Policy Analysis by D Shoup, J Tumlin, CARB, SCAG, MTC

Notes on Workplace Parking Feebate (Parking Charges + Incentives) - Feb 2013


Be sure to read the Parking Feebate (Parking Charges + Incentives) overview web page first, for policy framing within the context of: AB32/SB375, weak CA Cap and Trade, gas tax increases, European gas prices, US commuting, policy efficacy, etc.


The Workplace Parking Feebate proposal has been through an interesting 10-year journey (starting with a UC Berkeley masters thesis). 1) CA State Senate Transportation Committee staff and CA Air Resources Board said “the state can’t mandate unless you demonstrate two successful pilots.” SVLG, Sierra Club, and NRDC concurred. 2) Commute/transportation staff at tech companies (Genentech/Roche, Facebook, Intel, Cisco, Google, Yahoo, eBay, Oracle, Kaiser Health IT, etc) explained that they are happy to implement a state mandate, but it is career-limiting to pitch a pilot proposal up the chain of command. Genentech’s CEO once asked that the company charge for parking, only to be “talked down” from that position. 3) A 2013 tactic to persuade smart cities and transaction processing firms (IBM/Cisco smart cities, Oracle, and SAP failed). 4) The 2015 political climate is far more favorable and elected officials are making encouraging statements. 

A draft, phased California legislature bill has been developed. The California State Legislative Counsel has refined the bill's language. A promising public policy strategy: Work with a progressive, pro-climate state such as California. Implement a small number of pilots at major firms. Pass state law to mandate phased adoption in the Bay Area - begin with large firms and spread to smaller firms. Expand to Sacramento, LA, and San Diego metro areas. Expand to other progressive states. Expand within California. To date, interpretations of Prop 26, which requires a "supermajority vote to pass a tax/fee" have been ruled inapplicable to similar solutions where money does not "touch" the State. Chevron successfully led the Prop 26 effort in order to prevent the passing of pricing measures that will simultaneously protect the climate and hurt Chevron's short-term profit maximization. 

December 2010 Meetings and Chats

Communication with the following people: Kate White (Great Communities), Amanda Eakin & Justin Horner (NRDC), Gloria Ohland (Reconnecting Am), Rebecca Long (MTC), Grieg Asher (SCAG), James Paxson (Hacienda Biz Park), Jessica Zenk (SVLG), Michael Cunningham & Matt Regan (Bay Area Council), Allen Greenberg (FHWA), Mark Stivers (CA Senate Transp Committee), Terry Watt, Brock Winstead (Simitian's staff), Stu Cohen & Graham Brownstein (Transform), Kathryn Phillips (Sierra Club), Art Guzzetti (APTA), Mike Scanlon (Caltrain/SamTrans), Kurt Evans (VTA), Liz Mooney (Assemblymember Nancy Skinner’s staff), Ken Alex (Governor's Office of Planning and Research). 

  • Governor Brown is looking for bold, high-impact policies that play out within a single 4-year long gubernatorial term.  Bold means 1M tons CO2 per year or more.

  • Regarding the 100-member MTC/ABAG SB375 Sustainable Communities Strategy Advisory Panel, the Panel has a strong consensus that driving pricing is needed.

  • Reducing demand is 100,000 times more cost-effective than increasing supply. Let’s say the equivalent of driving pricing to reduce demand is expanding the state highway system by 10%. We have 50,700 state highway lane miles. Assume only $10M per new lane mile (rural is cheap, urban is expensive). So it’s a $50B project cost to expand lane miles by 10%. Project cost to reduce demand by the same amount is tiny. 

  • CA Prop 26: tax/fee versus "market reform." The government can mandate private actors to exchange money (a "market reform") without running into Prop 26 two thirds voting requirement. It is only when the government receives tax/fee income that Prop 26 applies. When the government avoids touching the money, then effective regulation can be implemented by majority vote. A commonsense definition of "tax:"   "a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc. (dictionary.com)

  • The policy should easily increase transit mode share from 4.9% (Commuting in America III) to 7.4%, a 50% increase. San Mateo County would gain 9,400 new transit riders. Nationally, 3M new transit riders will be added.

