets. Since parked cars are associated with increased danger of collision with child pedestrians and cyclists (Petch and Henson 2000), reduced parking might improve child safety.
  / Limiting demand for use of motor vehicles can reduce poor air quality and emissions, and limit loss of space given to vehicles. Charges within an area may create harm at the fringes if people park just outside the charging area.
  / If they are effective at limiting demand for driving, parking charges can contribute to alleviating problems of equity such as ill health associated with poor air quality, death and injury in collisions on roads, and severance. Reduced traffic in residential areas can bring social benefits (Appleyard 1981). However charges might have detrimental impacts on accessibility for those on low income.
  / See liveable streets above.
  There is weak evidence on a relationship between economic growth and charges.
  While charges may compensate for some externalities they are unlikey to bring substantial profit.
= Weakest possible positive contribution = Strongest possible positive contribution
= Weakest possible negative contribution = Strongest possible negative contribution
= No contribution

 

Contribution to alleviation of key problems
Objective Scale of contribution Comment
Congestion Charges might limit demand for driving private vehicles.
Community impacts If they are effective at limiting demand for driving, parking charges can contribute to alleviating problems of equity such as ill health associated with poor air quality, death and injury in collisions on roads, and severance. Reduced traffic in residential areas can bring social benefits (Appleyard 1981). However charges might have detrimental impacts on accessibility for those on low income.
Environmental damage / Limiting demand for use of motor vehicles can reduce poor air quality and emissions, and limit loss of space given to vehicles. Charges within an area may create harm at the fringes if people park just outside the charging area.
Poor accessibility / Limiting demand for use of motor vehicles can reduce severance and perception of danger to vulnerable road users. This might improve accessibility for pedestrians and cyclists. Charges might limit accessibility for drivers on lower incomes.
Social and geographical disadvantage / This may depend on where charges are implemented. Charges might mitigate traffic problems and pollution in disadvantaged areas. However if implemented in other areas they might contribute to exacerbating , problems for areas without charges if motorists choose to park there instead.
Accidents / See community impacts above.
Economic growth There is weak evidence on a relationship between economic growth and charges.
= Weakest possible positive contribution = Strongest possible positive contribution
= Weakest possible negative contribution = Strongest possible negative contribution
= No contribution

Appropriate contexts

Telecommuting is appropriate for almost all contexts. While it is appropriate as a policy for transport demand management, it could make small settlements and rural areas attractive for business expansion and hence contribute to the economic development. The establishment of communicating centres in an area could have positive impact on local businesses and increase employment associated with these centres and activities around it. 

Appropriate area-types
Area type Suitability
City centre
Dense inner suburb
Medium density outer suburb
Less dense outer suburb
District centre
Corridor -
Small town
Tourist town
= Least suitable area type = Most suitable area type

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Department for Transport (2013) Consultation on local authority parking, HM Government 

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Hensher D and King J (2001) Parking demand and response to supply, pricing and location in Sydney Central business District. Transportation Research A 35 (3)

Hess D B (2001) the effects of free parking on commuter mode choice: evidence from travel diary data. Lewis Center for Public Policy Studies, UCLA, available at www.sppsr.ucla.edu/lewis/WorkingPapers.html

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