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San Francisco Adopts Demand-Responsive Pricing Program to Make Parking Easier

By
Ben Jose
Tuesday, December 5, 2017

Today, the SFMTA Board of Directors took a key step to increase parking availability in San Francisco.

Approved by the SFMTA Board, San Francisco will be the first U.S. city to implement a “demand-responsive pricing” program on the city’s 28,000 on-street parking meters and to all SFMTA metered surface parking lots.

Two parking meters next to a grassy rise with the Bay Bridge in the background

The premise of demand-responsive pricing is simple: let’s use the basic economic principle of supply and demand to manage parking.

With demand-responsive pricing, San Francisco’s hourly meter prices could go up or down gradually, or even stay the same. These rate adjustments will be based on demand, happen once every three months and have a gradual increment of 25-cents an hour. All changes would be communicated to drivers and neighbors in advance and would be based on data that is available to all.

This decision comes after years of implementation and evaluation. As part of a federally-funded pilot called SFpark, the SFMTA successfully implemented demand-responsive pricing in 2011. This pricing methodology has been in effect for over six years at 7,000 meters, 14 SFMTA-managed parking garages and one SFMTA parking lot.

An evaluation of SFpark found that using demand-responsive pricing resulted in:

  1. Increased business for local businesses: Sales tax revenues rose over 35% in SFpark areas during the compared to less than 20% in the other parts of the city.
  2. Lower parking rates: Average meter rates were reduced by 4% (down $0.11/hour) in SFpark on-street pilot areas. City-owned garage rates went down by 12% (down $0.42/hour.)
  3. Decreased parking search time: Reported parking search time went down by 43% under the SFpark pilot.
  4. Decreased daily vehicle miles traveled: Reduced circling for parking led to a 30% decrease in miles traveled in SFpark areas, benefiting safety, easing congestion and reducing neighborhood pollution.

Now we know the question on most minds: "How much more expensive will parking become?"

Well, during the last SFMTA’s rate adjustment in the SFpark pilot areas we didn't change rates at 81 percent of the meters. That’s because those blocks hit the sweet spot of parking demand – well used, but not so full that customers and visitors couldn’t find parking. Furthermore, our financial analysis shows that expanding the use of demand-responsive parking pricing would be revenue neutral to the SFMTA. That’s because at most meters in San Francisco, the price of parking would go down or stay the same, not up.

Since demand responsive rates started with the SFpark pilot project six years ago, not one parking meter has reached the citywide cap of $8/hour, even in high-demand areas like the Financial District and Fisherman’s Wharf*. In fact, only a minuscule fraction - 0.04 percent - of San Francisco parking meters ever reached $7/hour as of December 2017.

Ultimately, demand-responsive pricing is about helping people find parking. For years, cities have struggled to find the right price for parking. When the price is too high, people don’t park at the meter and don’t visit local business. If the price is too low, no parking spaces are open and turnover isn’t just low at the curb, it’s low in local shops.

The demand-responsive model sets a clear pricing policy: charge the lowest rates possible without creating a parking shortage.

 

* As of February 2020, approximately 2% of metered spaces reach $8/hour at some point in the week.