SAN DIEGO: TURNING SMALL CHANGE INTO BIG CHANGES

Revenue return was part of the bargain that Pasadena made with businesses to create the necessary political support to install parking meters. Because the city had no parking meters before the revenue-return policy began, its general fund lost no money. But what happens when a city already has more than 5,000 parking meters that are generating substantial revenue for the general fund? San Diego's successful experience shows how cities can allocate parking meter revenue to business districts, even when this will reduce the general fund revenues in the short run.

Until 1997, San Diego used all parking meter revenue to finance citywide public spending. The BIDs in the older commercial areas with parking meters argued that this policy was unfair: the newer business districts in the city had ample parking and no meters, while the older business districts had a parking shortage, and their meter revenue did not come back to solve the problem. The BIDs had a good argument: the city should not take meter revenue from areas with a parking shortage, and spend it in areas with ample free parking. They convinced the City Council that communities should be able to spend a part of their own meter revenue to solve their own problems.

San Diego's City Manager was understandably reluctant to return what had been general fund revenue to begin funding business districts. In a compromise, San Diego now returns 45 percent of parking meter revenues to the districts where it is collected. When the city adopted this policy in 1997, the City Council explained the goal:

The intent of this Policy is to retain a certain portion of the meter revenues collected for the benefit of the area in which the meter is located. These revenues will be used for a variety of neighborhood and business improvement projects. Parking Meter Districts (PMDs) will be established to provide an equitable mechanism for distribution of the funds.33

The Revenue Split

The metered neighborhoods clearly benefit from the revenue, but does the rest of the city lose out? Not necessarily. San Diego's general fund continues to receive 55 percent of the meter revenue. The incentive for PMDs to install additional parking meters, extend the hours, and raise the rates to gain greater revenue for themselves can therefore increase the total meter revenues deposited in the general fund. If the PMD activities improve business conditions and taxable sales in the districts, additional sales tax revenues will also accrue to the city. Diverting a share of the parking meter revenues to neighborhoods can therefore eventually augment the general fund. In recommending the revenue-return policy to the City Council, San Diego's City Manager acknowledged that the revenue sharing creates a short-term loss to the general fund because the existing meter revenue previously accrued entirely to the city. Nevertheless, the policy can also produce long-term gains:

Sharing the revenues and involving the business community in the development of parking solutions in the City's older commercial areas will create a short-term loss to the City's General Fund. However, it is possible that by doing so, other BIDs and redevelopment areas may decide to request the installation of meters, thus increasing revenues to make up for the portion directed to the area. A carefully administered, comprehensive parking meter management program will enhance sales tax revenues in the districts and contribute to the overall economic benefits of San Diego.36

San Diego's three PMDs pursue different goals that depend on their different circumstances. The following sections will explain the contexts of the three districts, and the different priorities each has pursued. The results show that there is no one-size-fits-all approach for parking benefit districts. Instead, meter revenue sharing is a flexible policy that can be adapted to each community's preferences.

Uptown District

The Uptown District consists of several communities-Bankers Hill, Hillcrest, Middletown, Mission Hills, and Park West-to the north and west of Balboa Park, with 38,000 residents. The Uptown Partnership, a nonprofit community development corporation, was established expressly to administer the PMD, and it has become an extremely valuable addition to the "social capital" of its five neighborhoods. Many community development corporations have to spend much of their time scrambling to secure funds to stay alive, but the guaranteed meter revenue allows the Partnership to concentrate on the long-term goals for its community.37 The Partnership holds a monthly public meeting that anyone can attend, and it also publishes a newsletter that covers its activities. The Partnership has put its logo onto every parking meter, explaining that its purpose is "Turning small change into big changes."

Logo

In the first year of the program the Uptown District sought extensive community input and developed a five-year implementation plan that lists eight important community goals.38

1. Revitalize commercial districts.
2. Provide pedestrian-oriented commercial areas.
3. Encourage the design of building and circulation systems sensitive to pedestrians.
4. Improve traffic circulation, but not at the expense of retaining and enhancing the pedestrian character of Uptown.
5. Increase the availability of off-street parking, but not at the expense of retaining and enhancing the pedestrian amenities.
6. Provide for safe and efficient movement of people and goods.
7.  Establish a fully integrated system of vehicular, transit, bicycle, and pedestrian facilities. 8.   Establish a focal point for transit services within the community.

