Greater Greater Washington

Parking


To discourage building empty garages, unbundle parking

The DC Office of Planning (OP) wisely proposes eliminating most minimum parking requirements as part of the zoning update, but this does not affect developers who voluntarily build more parking than required and "bundle" it into condo sales or office leases.


Photo by jgrimm on Flickr.

This bundling leaves residents and workers with no option to save money by forgoing parking. Rules to "unbundle" parking in new residential and commercial buildings would ensure that genuine market forces govern development.

Excessive parking, whether by government mandate or developer choice, has tremendous costs to society. In The High Cost of Free Parking, UCLA Professor Donald Shoup called parking a "fertility drug for cars."

OP originally proposed setting parking maximums along with eliminating many minimums in the zoning update, but has now shelved the idea. OP still argues maximums have merit, but says that it's too difficult to set the right numbers without more work, which it still might undertake after the current zoning update is complete.

Setting maximums right is not simple. If proposed maximums are too low, developer pushback may jeopardize their survival. If they're too high, the standards are essentially useless, and developers will continue to build all the parking that they want regardless of whether the District's roads can handle the traffic resulting from this "fertility drug."

Minimum parking requirements distort the marketplace. Nixing them would remove this distortion, but other market distortions and subsidies remain. For example, parking is a tax-exempt fringe benefit the government allowsand even encouragesemployers to provide. If rules required users to pay for their own parking without passing its cost off to others, developers would have a strong incentive to "right size" parking instead of oversupply it.

OP has taken the first key step in discouraging parking oversupply by forbidding developers in Planned Unit Development (PUD) projects from building excess parking and then just leasing it to outside parties. An additional, even more effective strategy would be to forbid bundling parking costs with unrelated charges, such as including parking in the cost of a housing unit or an office lease. In those cases, the parking costs are masked from the user, or paid for entirely by someone other than the one making the choice to drive and park. When users pay directly for parking, they demand significantly less of it.

Legislation would ideally apply these policy changes to all parking throughout the District. However, the politics may be more manageable to start with the zoning code rewrite, whose rules will only apply to new development. There is also a good policy reason to take this approach. Parking is often oversupplied because there are very few limitations on its use. By constraining the use of new parking spaces, developers would build fewer of them.

How could this work? Rules could require unbundling parking. The details would vary between office, retail, or housing use. All parkers would pay directly for parking, or get money back for not parking, but the nature of the charges would differ by building type.

  • In multi-unit housing structures, except where parking is physically connected to only one unit, the developer would make parking available at market rate separate from the cost of the housing.
  • For office buildings, employers could provide a parking benefit, but then must also give employees the option to instead receive a transportation allowance (or "cash-out") of equivalent value. This could take the form of tax-free transit, vanpool, or bicycling benefits, for employees whose commutes make them legally eligible for such benefits, plus taxable cash. The total would equal or exceed the market value of the parking.
  • In buildings with retail tenants and parking, tenants would have to adopt and enforce a policy to charge market rates for parking for their customers. Retailers could give customers small discounts from market parking rates, but not more than 25% of the hourly market value of the parking.
A building's certificate of occupancy would require the owner to adhere to the standards (which would also need to be publicly displayed), and the Zoning Administrator could strip the certificate for noncompliance.

There is precedent for regulating on-site transportation accommodations through zoning: DC enforces bicycle parking standards this way. By eliminating the benefits to developers of oversupplying parking, developers would become much more judicious about building in parking that may not be used and whose costs would only drag down the project's bottom line.

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I am having a hard time seeing where there is an "oversupply" of parking and how it is supposedly detremental to the city at large.

Commercial building owners build parking at their own expense and either rent it or provide it free of charge to their tenants. They do so because it is expected. This parking, for the most part is never accessible to the public at large. The public doesn't subsidize this parking and the revenue from this parking is taxed at the cities benefit. Why and how is this somehow detrimental to the city?

Residential developers build parking because the majority of people demand it, either as an add on that they can rent or buy. To most, renting or buying in a building that didn't provide the option for parking, would be as distasteful as not having a laundry machine in the unit. It is one of the first things people look for.

Take Highland Park apartments whose front entrance is 75 feet from the columbia heights metro entrance. Ever been in their parking garage? Anecdotally, it was atleast 75% full on the Wednesday night I was in there and it is all tenant vehicles. They don't rent by the hour. One would think that the folks paying a hefty premium to live literally on top of the metro would be the first ones to go without vehicles, but it isn't the case.

