Case Study

City of Santa Monica – The Hidden Cost of Free Parking

Evaluating the Economic Impact of Free Parking Initiatives

Who’s Involved

Henry Servin | Parking Manager for the City of Santa Monica

Customer Takeaways

Free parking devalues the inventory. Parkers are more location-sensitive than price-sensitive. Paid parking helps to manage the supply and to maintain effective turnover for nearby businesses. When merchants say that there isn’t enough parking, that it’s always full, re-evaluate your rates to create turnover.


During the COVID-19 pandemic, municipalities and businesses across the country faced a 50-70% drop in commuter parking activity and visitation. During the 2020 holiday season, the City of Santa Monica tested a free parking initiative to boost economic activity amidst the significant pandemic decline in commuter parking and visitation. The city utilized ParkHub’s Smarking BI tool to analyze the effects of this program and guide future parking management decisions.

The Challenge

Stimulate local economic activity and increase downtown visitation.

Maintain parking revenue and the availability of parking spaces for residents and visitors.

Track data that would drive insight into the success of the initiative.

The Solution

Pilot Program for Free Parking

The city enabled free parking at parking structures 1 through 6 and maintained paid parking at structures 7 and 8 to see if parkers shifted to take advantage of the offer. The city kept its gates active, and each visitor had to pull a ticket for entry and return it upon exit. The program was active between December 10-25.

Data Tracking with ParkHub’s Smarking BI

ParkHub’s Smarking BI solution was used to track and analyze the program’s impact. To understand behavior and economic outcomes, we compared free and paid parking structures. A year-over-year (YoY) transaction analysis revealed the program’s results.

The Results

Free Parking Doesn’t Pay

The data revealed that the free parking did not significantly shift parkers from paid structures, indicating that location convenience outweighed cost considerations. The analysis showed only a slight change in overall visitation, with a marked YoY transaction loss during the peak holiday period.

Despite free parking at structures 1 through 6, the paid structures of 7 and 8 retained approximately 10% more transactions year over year. The city lost approximately $128,000 in revenue during the program.

There was an insignificant change in YoY loss in transactions from December 10-22. Between Dec 23-25, parking structures 1 to 6 suffered a YoY loss in transactions of 64.94%, while parking structures 7 and 8 observed a loss of 55.36%.

Table displaying parking transactions by location before, during, and after the program

Compared to 2019, there was a 16% increase in the proportion of transactions for 90-minute parking (free regardless of the holiday parking program). The proportion of parkers who stayed from 90 minutes up to the daily maximum rate of 5.5 hours declined. There was a slight increase in transactions over 5 hours, likely due to an increase in construction workers from nearby projects.

Table displaying parking duration by location for the same time period in 2019 versus 2020

In Conclusion

The initiative demonstrated that free parking did not drastically alter parkers’ behavior or significantly boost economic activity. ParkHub recommended that the city maintain its paid parking for revenue reasons and to optimally allocate parking resources for visitors and residents. The insights gained through ParkHub’s Smarking BI will guide future decisions on parking management and economic stimulation strategies.

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