The Uptown Partnership does not attempt to solve parking problems in isolation from other aspects of the urban system. Rather, it uses its parking revenues to address both parking and broader goals. The plan noted, for example, that the excessive width of some streets leads to speeding, and it proposed to reduce the number of traffic lanes on these streets, using the additional space for wider sidewalks or landscape improvements. One of the Uptown District's first completed projects was to plant trees in the median of Washington Street, greatly improving the appearance of a main commercial artery. Other streets were converted from parallel parking to diagonal parking, which creates more parking spaces and a wider buffer between the sidewalk and traffic.40

Diagonal parking on a residential street

The plan also proposed to install more parking meters, to extend the time of meter operations later in the evenings, and to install advanced parking meter technology to improve the streetscape and increase parking revenue. The Partnership is testing multispace parking meters (described in Chapter 15) to replace individual parking meters. It also sells debit cards that allow drivers to buy as much time on the meter as they want, and to get a refund on unused time. The cards allow drivers to park without having the correct change, without having to guess beforehand exactly how long they will park, without having to worry about their meter running out if they are delayed, and with the assurance that they will pay only for the time used. The Partnership also operates the Uptown Information Kiosk at the corner of Fifth and University Avenues, which sells parking meter cards, monthly bus passes, and transit tokens, and provides transit and tourist information.

Uptown Information Kiosk

Downtown District

The Downtown Parking Meter District is administered by the Centre City Development Corporation (CCDC), a public nonprofit corporation that San Diego established in 1975 to plan and redevelop the 1,500-acre downtown area. Because the Downtown District has the same boundaries as the Centre City Development Corporation, it did not require a new institution to carry out its functions. The meter revenue augments the CCDC's other sources of revenue, and enables it to carry out projects not otherwise possible. The CCDC estimated that the downtown parking supply was adequate for the next few years, but found that many drivers did not know where to find the available spaces. As a result, it decided to sponsor an extensive "Downtown Wayfinding Sign System" that directs drivers to major destinations and nearby parking. The new signs lead drivers from freeway off-ramps to downtown landmarks such as the Gaslamp Quarter, the Convention Center, and the Embarcadero. Other signs lead to public parking once drivers reach their destination. Interviews, focus groups and public meetings were conducted to determine the best ways to direct visitors to major destinations and associated parking. An environmental graphics firm planned and designed the signs using a historic tile motif, and mapped the clearest and most logical routes in cooperation with the San Diego Traffic Engineering Division. The District's local share of parking meter revenues financed the total cost of $550,000 for planning, designing, fabricating, and installing the wayfinding system.41

Wayfinding Signs

Parking regulations in the Centre City Community Plan are not focused solely on increasing the parking supply. Instead, they also seek to achieve other community goals, such as less land devoted to parking, fewer single-occupancy vehicle trips to the CBD, better public transit, and improved urban design. The following policies promote these goals:

1.   The off-street parking requirement for multifamily housing is only 1/2 space per unit.

2.   There are no parking requirements for nonresidential uses.

3.   All parking for a project must be enclosed and architecturally integrated into the structure.

4.   At least 50 percent of the street wall of structured parking must include street-level uses.

5.   For office buildings, at least two levels of parking must be provided underground before the provision of any aboveground parking.42

Public Parking Garage

Because San Diego has built public parking garages and does not require off-street parking for nonresidential uses in the Gaslamp Quarter, many historic properties have been restored and converted to new uses-such as restaurants-that are normally blocked by high off-street parking requirements. In addition to building public parking garages, the CCDC has installed more parking meters to increase turnover and make on-street parking more useful to businesses. (The CCDC pays 45 percent of the installation cost, and the City pays 55 percent, the same ratio in which they divide the meter revenue.) As in Uptown, the CCDC has converted parallel parking spaces to diagonal ones on some of the wider streets, increasing the curb parking supply at no cost, and calming traffic. It has also used meter revenue to replace curbs, gutters, and sidewalks, and plant street trees.

Mid-City District

The Mid-City District is a hybrid between the other two PMDs; because of the highly dispersed locations of the parking meters, the revenue and responsibilities are El Cajon Boulevard Business Improvement Association, the Golden Hill Community Development Corporation, and the University Heights Community Development Corporation. Because it has many fewer parking meters than the other two districts, the Mid-City District also receives much less money. It has used much of its funding to commission several creative studies of its parking problems, including an inventory of all the on-street spaces. The inventory included a survey all the unused curb cuts [such as disused driveways] in its area, and the District persuaded property owners to abandon some of them to increase the number of curb parking spaces. The studies also estimated the net gains in onstreet spaces that could be achieved by converting wide streets to diagonal parking. Although the gains in spaces were often small, the diagonal spaces are convenient, and serve to calm traffic on streets that were unnecessarily wide.

