How to equalize the parking subsidy

Mike Bullock, Modern Transit Society Director

Present and predicted shortages of transportation facilities require strategies to reduce the number of cars on the road at rush hour. An EPA study has concluded that "free parking" is, on the average, worth the same as commute gasoline and that its elimination would reduce commute car traffic by 20%. [Update: newer set of studies shows 25% traffic reduction]. However, workers may be reluctant to favor its removal. A better approach, then, is to give each worker the option of converting his own parking lot benefit into money.

We suggest that companies adopt programs whereby employees pay for their car parking only in proportion to the amount that they use the parking and that all employees receive an increase in compensation so that no employee comes out behind. Such a program requires that equitable and convenient methods of pricing, collection and distribution be established.

Calculating the cost of parking per year is an easy procedure. The cost of parking is the value of the parking facility (land value plus improvement cost) multiplied by the current prevailing interest rate, added to the yearly parking maintenance cost. The resulting price per day per parked car would have to be adjusted periodically. For example, if the average number of cars being parked were to decrease, the price would have to increase unless the parking lot size could be reduced.

While the most straightforward method of collection would be ticket dispensing and coin operated gates as is commonly used in airport parking lots, we would like to suggest an alternative. First, every employee would select the days of the week for which he would like to commit himself to the use of the parking lot. Then, employees would be issued a plastic card which would show their selected days, their name, and their employee number. This card could then be placed on the dashboard of a vehicle to indicate its authorization to be parked in the employee parking lot. If an employee decided to drive on a day not indicated on his card, the employee would buy a one-day pass which he would date and set on the dashboard next to the plastic card. The one day pass could be purchased at any time before the company's "daily spot check" is made. In fact, employees could buy them days or even weeks ahead if the need was anticipated. No cash would change hands during the purchase of these passes. The employee would simply indicate his employee number (show his badge) to the person (guards or secretaries, for example) dispensing the passes. The pass dispenser would write the employee number on a list which would then be given to the payroll department. The employee's paycheck would then show a parking lot charge for each of the employee's normal committed parking days and for each special one day pass purchased during the designated pay period.

The distribution of these funds would be straightforward. The total worth of the parking facility for a pay period would be divided equally among all employees and would appear in their paychecks as a "parking lot rebate". The company could then add to each paycheck an amount, identified as "bonus," so that even employees that parked everyday would break even under the arrangement.

This program has several advantages. It would require a very minimal effort on the part of the employee who drives every day and who gains no monetary advantage. He must only keep his plastic card on the dashboard of his car. Other employees, who would receive a monetary advantage, would certainly be pleased. It is the honest removal of a present incentive to drive. It would reduce traffic.

Sample calculation: equalizing the parking subsidy

Assume the following hypothetical company conditions:

Then, the cost to park per day =

[ ($250000 + $50000) (.15) + $500) ] / [ (90) (260) ] = $1.94

The parking lot rebate (per week) =

[ ($250000 + $50000) (.15) + $500 ] / [ (100) (52) ] = $8.75

The bonus (per week) =

(5) ($1.94) - $8.75 = $0.95

Therefore a person who rode transit everyday would gain $9.70 a week. A person that drove three times a week would gain $3.88 a week. [This article was written in 1981, so the figures should not be taken as today's costs. Of course, the equations do not change. -Editor]. A person that continued to drive everyday would break even. The "bonus" would cost our hypothetical company $95.00 per week. If zoning laws are changed so parking is not required, then theoretically it would not cost the company anything because $95 per week would be saved by reducing parking and using the land for something productive.

Mike Bullock is currently working to have VTA implement this plan.

Mike Bullock is an engineer in Sunnyvale. The land his company devotes to parking cars of its 15,000 employees is greater than the land devoted to its business pursuits. Mike Bullock can be contacted at 408/996-7563. How to Equalize the Parking Subsidy was originally written as a position paper. It was adopted by both the Modern Transit Society and the Santa Clara Valley Bicycle Association [since renamed the Silicon Valley Bicycle Coalition].

Footnote 1: The EPA report is DOT/ESPA/DPB-50180116.


home page | about MTS | Cashout | HOV lanes | Bay Bridge | Solution | Allow Pedestrians! | AGT | letters | webmaster