Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.” Read more opinion LISTEN TO ARTICLE 6:46 SHARE THIS ARTICLE Share Tweet Post Email

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Contrary to the practice in other big cities in the U.S. and around the world, parking on most New York City streets is free to all. But it’s an expensive sort of free. For one thing, finding a space often involves a long, emissions-spewing search, which isn’t unique to New York but is an especially chronic problem here. For another, there are the alternate-side parking rules.

The rules vary by neighborhood, but on east-west streets in residential neighborhoods of the city’s most densely populated borough, Manhattan, each side of the street generally must be vacated for 90 minutes twice a week to make way for street sweepers. The result is that many Manhattan car owners spend three hours a week sitting in their vehicles, initially double-parked across the street from the side that is about to be swept, then parked in their new spaces after the sweeper comes through waiting for the no-parking period to expire.

Car-owning households in Manhattan had a median income of $134,000 in 2017. Let’s figure for the sake of simplicity that this income is earned with 40 hours of weekly labor, which comes to a rate of $64.42 an hour. At three hours a week of parking duty, with the 38 weekdays this year during which the parking rules are suspended due to religious or other holidays subtracted out, that comes to $8,581 a year.

This may exaggerate the cost, since on-street parkers in Manhattan probably have lower incomes than garage parkers, and from the looks of it lots of them are getting work done as they sit in their cars. Some may also attach value to the time they spend reading quietly or chatting with fellow parkers — and we know from Calvin Trillin’s classic novel of Manhattan parking, “Tepper Isn’t Going Out,” that some people relish the game of finding a space. So a better measure of the cost of street parking in New York may simply be how much people are willing to pay to avoid it. Garage fees vary a lot by neighborhood, but I think it’s reasonable to say the Manhattan average is somewhere around $500 a month, or $6,000 a year.

Another way to get at the cost of parking is to estimate what that space would be worth if put to another use. Charles Komanoff, a New York City economist and environmental activist, has estimated the cost in terms of the added congestion of blocking a lane-foot of midtown Manhattan street at $140 per month. A 17-foot parking space (the average car is 14.7 feet long) in midtown thus imposes a cost of $2,380 a month, or $28,560 a year. “For a prosperous residential neighborhood,” Komanoff guesstimated for my benefit, “it’s less than half but more than a tenth of that.” The midpoint of that range is $8,568.

Finally, I took the average price paid for a square foot of developable land in Manhattan in 2018, $684, according to the Real Deal, and multiplied it times 119 square feet (17 times 7) to get a price per parking space of $81,396. Bankrate tells me that a 30-year mortgage of that size at 3.625% interest would (with property taxes included, because they should be, right?) cost $511 a month, or $6,132 a year.

These calculations were far from scientific, but the narrow range of results they delivered makes me think that a street parking space in Manhattan may really be worth somewhere between $6,000 and $8,500 a year. Expressed that way it sounds pretty exorbitant, but it’s actually less than a dollar an hour. It’s also quite relevant right now because some city officials in New York — not the mayor, mind you — are starting to broach the idea of charging for parking on residential streets, and/or issuing permits to residents that favor them over other parkers.

The new congestion fee for driving in the lower half of Manhattan that’s supposed to go into effect by the end of next year is one reason for this interest, with those living north of the 61st Street boundary worried that their neighborhoods will be overrun with outsiders looking for a place to park. The growing number of parking spaces being repurposed for protected bike lanes and other transportation innovations is another. There’s the long-standing reality that it’s just really hard to find a place to park in New York City — studies conducted in 2007 found that 28% of those driving in SoHo in Manhattan and 45% in Park Slope, Brooklyn, were looking for a parking space. And thanks to the work of University of California at Los Angeles economist Donald Shoup and others, there’s a growing realization that failing to price parking fairly has all sorts of costs for cities beyond just the foregone revenue.

Still, I doubt many New Yorkers have thought through just how expensive a residential parking fee would have to be to make it much easier to find parking. Well, Manhattan Borough President Gale Brewer has an idea, thanks to a helpful little report that her staff put together last month on parking policies in seven cities, five in the U.S. and two abroad. Four of the U.S. cities, plus London, charge a nominal annual fee for residential permits (although in London the fee at least goes up with vehicle emissions) and allow multiple permits per resident. The general result is that there are more permits than there are spaces, and it remains really hard to find parking in densely populated areas. In less-dense residential neighborhoods the permits mean locals can always find a space, but in San Francisco, city officials worry that this “may be inducing further vehicle ownership.”

Portland, Oregon, has a similar system in most of its neighborhoods, but has reported positive results from an experiment increasing charges and limiting permits in high-demand areas. In Stockholm, there’s a maximum of one permit per resident, with fees ranging from $374 a year in an outlying neighborhood to $1,372 close to downtown and a sense among locals that street parking is “a bonus provided to residents, not an obligation that the city must provide.” As Brewer put it in the conclusion to the report:

Portland’s Northwest District serves as a useful example; here, a neighborhood with a density that pales in comparison to some of New York’s under-discussion neighborhoods has made some progress, yet also struggled to curb parking demand at the current price of $195 for the first permit (and $390 and $585 for second and third permits). For New York to properly handle excess parking demand, the price of permits may need to be several, several multiples of Portland’s Northwest District prices.

How about … 30 times more? It wouldn’t need to be that high in all the boroughs, or even the northernmost parts of Manhattan. Provisions would have to be made for those who can’t get around without a car, and contractors and others who aren’t residents but need a place to park. But in a borough where fewer than 25% of households have cars, and those that do are almost twice as affluent as those that don’t, giving away for free something that appears to be worth more than $6,000 a year doesn’t make a lot of sense.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.