Should Drivers Be Allowed to Auction Off Public Parking Spots?

By Sachin Shenolikar

Traffic congestion is often the thing that drives up the blood pressures of urban drivers. A close second: trying to find parking.

It turns out the solution to both problems is connected. “Parking has been a pretty significant contributor to trying to crack the nut on urbanization and congestion and mobility,” says David Cummins, senior vice president and managing director of Parking Solutions at Xerox.

David Cummins, senior vice president and managing director of Parking Solutions at Xerox
“If the city is not charging market rates, the private sector can make money on that.” — David Cummins, senior vice president and managing director of Parking Solutions at Xerox

Venture Capitalists Take Notice

David cites a recent influx of venture capital into the parking industry. Startup businesses use that money to take new, somewhat controversial approaches to the market. For example, some companies aim to extract value from street parking, which, in most U.S. cities, is priced below what the market would demand when compared to off-street parking. Apps like Haywire and Sweetch allow users to auction off or charge a flat fee for public spots.

The economic theory behind these startups is sound. The LA ExpressPark project, in which Xerox collaborated with the Los Angeles Department of Transportation, found that raising rates significantly by a couple of dollars an hour frees up one or two spaces per block, which allows drivers to find spaces quicker. Estimates suggest that as much as 30 percent of urban traffic consists of cars looking for parking spaces. By reducing that glut, “you have a measurable impact on traffic flow and congestion,” says David.

Whose Business?

While city administrators don’t mind app development and different private sector options to improve mobility, they have been troubled by startups that seek to monetize on-street spaces. San Francisco and Boston have passed regulations to prevent companies from doing this.

Yet the mere existence of these startups is a sign of progress. The increase in venture capital funding shows that parking is a market with a lot of technological potential. And it is revealing that parking spots have strong value in a demand-based ecosystem. “The notion that you should have cheap parking in a city is really an idea that’s passed,” David says. “If the city is not charging market rates, the private sector can make money on that.”

Can Your Car Find a Parking Spot? Traffic Congestion

Things could change as cities such as Los Angeles, San Francisco, and Washington, D.C., develop their own models for demand-based parking pricing. This will coincide with the upcoming era of connected vehicles that will be able to interface with city infrastructure. “What if a car knew where to find open parking spaces? What if a car could pay for those parking spaces,” David asks.

“While today I’m using a smartphone or map while I’m driving, tomorrow the car will do it all for me.”

By the end of this decade, that could mean a significant reduction in congestion on urban streets — and a corresponding reduction in blood pressure readings for drivers.

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  1. Chris Smith November 25, 2014 - Reply

    As a Planning and Sustainability Commissioner for the City of Portland, Oregon (a volunteer role – my day job is at Xerox) I consider apps like Haywire to be very bad public policy – they essentially hijack access to a public resource to generate private gain.

    Rather than outlawing them outright, dynamic pricing is probably a better defense. Since one of the goals of dynamic pricing is usually to maintain a margin of availability, the scarcity required for these apps goes away, and revenue stays in the coffers of local government rather than being siphoned off.

  2. TODD BRENNAN December 10, 2014 - Reply

    I don’t understand how this works. My account is the largest hospital in NYC (Brooklyn NY). Parking in NYC is terrible, because added to finding a spot, there is the difficulty of alternate side of the street parking, for street cleaning. At the hospital the day shift comes in looking for the night shift to leave so they can get their parking spaces. Sometimes people on the night shift try to give their parking spaces to friends or co-workers, which sometimes causes big confrontations if there is someone already camped there waiting for that space..

    I guess my comment, or question is. How would an individual or company use this type of situation to make money?

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