While we are were all laying on the beach on summer vacation, Ann Arbor introduced zoned residential parking in the neighborhoods immediately north of Huron Street. In June, City Council agreed to the action to counter an expected influx of cars from the 460 students living in the new North Quad. As a result, I dutifully trudged down to the City Service Building, handed over $50 for a year’s parking, and received a flimsy plastic decal to prevent Triangle Towing from dumping my Dodge Neon in an impound lot.

At first I was annoyed to have to pay for street parking after parking for free in that neighborhood for six years. But after some thought, I changed my mind. Ann Arbor deserves props for putting a price on its overused public asset of street parking in residential neighborhoods.

In fact, one major problem that I have with the new policy is that the city is not charging nearly enough. Also, the scheme unfairly subsidizes the ability of residents like me to park their cars on city streets at the expense of the needs of commuters and student residents of North Quad.

The fix to these problems is quite straightforward: Create an annual auction for neighborhood parking permits. This step would create a fair market rate for parking, ease the city’s chronic parking problems and cut automobile congestion. In addition, Ann Arbor will expand its revenue base, increase economic efficiency and encourage development of environmentally friendly forms of transport.

The city’s current parking problem is a simple Economics 101 homework exercise. Free on-street parking in many neighborhoods close to campus makes demand exceed supply — which is the reason it’s impossible to find a parking place during the day on streets in the Old Fourth Ward neighborhood around Catherine, Lawrence and East Kingsley.

Putting a price on parking will lower the quantity demanded. If forced to pay more, citizens will re-evaluate their options. Suddenly car-pooling, the bus or living closer to town might look more attractive than street parking. This in turn will reduce externalities associated with free street parking — heavy traffic, pollution and excess wear and tear on roads, all of which create a drag on the local economy.

But the problem is finding a proper way to set a price on parking. The current neighborhood system falls short for two reasons. First, the city vastly under prices parking. In the Old Fourth Ward, private parking spaces advertised on Craigslist over the summer ran from $80 to $100 per month, roughly 20 times greater than the current price of residential parking permits.

Second, the current residential parking system unfairly subsidizes car-owning residents in the neighborhood at the expense of non-car owners and others who might wish to park — notably commuters and the students living in North Quad, who live within 100 feet of the Old Fourth Ward across Huron Road.

Auctions would solve these problems and inequalities by forcing prospective parkers to decide how much they value parking and creating a free parking market. Divide the city neighborhoods near central campus into distinct parking zones to reflect differing levels of desirability. The seven current residential parking zones could serve as a basis for these divisions. Once a year, anyone who wants the right to permanent street parking on weekdays submits a bid to park for the next year in the zone of their choice.

For example, let’s say we have a yearly auction for the approximately 600 spaces that make up the Old Fourth Ward and North Central neighborhoods (yes, I counted them). If 1,000 people bid, the top 600 bids get parking, and the yearly rate is set at the price of the 600th bid. A lottery could break ties if necessary. The city could also issue exemptions for disabled drivers.

The auction would also create significant yearly revenue. For example, a reasonable back-of-the envelope estimate of the minimum winning bid might be $1080 (at $90 per month). That means that the Fourth Ward alone would generate roughly $650,000 in additional annual revenue for Ann Arbor.

The city could use these proceeds to create a permanent street-repair fund and reduce the need to ask voters for special funds every several years. Perhaps it could boost the regional Ann Arbor Transit Authority’s budget to improve mass transit links like the bus routes between Ann Arbor and Ypsilanti that are perennially under threat of elimination. Or the city could cut property taxes.

But whatever the city does with the extra revenues, Ann Arbor can burnish its reputation as an environmental leader, improve its revenue situation and stop discriminating against students by making coddled residents like me pay the true value of parking.

Patrick O’Mahen can be reached at pomahen@umich.edu.

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