The market price of 60 specific park-and-ride spaces

Kevin O'Donnell
2016-10-19 11:18

Economics is inescapable. To use something, first that something must be built. Then maintained. Then eventually replaced. Here's a short story about a the economics of 60 park-and-ride spaces.

In 2012 the city purchased land for a new park-and-ride for $5.2 million, creating 342 spaces. That's $15,204 for each space in the current lot. If the city had built all of the 765 potential spots the per-spot price would be $6,797.

That isn't notable - the city is building park-and-ride lots all over the city. What is different about this particular lot is a Committee of Adjustment (CoA) application to dedicate 60 of those new parking spaces to a local landlord, for their exclusive use.

Minto, the landlord for Movati Athletics, wants to lease 60 spaces from the park-and-ride on an ongoing basis. They need CoA permission to do that because there are rules that say this particular parking can't be across the street. (Why? That's a rabbit hole all of its own.)

Why didn't the traffic planner cross the road? Because they forced everything to have on-site parking.

What the CoA application doesn't detail is how much Minto is going to pay the city for 60 parking spaces.

When asked, the city has said all 60 spaces will be leased out for an annual fee of $21,600, right up until the city needs them back for park-and-ride users.

Per spot, that's $360 per year. Divide by 12. Divide by 30. Each spot goes for $1 per day.

One dollar per day!

Ok then. The thing about prices is there is no external list of what an appropriate price is. There is only the price that someone selling and someone buying agree to at a specific moment in time.  

As a resident I can tell you that, subjectively, $1/day feels too low. But feelings aren't economics. So, let's be objective and look at some other prices for parking.

Gold Permit Park-and-Ride Passes

If you want to park in a busy park-and-ride lot you have two options: show up early because they are first-come-first-served, or shell out $54.75 a month for a gold permit parking pass so you are guaranteed a spot. That's on top of the monthly pass you also have to buy.

Clever readers will see that $54.75 a month is $1.82 a day.

Being clever, those readers will see that the city charges 82% more to bus users to park on city built parking spots than it does to a local landlord.

Are we talking apples to apples though?

Not exactly. The most notable difference between this park-and-ride and the ones where you can buy a gold-permit pass is the level of demand in the lot. This one is not congested. If the city offered gold-permit parking in this lot I expect nobody would buy one. Why would you if you can always park for free?

Other lots are different. They fill up early. If you want to park at 8:30am and ride into work you're out of luck, or you're out $54 a month.

The city has said that as soon as demand in this lot increases, Minto's 60 parking spots return to the fold.

A data point in the high cost of free parking.

In the end, I asked the city for details on the 60 spaces because there is no free parking. Someone always pays to build it. Someone always pays to maintain it. And its mere existence influences a lot about how we build the rest of the city - and we all pay for that.

The saga of these 60 parking spaces has at least confirmed that the city believes this: the price for a park-and-ride spot at an underutilized location, on this particular day, between the city and Minto, is $1/day.

We didn't know that before! 

The economics of park-and-ride spaces aren't simple. We give the spaces away (for the most part) to encourage people to take the bus downtown. That's better than having them drive, for lots of reasons.

But we could also just stop widening the 417. Congestion on roads will also, um, drive (zing!) people onto transit because now transit will be cheaper (in time-cost).

Or we could start charging a user-fee for roads? (Today everyone pays for roads no matter how much you use them, or when). A congestion charge on the 417 is in principle the same as the city's existing congestion charge for gold-permit passes at park-and-ride lots. Fixed supply, high time-of-use peak demand.

These options, and more, have always existed and get debated from time to time. The new wrinkle is we now know the city's price for park-and-ride spaces in underutilized lots.

And I find that interesting.

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