Friday, May 18, 2012

Privatizing Parking Meters (NYC and Elsewhere)

The WSJ reports here that NYC is considering a plan to privatize its parking meters.  The Gothamist has a nice post here about it with handy links to stories about Chicago's nightmare experience with doing the same thing recently.  I posted previously about Sacramento's plan to privatize parking here.

I see this as a bit different that hiring private companies to perform inherently governmental tasks, like running prisons, fighting on the battlefield (mercenaries, which today we euphemistically call "military contractors"), or administering welfare programs for the poor - which I generally oppose, for reasons explained repeatedly in my other posts.  Parking meters are more analogous to a physical asset that the government can lease out to others for a term of years, like unused lands or buildings.  I don't see anything wrong with the government leasing or selling its unused real estate to private parties, and to some extent parking meters are just that.  

But they're not quite just that.  They involve the imposition of fines for violations of government regulations (parking rules and rates).  In many states, unpaid parking fines can mutate into a criminal matter that can even result in jail time.  This is the problem - will the private entity have the right to set parking rates?  Many will complain about that if the rates escalate, but my concern is whether the criminal justice system will intervene when people do not pay the astronomical fines.  To return to the state-owned real property analogy, suppose McDonald's leases a parcel of real estate from the city (they apparently have leased some square footage from my local Wal-Mart).  If someone trespasses on the property or parks their car so as to block the drive-through lane, it would merely be a civil matter of towing the car, suing the wrongdoer, etc. - no different than if McDonald's owned that parcel.  It's very different to entangle their business interests with something that can involve criminal penalties.  There's more below the line...

For those who might be researching this as an academic issue, I found three interesting-looking articles on SSRN that might be helpful.  In 2010, Snigdha Verma (Carnegie Mellon/World Bank) posted Assessing the Revenue Generation Capacity of The Pittsburgh Parking Authority, a study on Pittsburgh's proposal to privatize its parking meters. From the abstract:
This study provides an independent analysis of the viability of leasing out Pittsburgh Parking Authority’s assets and utilizing the revenues to make up for the deficit in the City of Pittsburgh’s pension plans, as proposed by Mayor Luke Ravenstahl in January 20092. With this objective, the study was carried out to ascertain the potential revenues from leasing out 11 parking garages and 680 on-street parking meters owned by Pittsburgh Parking Authority (PPA) in downtown Pittsburgh. Based on our analysis, these assets were found to be valued at almost $2 billion. 
More interesting for me is the 2005 article posted by William A. Fischel (Dartmouth), Free Parking at Christmas is Not a Tragedy of the Commons, responding to the parking meter example in Hardin's classic Tragedy of the Commons article:
In his famous 1968 article, Garrett Hardin used the municipal practice of suspending the use of parking meters for Christmas shoppers as an example of how short-sighted politicians create a "Tragedy of the Commons." I argue that this example was not well chosen. Because shoppers spend more time in stores during December and because conventional parking meters are not easily recalibrated, free parking and the nonprice rationing that downtown organizations adopt are actually efficient responses to seasonal demand shifts.

More well-known to those in legal academia is libertarian prophet Richard Epstein, who ten years ago posted an article discussing municipal parking and parking meters: Allocation of the Commons: Parking and Stopping on the Commons, which he summarized as follows:

The economic forces governing transitions between different property rights regimes has been the source of extensive study since Demsetz's path breaking 1967 essay, "Toward a Theory of Property Rights." This paper offers first a general critique of that position, chiefly on the ground that it underestimates the practical difficulties of orchestrating efficient transitions in contexts where strong political forces are at play. Thereafter, the paper explores the movement among various systems that are used to allocate a particular public good, namely parking places on public streets. It examines both bottom-up systems that rely on analogues to the rule of first possession (in both clear and snowy weather) and top-down systems that use meters and permits as allocation devices. It offers explanations as to why the optimal rule will tend to vary with the density of traffic and generally opposes the use of special permits that limit occupancy to residences of certain neighborhoods, which effectively reduce the carrying capacity of a system of roads.
- Dru Stevenson

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