Same goes for Kenyon SQ Condos across the street. They both built parking facilities and either bundled the cost in or sold the parking seperately and their parking garages are full. How can this be if the OP is correct? Shouldn't their garages be empty?

by Parking on Oct 22, 2012 12:49 pm • linkreport

This strikes me as a "one-size-fits-all" sort of policy that is inappropriate in this city with tremendously varying density. On the one hand, there is K Street and its parking problems; on the other, there is the New York Avenue Walmart, with its totally different problems.

Compelling retailers to charge market rate for parking for buildings way out on NY Ave or Skyland just ain't gonna fly.

by goldfish on Oct 22, 2012 1:02 pm • linkreport

Surely the solution to market distortion is not further distortion? Is the simplest thing not just to treat free employee parking as a taxable benefit?

by renegade09 on Oct 22, 2012 1:06 pm • linkreport

This is an excellent post on an extremely important topic.

One additional benefit of unbundling parking is that it makes inclusionary zoning work better. In current circumstances, inclusionary zoning runs into trouble in expensive condos because moderate-income owners have trouble paying high condo fees. This problem can be resolved by having the condo association retain ownership of the parking and charge a high monthly rent for spaces. The parking revenues pay much or all of the building's common expenses and the condo fee can be small or nonexistent.

by Ben Ross on Oct 22, 2012 1:13 pm • linkreport

What is really amazing is that cars are apparently so addictive we have to go zero tolerance on them, lest formerly "Car-free" residents discover the jobs of Wegnams runs.

by charlie on Oct 22, 2012 1:14 pm • linkreport

Sigh. To recap: Parking minimum rules cause troube. Makes sense. It is regulation that can go. But how can the solution be to replace a relatively simple rule with something way more complex?

Just get rid of parking minimums. Done.

by Jasper on Oct 22, 2012 1:15 pm • linkreport

@Parking: the city *does* pay for free private parking, albeit indirectly, because it cheapens the cost of driving with respect to other means of transports, thus incentivizing driving, which has implications on road capacity, which gets paid for by taxpayers. And developers don't provide it to renters for free; nothing is free. The cost of the parking is factored into rents, and, for retail establishments, eventually passed on to customers.

by Andrew Pendleton on Oct 22, 2012 1:20 pm • linkreport

A natural complement to erasing parking mins. Build the parking you think you can sell to your residents, without obscuring it within total purchase price. Whether or not the theorized drop in parking use happens, giving users some visibility into the variable costs of behavior, giving them flexibility and even some incentive to save money by reducing/forsaking, and assigning costs to those taking the benefits, are all good things.

by darren on Oct 22, 2012 1:38 pm • linkreport

This is a solution in search of a problem. When it's possible to make a buck by 'unbundling' parking, businesses do that. That's why you always have to pay on top of your rent to park at your apartment complex. There is no market incentive for businesses to over-provide parking...I just don't believe it goes on much.

by renegade09 on Oct 22, 2012 1:54 pm • linkreport

Agreed, parking minimums should go...but the only way to encourage developers from including a huge supply of parking in their projects is to fund reliable public transit in the city. I would forgo car ownership indefinitely if metro/metrobus got me where I needed to go at reasonable headways. It doesn't, so you can bet my next condo will need to have garage parking.

by dcredhead on Oct 22, 2012 2:06 pm • linkreport

Thanks for the post. This is a good approach to internalizing the cost of parking so that users can buy how much they want but we avoid cross-subsidizing or over-consuming.

by Cheryl Cort on Oct 22, 2012 2:15 pm • linkreport

@darren I strongly agree with that. The first and most important step is to show people that they are paying for parking. Even if it were required to be itemized out without the option to opt out of paying the fee, it shows that there is a cost. Therefore, people realize it costs more to drive / offer parking then they thought. I do also strongly agree with unbundling so that people have the option to not pay for parking.

