Guest Column: Basic economic principles lacking in city’s parking plans

By Jim Phelps

How much would you pay for parking in the parking decks? Would you pay $53 a month? How about $80? That is what is being proposed by city staff. They call this “market rate.” Current market rate on city surface lots is $43 a month, proposed to become $70.

These are not market rates. No, this is what is called in economics a coercive monopoly price. Coercive monopolies are what government entities charge regardless of the demand for those services. However, coercive pricing only works when there is no other alternative for those services.

For example, in the 300 block of Mulberry across the street from The Rock River Times, is a private lot. At $40, it is $3 a month less than what the city demands currently, and will be $30 a month less than what the staff is recommending for next year’s budget. In my area of Seventh Street, there is plenty of private parking, much of it for free. Why would anyone pay for what they get for free?

This is the problem of government entering into a market where few for-profit enterprises make money. Rockford is not Chicago. Here, there is an abundance of public parking that is under-utilized. Funny enough, nearly doubling the price of the permit will do nothing to increase the demand for those permits.

Rockford is the one place I have lived where it seems no one has studied basic economic principles. When you have a surplus of a good or service, you have low demand at almost every price you set. When you have scarcity of a good or service, you have high demand at nearly any given price.

The city staff is treating the price for a parking space like it is the demand for gasoline. Gasoline’s demand is what economists call relatively inelastic in terms of price. That means that for gasoline, people are willing to pay any price for it because they need to go from A to B. You can’t substitute applesauce or beer for gasoline. State Sen. Dave Syverson, R-Rockford, thinks state representatives and senators should have a mandatory eight-hour class every year in economics. So should local units of government.

Just because you are new to the parking scheme, you get the sucker rate. If you come into a parking ramp at $53 a month, there is a high likelihood that someone parking next to you will pay significantly less because of a prior agreement with the city. Talk about a disincentive to live, work and play downtown. Talk about a disincentive to invest in these buildings like the Hanley building. I would hate to tell a prospective tenant, “Yep, your rent for this unit is $1,000 a month, parking not included.” “How much is parking?” “$80 a month — $960 a year.” Hey, that might be a good sales pitch for local Realtors. “Why rent downtown when you can buy a house cheaper elsewhere?”

City staff is recommending that ramp parking permits increase from $53 to $80 a month. That is unless you got a great deal like tenants of the former Gas & Electric/Camco building that now houses SupplyCore and the Workforce Investment Board for Boone and Winnebago County.

According to an article by Stuart Wahlin, “Local magnates squabble over ventures gone bad” ( in this paper in August 2009, the city gave $750,000 in TIF funds toward the project. Additionally, the city gave reduced parking in the Pioneer Parking Structure adjacent to this building.

It was revealed in the parking group meeting last week that the reduced parking rate for those 200 spots in the upper deck is $20 a permit per month from the regular rate of $43. That is a savings of 53 percent over the current rate and a savings of 71 percent over the proposed rate of $70. I don’t expect that Joe Average will get that rate.

There are many such agreements the city has entered into for property owners. The county pays just $22 a month for 320 ramp permits. Apparently, they lack pull with the city. Very few folks are currently paying the full rate. No wonder why the city expects a shortfall in parking revenues.

Here’s another interesting example of this: The Shumway Parking lot permit price is proposed to take a 30 percent decrease from $43 a month to $30 a month, primarily because the Rockford Area Arts Council, a not-for-profit, is adjacent to that lot. However, JustGoods, a not-for-profit retail store specializing in fair trade goods, is going to get a 38 percent increase on their adjacent surface lot. They must lack pull, too.

We cannot build Communitas, the spirit that we are all in this together as a community, if we continue to pit one group against another. No place I have ever lived has been this badly governed, apparently, on purpose.

Jim Phelps is owner of Phoenix Traders, 215 Seventh St., Rockford.

From the Sept. 4-10, 2013, issue

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