  • It may be desirable for the policy to encourage transit more than carpooling. The $4 commute incentive is a flexible notion, so, for example, could be modified to be more finely tiered, for example: $4.25/day for transit and $3.75/day for carpooling.

  • US transit funding is facing a severe deficit. It may be desirable to couple this policy with a companion bill that increases transit funding. It can be argued that such a funding increase should be phased in step with increases in the daily parking charge amount.

  • Will employers enthusiastically support this? a) the long-term real-estate upside is compelling and employers will comprehend this, b) craftily positioned against GHG reduction policies that are highly unpopular {large gas tax increase, SF Doyle Drive congestion charging, $6/day employee parking charges}, this policy is surely the “least worst.”

  • Without in-fill of free parking spaces, the policy is short-term no-cost to employers. With the in-fill, the policy is long-term highly
    profitable to employers. Protecting the environment and corporations making long-term real-estate profits, that’s a modern CA solution.

Majority of voters support pain-free, convenient climate protection, with very limited willingness to sacrifice. Voters want a magic bullet solution:


Objections/comments voiced by corporate commute / transportation staff

  • I don't foresee our company ever imposing a parking fee directed towards our employees. We prefer to offer incentives to use alternative transportation (such as our commuter shuttle service) verses implementing a system that penalizes employees. For example, recruitment and employee retention are vital to our success. Telling our employees that they have to pay for parking would not fly. We previously asked employees about parking charges and received strong negative responses.

  • Charging for parking is not in keeping with our culture. We have lots of incentives in place.

  • For a pilot at our company, leading with an argument for climate protection will not work with our company.  We have a number of workers who have strong political opinions. 

  • We undertook an informal carrot versus stick investigation of parking charges versus incentives at our company, as part of planning for our growing employee population. We received strong employee pushback about charging for parking.

  • For the major employment center in our city, the city’s draft trip reduction plan included parking charges, but this was removed in the final version. 

  • There is free parking at almost every non-downtown parking space at U.S. offices. There is no justification for breaking away from free parking. Our company has no obligation to change this. 

UCLA Professor Donald Shoup (author: The High Cost of Free Parking)

  • April 2010 (D Shoup, T Litman, Raney).

    • In 1994, the Clinton Administration adopted the Shoup proposal for apply parking cashout (incentives) to 100% of US
      employer-rented parking spaces. An implementation issue took 5 years to resolve, into the Bush Administration,
      where the policy did not advance.

    • The mild CA proposal SB518 called for cities to adopt progressive parking policies from a menu of tools. It “got
      killed” and Senator Lowenthal was viciously attacked. Parking is an emotional issue. And APA lobbied against it
      (for shame!), arguing that the policy should be voluntary, not mandatory.

    • Cashout is perceived as a huge new cost to employers, so employers fight it vigorously.

    • The transaction cost of implementing employer parking control (gates, etc) is a barrier to implementation.

  • June 2008

    • Be sure that the charge is a daily charge. A monthly parking pass is worse.  Once you  have bought a monthly pass, then parking each day is conceptually free.  (The "park or not" trade-off decision should be apparent each day, in order to "gnaw" at people. This is similar to the thinking behind auto insurance "pay as you go" proposals.)  Further, a monthly scheme can be perceived as all or nothing ("I can't commit to not parking every day, I need to park a couple of times per week.")
    • Pfizer in the UK has a good daily scheme.  The "cost" of parking is $4 per day. Workers use proximity ID cards to access buildings and gated parking. (Gated parking is a bit of a daily irritant.) Each employee is given credits each month for a month's worth of parking. Each access to parking draws down these credits.  Unused credits are turned into $4 per day (via payroll) at Pfizer's Sandwich facility (and $10 per day at Pfizer's Walton Oaks site with tighter parking requirements). Shoup explains that carpool riders may swipe at the parking gate, to share the cost of parking with the driver. Pfizer has 5,500 employees at their Sandwich in Kent facility.
    • "Workplace Parking Feebate is an interesting proposal. I would like to know how some Century City employers react to it, given their past innovations."
  • D Shoup at CNU XIII (June 2005). "Parking lots within our office parks represent a 'land bank.' Office parks can be transformed in ways that few people now envision."