The Mid-City District's consultant also measured the occupancy rates of curb spaces, and found a wide variation. The occupancy rate exceeded 100 percent on many blocks that do not have meters, and was below 50 percent on many metered blocks. The study showed that parking problems are extremely localized, and that meters can solve a shortage, but that prices need fine tuning. San Diego sets a single price ($1.25 an hour) for all parking meters in the city, and has the same hours of operation everywhere, regardless of variations in the intensity of parking demand in different areas at different times. The underuse of parking meters in the Mid-City District shows that this citywide uniformity is not an appropriate way to manage curb parking demand.

Big Changes from Small Change

San Diego's Parking Meter Districts show real achievements and even greater promise. Decentralizing control over curb parking revenue has allowed communities to make policy choices that respond to local priorities, such as landscaping, pedestrian convenience, better signage, and wayfinding. Making an area more pedestrian-friendly is a particular benefit of local control. Planners who work for neighborhoods rather for transportation departments do not automatically assume that pedestrians are merely drivers who have found a parking space.

an Diego has established a Parking Meter District Parking and Mobility Task Force, with representatives from city departments and the three Districts. The PMD staff effectively represent their communities' interests to the city, and they provide an alternative perspective to that of the city transportation engineers. The Task Force makes recommendations to the City Manager on such issues as the installation of parking meters, parking enforcement, signal timing, and the violation of parking regulations by city vehicles. Because of their expertise on parking issues, the PMD staff members can represent their communities from a position of authority, and their arguments carry considerable weight in discussions with traffic engineers and other city departments. The Task Force also fosters cooperation among the PMDs in experimenting with new parking and transportation policies. The Uptown District, for example, was the first to convert parallel curb spaces to angled spaces, and after seeing the results the other two Districts have also done so.

The revenue from curb parking has financed many significant improvements in the three Districts, and in 2003 the city increased meter rates by 25¢ to $1.25 an hour, in part because the benefits to the metered neighborhoods provided political support for the increase. Even more revenue would be available if the parking meter hours were extended to coincide with adjoining business hours of operation, but all meters in the city operate only from 8 a.m. to 6 p.m., Monday through Saturday. Parking demand is high in the evenings and on Sunday in both the Downtown and Uptown Districts, but curb parking is free and overcrowded.

Why haven't the Downtown and Uptown districts argued strongly to operate the parking meters in the evenings and on Sunday? One explanation is that San Diego's formula for distributing meter revenue reduces the incentive for PMDs to extend the meter hours in areas where the parking demand is high. The Downtown District, for example, would receive only 29 percent of the additional revenue. First, the city takes 55 percent and return only 45 percent of the additional revenue to the PMDs. The city distributes the meter revenue to the PMDs in proportion to the number of meters in each district; because the Downtown District has 65 percent of the city's meters, it receives 65 percent of the revenue returned to the PMDs or only 29 percent of the revenue created by increasing its meter rates (45% x 65%). The incentive to earn more meter revenue is even lower in the other Districts. The Uptown District receives only 12 percent of any additional revenue it generates (45% x 26%) and the Mid-City District receives only 4 percent (45% x 9%).

Why doesn't San Diego simply return to each District 45 percent of the revenue it earns? When the revenue-return program was established, the city collected meter revenue on routes that included more than one District, and there was no way to link the revenue to the District in which is was collected. The city therefore audited the number of meters in each district, and based each District's revenue on its number of meters. With the subsequent installation of electronic parking meters, however, the city's Parking Management Division has established a tracking system, with a unique number for each meter. The first digit of each meter number indicates which District it is in, and the revenue will in the future be returned on the basis of the actual meter revenue collected within each District. This new policy of returning to each District 45 percent of the revenue it generates will greatly increase each District's reward for increasing the number of meters, their hours of operation, and their rates.

The neighborhoods' growing interest and expertise in parking management may soon lead to substantial changes in San Diego's parking policies. In 2003, the City Manager appointed a task force with representatives from the PMDs, businesses, and other stakeholders to examine the city's parking management. They recommended shifting from a single meter rate throughout the city to rates that match supply and demand in each area:

The City's current approach of establishing time-limited areas with identical times and setting up all meters with identical fees does not effectively manage the varying demand for parking spaces... there is no one combination of rate and time that will meet the parking management needs throughout the City, and indeed there may be no one rate and time limit that meets the needs of even an individual community. . . Parking meter rates should vary and meters should be operated during the days and hours that require management of the supply. . . At some locations, metered parking provided at too low a rate may exacerbate parking and traffic impacts, while parking provided at too high a rate leaves metered spaces unused. Meters at different locations may have different rates (e.g., parking at a high demand meter location may cost $.25 for 5 minutes [$3 an hour] a while low demand meter might encourage longer term parking with $2 for 8 hours [$.25 an hour]). Permits may be provided to some users to park in otherwise restricted areas. Meters may be operated in evening hours in entertainment zones, and on Sundays and holidays in areas with high demand on those days.44

