Parking rate policy needs 'sorting out'

Parking rate policy needs 'sorting out'

The Jakarta city administration is involved in a dispute over
parking fees with private parking operators, with the former
threatening to close down the booths and equipment of defiant
operators on May 22, allowing private vehicles to park for free.
Senior lecturer in transport engineering at the Bandung Institute
of Technology Willy Tumewu takes a closer look at the issue.

BANDUNG (JP): A vehicle is generally more often stationery
than moving, either at home or one's destination. When a vehicle
is parked at a destination other than the home, what services are
we entitled to when we pay for parking?

Parking can be categorized as on-street or off-street. On-
street parking fees are supposed to contribute to local
government revenues; off-street parking is organized by the
private sector, and, subsequently, should the revenues be
taxable?

Basically, a parking fee covers the rent of a space in which
to leave a vehicle for a certain period, either with or without
the help of an attendant, and with various levels of attendant
service. But, terminologies like valet parking and secure parking
are supporting the misconception that a parking fee covers
security.

As both on-street and off-street parking fees affect the
general public, the local government may assume that it has the
right to control both in the interest of the general public.

But, parking can also be regarded as an optional service for
vehicle users for which they have to pay accordingly, when they
decide to park there.

A parked car needs a stall of 2.5 meters by 5.0 meters. When
alleys and ramps are added, then one car needs on average 25
square meters. Assuming that the cost of a multistory parking
structure is about Rp 0.5 million per sqm, the cost
of providing a standard parking space is about Rp 12.5 million,
excluding the price of the land.

At a basic rate of Rp 1,000 per hour for cars, one parking
space may generate some Rp 10,000 per day, or Rp 3.5 million per
year. This would only cover the operational and maintenance
costs, plus the cost of capital, but not any coverage for
security.

Surface parking on available land needs less investment; also
motorcycles are more space efficient and hence more cost
effective, but these form a small part. So, parking on its own
may not be a profitable enterprise at this basic rate.

When parking is provided as part of an establishment, the
appraisal should be on an integrated basis. For example, parking
as part of a shopping center is a necessary component without
which it cannot operate.

The cost and benefit of providing parking facilities should
thus not be appraised independently, and this applies to Jakarta,
where almost all off-street parking is provided by an
establishment.

The value of one parking space can be estimated from the
additional profit the establishment makes from providing one
additional parking space. With a profit margin of say 10 percent
and total average spending of Rp 50,000 to Rp 100,000 per parked
car, the profit or value of the parking space far exceeds the
cost of providing it.

Not surprisingly, as an attraction, the establishment may give
a parking voucher or some other token to its "preferred"
customers to cover the parking fee, and still make a profit. By
way of illustration, one downtown parking area requires a minimum
Rp 100,000 cashier's slip to be eligible for a normal parking
charge.

But, a nearby establishment can also benefit from the parking
space. It can simply give a, say, Rp 2,000 "discount" in cash to
customers who spend more than a certain amount to cover their
parking fees, and still make a profit, but without having
provided the parking facility.

Then there is free parking, which is sometimes used as an
attraction by an establishment, but this can also be exploited by
noncustomers, for example, as a transition stop before visiting a
nearby destination.

However, would an establishment forego an opportunity to
generate profits from its parking operation? When parking places
are scarce, or when customers have no other option, parking rates
can be raised without adverse effects on business. But is this in
the interest of the general public, especially when no nearby on-
street parking is available?

Furthermore, to charge parking for dropping off passengers is
not a fair business; for example, compare parking systems at
railway stations Gambir and Jatinegara, or airports Soekarno-
Hatta and Halim Perdanakusuma. The secure parking system tries to
overcome this by introducing a few minutes of grace period.

Parking fees can also be used as a traffic management tool. By
applying high parking fees in a certain area, it is expected that
visitors would convert to using public mass transport and hence
cause an overall decrease in traffic flow.

But, for this purpose the traffic authorities must have full
control over the number of available spaces for both on- and off-
street parking, and also on the level of parking rates.

Applying parking fees on an hourly basis, or which increase
progressively with duration of parking, is a means of
discouraging parking by commuters, which hence cause a reduction
in commuter trips by car, but without affecting business visits,
which normally need only a short parking period. Here the
authorities also need full control over the area.

An advance payment for parking, together with payment of the
annual STNK vehicle registration, should not be considered as an
option for Jakarta because of the limited supply of parking
spaces. There would be no incentive for road users to control the
demand for parking, and there would also be no incentive for
parking attendants to provide a service.

Also, parking is a commodity which can not be stored,
regardless of how many times a car has been parked before, when
there is no vacant parking space at the time of demand, a vehicle
will be refused the service, and the driver will feel cheated by
the system.

The private sector, which controls the off-street parking, is
arguing with the local government over legal matters and the
level of parking rates. It is not clear what the real issues are.
The public certainly prefers the lowest possible rates, but the
policy behind the rates should first be sorted out.