@goldfish I disagree. Yes, there are differences between K St and NY Avenue. The market rates of the parking are different. However, in both locations there is a cost to the parking that should be transparently exposed so that users have options and can make choices. I went to a concern a number of years ago at FedEx Field. The ticket listed that it included like a $20 or $25 parking fee. However, I took Metro there. Yet I still ended up paying for parking. This should not happen. If people are forced to pay for parking through such bundling, of course developers will build the parking. Unbundling changes that dynamic.

by Steve on Oct 22, 2012 2:18 pm • linkreport

Government policies that distort parking is one thing, prohibiting free-market approaches such as bundling or subleasing spaces is another.

Bundling the spaces has significant efficiencies. It means that a building owner can guarantee parking to a new tenant because the space is not already committed, and for the tenant, there is no need to arrange for parking separately. In a regime without bundling, buildings will either be limited in offering parking to tenants who want it or will have to overbuild parking to make sure there is enough "max" capacity for when tenant demand increases.

Also, if a retailer wants to subsidize parking in order to drive sales, why should there be interference with that? Stores provide subsidies on various things to drive sales (start with credit card users)--why prohibit only this one, particularly when the cross-subsidy is relating to private property, not government provision of parking.

by ah on Oct 22, 2012 2:19 pm • linkreport

Is this really an issue for new residential (condo) buildings, or any apartment buildings? I know when I bought my condo downtown in 2006, I paid for the deeded parking space separately, and pay a separate condo fee each month for the space. Nearly everyone I know who bought in the district had a similar situation. Also I've never lived in an apartment building that didn't charge separately for a parking space. It appears, to me at least, that this is a solution in search of a problem.

by Annon on Oct 22, 2012 2:32 pm • linkreport

Let's see if I correctly follow the author's logic (or the lack thereof) here parking minimum should be eliminated because they distort the market (makes sense so far) but parking maximums are a good idea (and they don't distort the market, how exactly?) as are regulations to prevent developers from including parking with residential and office units (which also distorts the market) and we should even go so far as to prohibit retailers from offering free (or even too steeply discounted) parking to their customers (wait, what?).

I think I get it, we should let the market determine the correct amount of parking at a given location and how much it should cost, unless market forces dictate more plentiful or less expensive parking than Mr. Greenberg feels is appropriate in which case the government intervene. Makes total sense.

by Jacob on Oct 22, 2012 3:32 pm • linkreport

My impression is that some private unbundling takes place - people who get a bundled spot and who choose to live carfree often rent the spot out via craigslist or whatever.

OTOH some HOA's in the suburbs have rules that BAN the grey market in parking spaces (if you get two free spaces and have one car, you might want to rent your space out - instead under the HOA rules it becomes in effect a free guest space for whoever needs it). I would love to see such rules outlawed, but I'm not holding my breath - at least not in FFX county.

Renegade is correct - the best approach would be to change the tax treatment - but thats not in the local govts control.

by AWalkerInTheCity on Oct 22, 2012 3:32 pm • linkreport

Parking is a very poor use of space (compared to e.g. apartments or offices) that has been subsidized through all sorts of tax, zoning and other treatments. It leads to car-less people to subsidize those with cars. Forcing unbundling requires the market to value the parking separate from other amenities. This should lead to the optimal use of the space.

Having broad taxes to subsidize something is appropriate if subsidizing a social good, and/or for which it is difficult to efficiently tax (e.g. public education, roads, police). Parking is neither.

by SJE on Oct 22, 2012 5:07 pm • linkreport

1. Why do Section 8 projects include free parking?

2. Developers will want some parking in any building over 6 stories as a concrete foundation for the concrete building has to be excavated anyway.

3. Neighbors will be loathe to ever accept parking-free new buildings if those buildings can get into Residential Parking. New buildings in commercial zones should absolutely not be allowed into neighborhood RPP.

by Tom Coumaris on Oct 22, 2012 5:27 pm • linkreport

@Tom Coumaris Office space can and is built below ground. I've worked in buildings with offices 1 and 2 stories (and even 3) stories below ground. I've seen restaurants and bars that are a story or 2 below ground (though with a ground level entrance). There are concept designs about how to bring natural light to below ground floors. No reason the below ground has to be used for parking.

by Steve on Oct 22, 2012 5:38 pm • linkreport

@steve: Yes, there are differences between K St and NY Avenue. The market rates of the parking are different. However, in both locations there is a cost to the parking that should be transparently exposed so that users have options and can make choices. I went to a concern a number of years ago at FedEx Field. The ticket listed that it included like a $20 or $25 parking fee. However, I took Metro there.

