Dutch auctions could improve parking permits in DC
Nothing in urban life seems to be as contentious as on-street parking in DC. One answer may be a Dutch auction, which allows residents to set the price of parking, making parking more responsive to demand.
In DC, residential parking permits (RPPs) are sold to residents well below market rates, meaning people have an incentive to use more space than they may need. This restricts the supply of parking for everyone. And the city isn't making any more on-street parking spaces.
Unlike standard, or English, auctions, in a Dutch auction, prices start high and drop over time. When the price reaches a level that you are willing to pay, you submit your bid and the auction ends. In a modified Dutch auction, the auction doesn't end until the last item sells. At that point, anyone who bid higher than the lowest bid will get a refund for the difference.
Northwestern University uses this kind of auction for its Purple Pricing basketball ticket scheme. Like residential parking spaces, basketball tickets are generally similar, but certain kinds of both are worth more than others.
In Purple Pricing, sports fans visit a website or call a hotline to learn the current selling price for tickets. This price may decline as the game date approaches, but it will never increase. If the price goes down after you buy tickets, you'll receive a refund for the difference. This prevents fans from holding out until the last minute to buy tickets because they'll get the best price no matter what.
A parking auction could work similarly. DDOT would determine the number of parking spaces to be auctioned in each RPP zone. The agency could maintain the current, albeit flawed zones or adjust them. The important part is determining how many "items" each auction will have. The DC DMV would hold an auction with everyone living in a particular RPP zone who has a registered vehicle.
Auctions could open at the start of each year for new parking passes that take effect a month or two later. Initial prices for an RPP would be much higher than the expected final price, and they would lower by a certain amount each day. The DMV would also announce each day how many permits remain.
Let's say that on April 1, the price of a Ward 1 RPP is set at $500. To some people, $500 would be totally worth it and they would submit their bids. Or maybe they're willing to pay whatever the final price is and they want to get their bids in early to ensure that they will get a pass. But it's highly unlikely that the RPPs would sell out at that price.
On April 2nd, the price would drop to $400. Again, more people place bids, but there would still be plenty of permits left. By April 15th, the price goes down to $50, at which point the permits sell out. Since $50 is the clearing price, anyone who paid more than that would receive a refund for the difference.
Since each parking zone would have its own auction, the price of a parking permit would vary based on resident demand. It's likely that demand for parking in dense Ward 1 is higher than it might be in, say, suburban parts of Ward 5. So for places where demand isn't as high, DC could establish the current $35 price as a "floor" to ensure that price doesn't fall below that amount.
Unlike the current system, which issues passes for a flat fee regardless of demand, a Dutch auction accomplishes two things. It recognizes that parking permits have different values in different zones. And it allows resident demand for parking to set prices.
Since the Dutch auction would happen yearly, prices would fluctuate based on that year's demand for residential parking permits. If fewer people wish to park on the street in a certain part of DC, prices would drop. If more residents want to park their cars on the street, prices would rise. Allowing an auction to set the prices also helps depoliticize the parking process, taking price-setting authority away from politicians and bureaucrats.
What about residents who move into the District after the yearly auction takes place? If there aren't any more spaces, the DMV could simply forbid them from parking on the street. Or if there are any remaining RPPs, they could sell them. Residents frequently sell their cars, move out of the District or to another ward, so it's likely that some come available throughout the year.
A Dutch auction raises issues about equity, particularly for low-income residents who may not be able to afford permits or elderly or handicapped residents who may rely on access to a car. DC could provide some a tax credit based on income, age or disability to subsidize the cost of parking permits.
The current approach to RPPs, in which anyone can get one for a small, flat fee, is inefficient and inflexible. It also fails to recognize the finite amount of on-street parking spaces in DC. Holding a yearly Dutch auction for RPPs allows residents to decide how much on-street parking is worth to them, making more space available to everyone.
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