Close-up of a parking meter in San Francisco, one of the first cities to price parking spots based on demand. funky-data via Getty Images

Finding free or inexpensive curb parking in a crowded, expensive downtown feels like hitting the jackpot. But these parking spots offer drivers too much of a bargain, according to Donald Shoup, an author and distinguished research professor in the University of California, Los Angeles’ urban planning department.

“If curb pricing were priced right, people would never be desperate for parking,” he said.

That’s the idea behind variable-price parking, a concept Shoup introduced almost two decades ago in his 2005 book “The High Cost of Free Parking.” Variable-price parking sets parking fees based on what proportion of a city’s parking spots are already in use. The higher the demand for parking, the higher the cost.

“It’s sort of a no-brainer to set parking prices to reflect demand,” said Henry Grabar, author of the recently published book “Paved Paradise: How Parking Explains the World.”

Variable-price parking, also known as performance-based pricing, demand-responsive pricing and demand-based pricing, is more than planning jargon. It’s a whole new way of valuing urban real estate and incentivizing residents to make different transportation choices. In communities that have tested the strategy, it’s working well, local officials say.

San Francisco: A variable-price parking trailblazer

San Francisco was one of the first cities to try demand-responsive parking pricing through a federally funded program in 2011 called SFpark, according to Grabar’s book.

The city pursued the project to encourage people to make “better transportation choices,” said Hank Willson, policy manager for parking and curb management at the San Francisco Municipal Transportation Agency.

“We have a citywide map online that shows the price at every meter at any time of day,” he said, noting that prices could be more than $10 per hour in one part of town and $1.50 a block away. “Someone might look at [the price] and decide to take the bus to save a $5 parking fee.” In that sense, Willson added, demand-based pricing functions similarly to congestion pricing, which imposes fees on drivers who enter densely congested areas.

SFpark is now an established program, but in its 2011 pilot phase, the city used sensors on meters to understand parking demand, Willson said. Informed by this data, the city changed rates every six weeks by no more than 25 cents per hour.

“It was a very deliberate, slow process because we’re not interested in shocking someone,” Willson said.

Now, pricing is based on time of day and location, and the agency changes rates quarterly at most. “If it’s an extremely full block, always crowded, the most it would go up is $1 a year,” Willson said. Saturdays are priced differently from weekdays, and most of the city has free parking on Sundays. San Francisco stopped using the meter-attached sensors in 2018 when it became able to read data directly from the meters.

The program was improved by changes to the city transportation code that allow the transportation agency, rather than City Council, to make parking rate decisions, Willson said. “The main point was to avoid politics,” he said. “We wanted to be demand-responsive. In the past, to balance the budget, the city raised parking prices.”

The city aims for 60% to 80% use of meters, he said. If use is above 80%, the price goes up. If use is below 60%, the price goes down. Shoup recommends aiming for 85% occupancy of meters, but Willson has found the lower range to be more realistic.

“When any given person drives up, they want to find a spot,” Willson said.

The city also owns 20 garages in San Francisco. The garage parking price varies by time of day, as it does on the street. “In some cases, we dramatically lowered rates at garages that were not well used,” said Willson, noting that the COVID-19 pandemic put a huge dent in garage use. The lowered rates “got their usage up considerably.”

Boulder, Colorado: Pricing drives street-parking turnover

Boulder started performance-based pricing in April, setting curb parking rates based on demand. Rates vary only by location, not time of day or day of the week.

The city manages 1,000 downtown curb spaces as well as five downtown garages with 2,000 spaces total, said Cris Jones, the city’s director of community vitality. The curb spaces are more expensive than the garage spaces to encourage longer-term parking in the garage.

“We want to encourage more folks to park off-street,” Jones said. “We don’t want the storage of cars [through on-street parking] to detract from the vibrancy of downtown.”

Boulder also sets time limits for street parking, Jones said. “The goal is to drive turnover on the street. If you’re downtown for a long period, you park once in the garage and leave the car there, so on-street parking can be managed short-term.”

Boulder follows Shoup’s guidance to aim for 85% curb parking use by adjusting prices annually, Jones said. The city tracks parking data from each block through meter transactions and by collecting license plate information with cameras on parking enforcement fleet vehicles. The community vitality department gives an annual update to the City Council recommending where parking rates should increase based on which blocks see the most demand.

Seaside, Florida: Parking dollars support transit

This small community on the Gulf of Mexico switched from free to variable-price parking in March 2022.

The New Urbanist town began with a valet parking program for its main commercial area, then it considered installing parking meters, said Micah Davis, president of Seaside Community Development Corp., in an email. As COVID-19 spread, the town banned parking around its central square to allow people more space for social distancing. Seaside later started charging for parking, which drivers pay for via an app, to encourage turnover and ensure available spaces for people driving in, Davis said.

He explained that the town monitors parking occupancy by the hour through the app, Passport. Like Boulder, Seaside follows Shoup’s recommendation to aim for 10% to 15% parking vacancy by setting prices that vary by time of day.

“Morning and mid-afternoon hours can be as low as $2 an hour, but busy times around lunch and dinner will be as high as $7 an hour,” Davis said. “All of the revenue collected from the parking management program is used to provide the free shuttle service and other town improvements.” The shuttle travels to and from a free parking lot a couple of miles from the center of town.

Shoup advocates for a similar concept of “parking benefit districts” that keep the revenue from parking close to where it was generated.

“Parking meters are like sticks without carrots,” said Shoup. “Just pay, and nobody benefits. If the money for curb parking were used for a parking benefit district, you could have better sidewalks, cleaning, anything that would improve the neighborhood.”

An early example of the parking benefit district is in Pasadena, California. Shoup described the city’s business district, Old Pasadena, as a “commercial skid row” in the 1980s, with buildings in terrible condition. When the parking benefit district program started, the meters and stores all had signs that read, “Old Pasadena – Your meter money makes a difference.” The alleys were cleaned, sidewalks were fixed and streets improved.

“The sidewalk is swept every night and pressure washed every two weeks,” said Shoup. “If you show people, ‘Here’s where your money goes,’ they like that.”