Nobody is going to take Metro to the Walmart on NY Ave, because there is no stop there. Since everybody must drive, the only point of making those customers stop and pay for parking is to hassle them for driving. These business must provide parking to customers, or lose out to the suburbs.

I am sure you do not intend to handicap DC business compared to the suburbs ...?

Fedex Field? Hah -- parking is a well-known and hated revenue "enhancer" for Dan Snyder. Just review the many highly entertaining articles about this in the City Paper, how Mr Snyder had laws passed to line his pockets. So you managed to get there via Metro: Bravo. But this is not a foundation for land use policy.

by goldfish on Oct 22, 2012 5:53 pm • linkreport

"Nobody is going to take Metro to the Walmart on NY Ave, because there is no stop there. "

There are charges for parking at Skyline in Baileys Crossroads in Fairfax, which has no metro stop. Its a very dense place, and you can get there by walking (esp if you live in the complex) or by bus (or in theory by bike, but its not particularly bike friendly).

I am not saying the govt should get involved in retailers parking policies (I am skeptical of that myself) - but I do find it odd that you think metro rail and driving are the only ways to get somewhere - I thought you were in the "buses are a fine substitute for rail" camp?

by AWalkerInTheCity on Oct 22, 2012 6:00 pm • linkreport

@goldfish Parking does not need to be bundled with the store merchandise cost to make the business competitive with businesses outside of DC. The Walmart should have a cost to its parking. Maybe it's $1/hr (give or take) and not $8-10/hr, but there still should be a transparent cost to parking. This is similar to bundling luggage with plane tickets. I've heard my relatives complain about airlines who "charge" for parking when in reality all airlines charge for parking, it's just whether you automatically "pay" for luggage vs it being added on after your ticket. Let the market take over by requiring transparency. The average person has no idea of the staggering costs of driving that are paid and thus makes uninformed, unincentivized decisions.

by Steve on Oct 22, 2012 6:01 pm • linkreport

While I'd like to see parking minimums go, parking maximums seem unnecessary. It will be a learning process for developers to learn how much parking is truly necessary, but the sheer cost of building parking on high-value land should minimize the amount of parking they build, when they're not required to build it. Sure, in communities where land is cheap and they're trying to promote better streetscapes (i.e., limited front-of-the-lot parking) and more use of alternative transportation, that might make sense. But in a city like DC, where every square foot counts and the developer is unlikely to see a return on structured or underground parking (according to Northwestern, $20K cost for a garage spot and $30-40K for underground), it appears that the market will eventually take care of itself, should minimum amounts of parking not be required. My friends who bought parking spots in their buildings, in valuable areas, are regretting that choice, by and large. Most of them don't own cars, and have now realized that they're not going to see a return on their investment, even if they rent the spot. And guess what, Parking, a handful of those people live in the big Columbia Heights developments. Sure, the cars might *appear* to belong to tenants, but at least some of them are being used by people who rent the spot from the owner of the unit, but don't live in the building. They thought the parking spot was a good investment they could rent out, and are now realizing fewer and fewer people want parking (so they won't be able to sell it easily when they move) and the rent won't cover the purchase cost for over 25 years. Oh, also, the purchase cost likely didn't cover the cost to build it, and, in the absence of minimum parking, so much parking probably would not have been built.

by Ms. D on Oct 22, 2012 8:59 pm • linkreport

@Steve: The development I am using is on the corner of NY Ave and Bladensburg Rd. I repeat: nobody will walk here for many, many years.

It makes good business sense to provide some inexpensive things gratis that are necessary for the transaction. Restaurants do not charge for napkins, hotels do not charge for soap, repair shops do not charge for parking, department stores do not charge for advice on one's appearance, tv makers do not charge for batteries, etc. There are only two exceptions: shopping bags in DC and baggage on an airplane. Both of these are much fretted over and just like a labor strike, can undermine customer good will and support -- which is why they are gratis.