  • An August 21, 2007 (paraphrased) letter from Donald Shoup to Mary Nichols of CA Air Resources Board (CARB) comments on the potential of the parking cash out program to reduce greenhouse gas emissions in California. "I would like to suggest a promising approach to reducing Greenhouse Emissions: enforce California's parking cash-out law.  This law, enacted in 1992, requires many employers to offer commuters the option to take the cash equivalent of any parking subsidy offered.  CARB is responsible for administering the parking cash-out law, but has not attempted to enforce it.  In 2002, CA's Legislative Analyst issued a report on widespread noncompliance.  The Analyst estimated that compliance would reduce VMT by between 113M and 226M VMT per year.  Few employers comply with the law, or even know about it."  (Unfortunately, this 1992 law may only be applied to a relatively small set of parking spaces where the employer leases such spaces in a separate arrangement from the building lease.)  See also this October 2006 LA Times article: "California State Law Does Little to Limit Free Employee Parking," http://www.planetizen.com/node/21503

  • A 1989 academic paper ("Parking Subsidies and Commuter Mode Choice: Assessing the Evidence," by Richard Willson, Donald Shoup, and Martin Wachs) finds commute carrots are less effective than sticks: "A program of transit and vanpool subsidies as well as preferential parking for carpoolers had little effect until [Twentieth Century Corporation in Los Angeles] raised the price of employee parking from no charge to $30 per month for solo drivers. Solo driving decreased from 90 to 65 percent after pricing."

Jeff Tumlin (Author: Sustainable Transportation Planning, Principal: Nelson Nygaard Assoc), June 2008

  • The July 2002 Draft Moffett Research Park (Silicon Valley - near Google) Transportation Demand Management Plan (by Tumlin) Nelson Nygaard Associates was an ambitious, early attempt to eliminate free workplace parking.  "There will be no free parking on site during weekdays. At project build-out, true-cost daily parking charges will range between $3.40 and $4.20."  
  • Any effort by a single employer to charge employees for parking will fail. An employer’s organizational cost for big, new initiatives such as parking charges is huge. Employees can only absorb so much corporate information. Cashout is a complicated-to-explain concept. Parking charges are a complicated-to-explain concept. Combining both is complicated further still. The time spent internally communicating this program (and dealing with objections and questions) will cause delays to other important corporate messages. There is an opportunity cost associated with a company engaging on this issue. Messages about a corporate re-org, an acquisition, or a green solar project will have to be delayed. A parking program will suck up a lot of valuable time by exec staff and HR, don’t think that it is simple to implement such a program. Do not underestimate the corporate cost of this program. There may also be fear of an uncontrollable change in corporate culture. 
  • For a pilot project, there is no way to get the messaging right. You’re telling 54% of your employees (those who commute via SOV) that they are bad.
  • There is no real-estate benefit to a company for parking charges + incentives. If this is implemented and a huge sea of unused parking develops, the city won’t reward the company that brings this about. But, if a city WOULD allow a company to do something profitable with their virtuously achieved unused parking, then that would help the proposal.
  • We won’t achieve 2020 CO2 reduction goals without parking charges. 50% of CA CO2 is from transportation, we have to cut VMT. Charges are more effective for reducing VMT than all other measures combined.
  • The cost problem with parking cashout is that you have to grandfather in all the existing green commuters before you can entice new green commuting. Cashout is a very expensive TDM measure.
  • Lastly, CA CEQA makes smart growth illegal. CEQA must be changed to ignore worsened local intersection traffic congestion. Level of Service F intersections are good things when smart growth TOD density results. What CEQA needs to measure is regional VMT impact.  See for example this 2003 regional workshop: LOS Methodologies: Barrier to In-fill http://www.abag.ca.gov/planning/smartgrowth/technical%20sessions/1/Session%20Materials/SessionNotes.pdf Jeff Ordway(BART real-estate) pointed out that lower densities score better in CEQA and LOS because they are assumed to have a lower environmental impact.

