New empirical evidence that parking minimums encourage sprawl

by Stephen Smith

Although we at Market Urbanism are big fans of Donald Shoup’s work on parking minimums, we have to admit that rigorous econometric evidence that parking minimums mandate more parking than the market would otherwise supply has been a bit lacking. Randal O’Toole at The Antiplanner quite rightly asks to see empirical proof that parking minimums are binding. Tyler Cowen appears to have found this proof, in the form of paper posted online very recently which seeks to determine whether or not non-residential developers in Los Angeles County build more parking than they would in the absence of minimum parking mandates. Here’s the second half of the abstract, emphasis mine:

[To] our knowledge the existing literature does not test the effect of parking minimums on the amount of lot space devoted to parking beyond a few case studies. This paper tests the hypothesis that parking space requirements cause an oversupply of parking by examining the implicit marginal value of land allocated to parking spaces. This is an indirect test of the effects of parking requirements that is similar to Glaeser and Gyourko (2003). A simple theoretical model shows that the marginal value of additional parking to the sale price should be equal to the cost of land plus the cost of parking construction. We estimate the marginal values of parking and lot area with spatial methods using a large data set from the Los Angeles area non-residential property sales and find that for most of the property types the marginal value of parking is significantly below that of the parcel area. This evidence supports the contention that minimum parking requirements significantly increase the amount of parcel area devoted to parking.

The study ends up finding that at least half of all non-commercial properties have more parking than they would otherwise choose, and that the excess can oftentimes be quite large.

In the aforementioned link, Randal O’Toole suggested that Shoup’s residency in Los Angeles might be biasing his research, since the City of Los Angeles is quite dense indeed. This study, however, uses a large dataset with data points from all over the County of Los Angeles, home to almost 10 million people, or over a quarter of all Californians. (Many more live in other dense areas, like San Diego and the Bay Area.) And in fact certain parts of the paper focus solely on suburban areas, and claim to be undercounting some of the denser areas where the discrepancy between what the market would choose and what the law currently dictates would be even greater. One example of properties that were dropped from the study were properties for which the FAR, or floor area ratios, regulations were even more restrictive in terms of density than the parking minimums, making marginal analysis impossible. These properties tended to be downtown, where the parking minimums are most likely to be binding.

I’d be interested to see if this econometric evidence changes The Antiplanner’s mind about which pro-sprawl regulations are relevant constraints on density and which are not. I will admit that O’Toole has far more patience with numbers and equations than do I, so I wouldn’t be surprised if he caught something that I didn’t, but to the extent that I understand them, the authors’ methods appear sound to me. I’ve e-mailed Randal and asked him for his opinion, and if he responds, I’ll let you readers know either here or in a new post.