CONCLUSION: BUILDING BETTER BUSINESS DISTRICTS

Suppose American cities in the 1920s had chosen the parking policy that Pasadena and San Diego adopted for their downtowns in the 1990s. If they had charged the right price for curb parking and dedicated the revenue to improve the downtown, the merchants and property owners who benefitted from the revenue would have been less inclined to recommend free parking. The right prices would have made the scarce curb spaces available to customers, rather than to commuters who parked all day in front of the stores where they worked. By creating a few vacancies, the right prices would also have eliminated cruising for parking on downtown streets, and thereby reduced traffic congestion. Public transit would have run faster, and the higher speeds would have reduced both the transit companies' costs and the riders' fares. With higher speeds and lower fares, public transit would have been more competitive with the automobile. And with less traffic congestion and better transit service, the central city shopping district would have been more competitive with the suburbs. Instead, cities began to require off-street parking everywhere. We now expect to park free at both ends of every automobile trip, and we live with the resulting traffic congestion, urban sprawl, and air pollution.

Older business districts are like shopping malls without the free parking. Merchants may fear that charging for curb parking will drive customers away, but earmarking the revenue to pay for increased public services and amenities can mitigate these concerns and create the necessary political support for parking meters-the merchants will want revenue they produce. A few curb vacancies will make the business district a convenient place to shop, not merely a place where drivers can park free after they cruise long enough. Spending the curb parking revenue to finance public services and amenities that draw customers will also give merchants an incentive to support pay parking.

1. Who does receive the money that parking meters swallow, and how is it spent? In a survey of large cities in the US, de Cerreno (2002, 18) found that half the cities deposit the revenues in the general fund, while the others direct the funds to the city's Department of Transportation or to subsidize public transit. According to an earlier survey, 60 percent of all cities deposited their parking meter revenues into their general funds, and 40 percent deposited them into special funds that typically were used to provide public off-street parking (Robertson 1972). None of these revenue uses is so popular that voters want cities to charge higher prices for curb parking; politically, it is as if the money were incinerated. Most residents will place a higher value on the immediate, tangible benefit of free parking than on the possible long-run benefits of higher public services or lower taxes that would be made possible by charging higher prices for curb parking.

2. In Britain, earmarking is called "ring-fencing," as if a fence were put around the revenue to prevent its leaking out. This is a particularly appropriate description for a parking benefit district, because the revenue is earmarked is for any purpose in a specific neighborhood, not for a specific purpose (such as public transit or a tax reduction) in a whole city. Harrington, Krupnick, and Alberini (1998) found in a survey in Southern California that residents were more willing to support congestion tolls if the revenues were returned to the public as a tax reduction than if the revenue use were unspecified.

3. Simon Haworth and Ian Hilton (1982) summarize studies of the elasticity of demand for parking. All the studies show that the demand for parking is less elastic for shorter parking durations.

4.   Brown (1937, 53). Fogelson (2001, 299-302) relates the early debates for and against parking meters.

6.   If most consumers valued low prices more than convenience, thousands of products (such as pre-washed, pre-cut lettuce) would cease to exist.

11.   Section 17.68.025 of the Pasadena Municipal Code, available online at
< http://www.ci.pasadena.ca.us/cityclerk/municode.asp>.

12. This problem is an old one. Smith and LeCraw (1946, 21) comment on "the practice which still exists today in some communities: one merchant parking his own car at the curb in front of his competitor's place of business. This attitude still prevails among long-time parkers, for studies have shown a large percentage of vehicles parked for a full day to belong to employers and employees of business establishments within the same block."

14.   The Mayor appoints the seven members of the Advisory Board, subject to confirmation by the City Council < http://www.ci.pasadena.ca.us/commissions/parking_meter.asp>.

16. Pasadena calculates the full costs of the parking meter program. For example, the charge of $51,162 for personnel includes not only staff who collect the meter revenue, but also office staff for customer service and management. The charge of $34,425 for city abatements includes overhead for the City Manager, financial reports, and other general services provided by the city. The charge of $7,896 for rent is for a share of the office space occupied by the Transportation Department. The charge of $44,146 for cash handling includes the cost of counting the coins and armored car service.

17.   All the other streets in the district are also steam cleaned, but less frequently. The brokenwindows theory suggests that frequent cleaning is an important step to discourage litter and graffiti.