Jeff Weir, Panama Bartholomy, Dennis Wade: CA Air Resources Board LUSCAT / TDM staff, July 2008, May 2010

  • Cashout is a very expensive TDM measure. Cashout can't be easily done. And CA's cashout law has limited applicability. With cashout you have to grandfather in all the existing green commuters, so this is too expensive. 
  • To reduce VMT to meet AB32, charging for parking is key. Yes, if the government could mandate a parking tax or charging for parking, we could reduce commute VMT to a level that would be in line with AB32 goals. But, a 10-year-old survey of pricing measures found that parking charges rated the lowest.  Hence, parking charges do not appear to be politically feasible. Folks think free parking is their god-given right.
  • And, if employers just started charging for parking, that would bring us to AB32 VMT goals. It's interesting to hear the argument that employers will face an internal hornet's nest with employees if employers propose parking charges. Given the recent gas price rise, it must be that much harder to convince employees to favor parking charges. It's interesting to hear the idea that if a company had 90% of employees mildly in favor of parking charges and 10% strongly opposed, then a company might decline to pursue parking charges because of a very high cost dealing with the 10% to that company. Hence, companies may prefer a state mandate to enable parking charges, as they can't bring about parking charges via an internal political process with their employees. And the government can't mandate charges because of voter opposition, so the government would prefer a voluntary, employer-led program. So both sides wish the other would solve the problem, so there's really no way to meet AB32 VMT goals.
  • The federal tax exemption that allows employers to not pay tax on parking that they subsidize for employees is a perverse incentive.
  • "LUSCAT" - Land Use Subgroup of the Climate Action Team.
  • Workplace Parking Feebate is an intriguing idea. Hurting is more effective than rewarding. It would be compelling to see an ABAG/MTC regional travel demand forecast showing a 2M ton/yr regional CO2 reduction from this policy.
  • CARB has no ability to mandate or regulate to overcome the Tragedy of the Commons. SB375 is an incentive-based bill and CARB is getting lots and lots of pushback. Some in CARB are pessimistic about CARB’s ability to go beyond providing a voluntary set of tools for MPOs to consider implementing as part of SB375.
  • We are hearing the idea of driving pricing come up more than it used to.
  • Is there any way for this to be voluntary?

Robert Cervero & Peter Calthorpe

  • Berkeley Professor Robert Cervero (author: Transit Metropolis and America’s Suburban Centers), "Parking lot laden office parks are one of our biggest blights, but they also represent our largest opportunity for in-fill development because of their inefficient use of land."
  • Peter Calthorpe (author: The Next American Metropolis) at the Congress for New Urbanism Conference (CNU XIII), June '05: "We New Urbanists didn't focus on the growth of office parks. This was a huge mistake. We need powerful strategies for these job centers."

Martin Wachs

  • In “How Can Transport Become More Sustainable?” (3.6MB, pages 54-62, http://onlinepubs.trb.org/onlinepubs/conf/CP37.pdf) Martin Wachs explains how all U.S. public policymaking is unable to bring about large-scale change. “In other (non - U.S.) cases, planning models were used, as they have rarely been in the United States, to 'backcast' rather than to forecast. That is, certain environmental and travel goals were developed for the target year of the plan, and the models were used to test alternative policies and consequently to select policies that would lead to the desired outcomes.” “Despite such urgings and many revisions to planning regulations included in the national highway program, progress in reforming the regional transportation planning process has been limited. We appear to be unable to achieve the dramatic institutional changes that would be needed to make regional planning more capable of addressing sustainability.” Hence, U.S. public policymaking is unable to develop grandiose schemes, but climate protection goals (such as those for California AB32 for 2020 or Kyoto 2020) require grandiose schemes.
  • In “How Can Transport Become More Sustainable?” (http://onlinepubs.trb.org/onlinepubs/conf/CP37.pdf , pages 54-62), Martin Wachs explains the difficulty with complex policy proposals. “Societies do not do well with complexity, nor do conference workshops. We need to find a way of reducing our discussion to manageable components, just as we need to find ways of enacting policies through manageable steps and workable components. We need to acknowledge complex relationships among the elements while focusing on them one at a time. We only seem to be able to enact laws and regulations, to take actions, and to set priorities one bite at a time.”

Regional GHG Reduction Target Setting

OneBayArea's (MTC, ABAG, BAAQMD) 2010 PPT presents a startlingly aggressive pricing scenario to achieve large GHG reductions. A combination of price increases would have the same driving reduction impact as $20 per gallon gas. While OneBayArea gently broached this topic, this did not lead to an "adult discussion" of this topic. OneBayArea simply passes the buck to the legislature, indicating that "new legislation must be developed" to achieve GHG reduction targets.

A 2010 memo ("Preliminary Report on Metropolitan Planning Organization (MPO)/Air Resources Board (ARB) Senate Bill 375 (SB 375) Target Setting Analysis") from CA's four largest MPOs (MTC, SCAG, SANDAG, SACOG) to CA Air Resources Board, similarly discusses implementing extremely unpopular pricing measures to meet GHG reduction targets. More politically viable pricing measures, such as Workplace Parking Feebate are not proposed. It seemed that the MPOs chose self-defeating policies for addressing GHG reductions. 

Social Equity / Social Justice

Climate change will disproportionately impact the third world, so any strong, regressive US driving pricing policy applied to 300M Americans ($5 per gallon gas tax increase or $200/ton carbon tax) will be very progressive for the other 6.7B humans.

As far as analyzing driving pricing social equity effects only on 300M Americans and ignore the rest of humanity:

  • Cap and Dividend is a very economically progressive policy.

  • A large gas tax increase is very regressive.

  • Parking Feebate is progressive, but creates a distribution of winners and losers.

Compared to a gas tax increase, this concept is economically "progressive," meaning “a transfer of wealth from higher-income workers to lower-income workers.” This is because higher income workers are more likely to commute by solo driving than lower income workers.

The concept will not penalize low-income graveyard shift grocery/hospital workers and other low-income workers who have few alternatives to driving. The work plan will develop "exception rules" to handle such cases. The non-profit Environmental Defense Fund has studied social equity impacts of policies to increase driving costs/pain. Their report concluded that exceptions have to be carved out of such policies to ensure social equity. This concept envisions fair, compassionate exceptions developed via a transparent process.

IBM Smarter Cities Division - well-educated tech workers want to save the world

From Dr. Colin Harrison is Distinguished Engineer, IBM Enterprise Initiatives: Smarter Cities

IBM held a 72-hour online chat session with 7,000 worldwide IBM employees (with additional input from employee family members). The topic: "What are important problems that the planet faces that IBM should address?"  Issues identified were carbon management, water management, and alternative energy. CEO bet $100M on 10 ideas. A pretty impressive set of IBM actions resulted from the jam. “The CEO wasn’t expecting so many 'save the world' ideas. In response, the CEO bet $100M on 10 ideas - an impressive set of initiatives sprung from the chat session.
Result: We developed “instrumented planet,” a common infrastructure IT architecture that enabled common middleware. 
Result: IBM solar cell chip manufacturing effort.
Result: Infrastructure asset management system