18. Finally, $39,000 (3 percent of the net parking revenue) remained after paying all capital and operating expenditures for additional public services in Old Pasadena, and was carried forward to FY 2002.

19. The fee was initially set low to promote new businesses in Old Pasadena, and was indexed annually by the Consumer Price Index. Because business is now booming, the City Council increased the fee per credit to $240 in 2003, increasing to $720 per year in 2005. The parking credit policy is available online at <http://www.ci.pasadena.ca.us/planning/deptorg/curplng/pkgcredit.asp>.

20.   Interview with Marsha Rood, June 6, 2001.

21. In contrast, a parking study in downtown Tempe, Arizona, found that 55 percent of the offstreet parking spaces were restricted to use by employees, and 32 percent were reserved for customers who were made to move on after they finished their business; only 13 percent of the offstreet spaces were available for public use. Because of these restrictions, the maximum occupancy of all spaces on a Friday evening-when parking has hard to find-was only 52 percent (Minett 1994).

22.   Section 17.33.060 of the Pasadena Municipal Code.

23.   Presentation at the Urban Planning Forum in the Pasadena City Hall Council Chambers on February 12, 2000, < http://www.ci.pasadena.ca.us/mayor/PolyzoidesSummary.asp>.

25.   Meyer, Mohaddes Associates (2001, vi). Old Pasadena's parking meters operate until 8 p.m. Sunday through Thursday, and until midnight Friday and Saturday.

26. Kaku Associates (1994, 12). The meter rate increased from 50¢ to $1 an hour in the 1980s, and was reduced to 500 an hour in 1994. Curb parking is free after 7 p.m. and on Sunday. In Chapter 14, I estimated that cruising for underpriced parking in Westwood Village creates about 70 percent of the traffic on some streets.

27. Kaku Associates (1994). The off-street occupancy rate was 44 percent at 10 a.m., 68 percent at 2 p.m., and 39 percent at 8 p.m. At the peak daytime hour (2 p.m.), 32 percent of the Village's parking spaces were vacant.

28. Section 9(E) of the Westwood Village Specific Plan. This specific plan was established by Los Angeles City Ordinance 164.305 (effective January 30, 1989), available online at <http://www.cityofla.org/PLN/complan/specplan/pdf/wwdvil.pdf>. See also the discussion in Chapter 5.

30.   See Chapter 6.

31.   Kurt Streeter, "Old Pasadena Thanks Parking Meters for the Change," Los Angeles Times, March 2, 2004.

32.   Kurt Streeter, "Old Pasadena Thanks Parking Meters for the Change," Los Angeles Times, March 2, 2004.

33.   "Parking Meter Revenue Allocation & Expenditure Policy," City of San Diego Council Policy Number 100-18, effective on March 4, 1997.

34.   Information about the Parking Meter District Program is available on the city's website at < http://www.sannet.gov/economic-development[business-assistance/small-business/pmd.shtml>.

35.   The City of San Diego Manager's Report No. 02-247, October 23, 2002.

36.   City of San Diego Manager's Report No. 96-221, October 24, 1996.

37.   The Uptown Partnership's website is < http://www.uptownpartnership.org/>.

38.   Uptown Strategic Mobility Plan, November 17, 1999, p.2.

40. Uptown Parking District Strategic Plan and Implementation Guideline, Phase 1, May 6,1999, p. 15. India Street has since been converted to diagonal parking. (Some cities now require drivers to back into diagonal spaces when parking so they will drive forward when unparking. This is safer than backing into the traffic flow when unparking, and it is much safer for bicyclists who share the roadway with cars.)

41.   San Diego Centre City Development Corporation, "Wayfinding Sign System Unveiled Downtown," May 18, 2000.

42. These provisions for the Centre City Planned District are contained in Chapter 10, Article 3, Division 19 of the San Diego Municipal Code. The code is available online at <http://clerkdoc.sannet.gov/Website/mc/MunicodeChapter10.html>.

43. Bonds that are backed by two or more revenue sources are called "double-barreled." Doublebarreled bonds used to finance public parking garages can be backed by both the garage revenues and the on-street meter revenues. The garage revenues are the first repayment source, and if they are insufficient the meter revenues can be used. Double-barreled bonds are used when the projected revenue stream is uncertain, and the added security of the meter revenues increases the security of the bonds.

44.   "Managing Parking in San Diego: Report of the Parking Task Force," (Office of the City Manager, 2004, pp. 2, 5, and 7).

45.   See Fulton and Weimer (1980) for a description of how they guided the proposal for parking permit districts through adoption and implementation in San Francisco.