You do not need to convince me; businesses in the outer reaches of DC will point out that this will handicap their ability to stay even with suburban competitors. Why shop at a DC Walmart when 9 minutes away there is another that does not charge for bags and parking, but has the same prices? Ultimately it will hurt tax revenues.

by goldfish on Oct 23, 2012 8:30 am • linkreport

@Ms D: +1.

by goldfish on Oct 23, 2012 8:31 am • linkreport

@AWitC: I do find it odd that you think metro rail and driving are the only ways to get somewhere

It depends on how much one needs to carry to or from when one gets there. A baseball game, a few souvenirs; work, a briefcase and maybe lunch; a movie, nothing. On the other hand: day care, one's children, their lunch and daybed; a grocery store, food for a family for a week; a lumberyard, 2x4s and an 4x8 sheet of plywood and drywall; etc. Obviously one may take a bus or metro to the former, but pretty much only drive to the latter. Note that while it is possible to take the metro to a daycare or a grocery store, it is mighty inconvenient and most people do not do it.

by goldfish on Oct 23, 2012 9:25 am • linkreport

sure, there are things where a car is a great convenience. But for all those things where transit is inconvenient, metro rail and bus are equally inconvenient, are they not?

I was responding to this

"Nobody is going to take Metro to the Walmart on NY Ave, because there is no stop there. "

Which seems to imply that IF there were a metro stop there, some people would take metro, and unbundling the parking might make sense. But that in the absence of a metro stop (I presume you mean a metrorail stop), no one will take transit.

That sounds like the argument of a rail snob who ignores teh potential of buses, which does not seem consistent with the anti H street streetcar position.

by AWalkerInTheCity on Oct 23, 2012 9:35 am • linkreport

Ultimately, the wisdom of bundling of not bundling depends on whether residents have strong preferences that the spaces only be occupied by other residents.

Bundling makes it possible to largely limit occupancy of the spaces to other residents (though enforcement may be impractial for really high value spaces). Unbundling makes it inevitable that spaces must trade freely to nonresidents.

Unbundling usually induces economic efficiency--except for when collective action produces a common good. The obvious question is whether residents are---collectively--willing to pay more for unbundled or bundled spaces. Until that is assessed, the arguments pro and con are just speculation.

In the case of retailer space, one must also recognize that many consumers are in some sense irrational about parking (and gas prices). Having to pay $1 for parking will deter people from patronizing a store where they are likely to save more than $1. For a place like the planned Walmart, regulations requiring convenient bike parking and safe pedestrian accommodations are more productive minimum fees for parking.

by Jim T on Oct 23, 2012 9:52 am • linkreport

I suspect "Parking"'s comments about well-utilized parking facilities at the Highland Park and Kenyon Square multi-family buildings in Columbia Heights are invalid because its likely that the number of parking spaces provided at each of those buildings is quite small compared with the number of residential units. A more interesting comparison is the large Van Ness complex adjacent to the Van Ness Metro. It was constructed well before the opening of the Red line and has a massive amount of resident parking. In the last four years the market price for car-less owners to rent their parking space has fallen from $120 a month to around $80. The demand for parking spaces has clearly fallen in Van Ness as residents own fewer cars and take advantage of good bus and rail service.

by Mr. Transit on Oct 23, 2012 11:21 am • linkreport

"When it's possible to make a buck by 'unbundling' parking, businesses do that."

I don't think you understand the purpose of bundling. The purpose of bundling is to provide more than a customer wants. See, for example, your cable/satellite TV bill.

"Government policies that distort parking is one thing, prohibiting free-market approaches such as bundling or subleasing spaces is another."

Bundling isn't a free-market approach. Forcing a person to buy something he doesn't want to is the opposite of a free-market.

"One would think that the folks paying a hefty premium to live literally on top of the metro would be the first ones to go without vehicles, but it isn't the case."

When I lived in a complex 1/4 mile from the White Flint station, I didn't sell my car. But I was far less likely to use it for my daily commute. The DC area is very difficult to navigate without a car, even if you can commute without one. If you want to go shopping, you need a car. If you want to socialize, you need a car. But it would still be a benefit to the traffic situation as a whole if more people were commuting by Metro.

by RickD on Oct 23, 2012 1:07 pm • linkreport

@RickD
I don't think you understand the purpose of bundling. The purpose of bundling is to provide more than a customer wants. See, for example, your cable/satellite TV bill.

This is not at odds with the idea that if companies thought they could make more by unbundling products/services (like parking), they would. The point of bundling is to make more money, not to give customers more stuff.

Bundling isn't a free-market approach. Forcing a person to buy something he doesn't want to is the opposite of a free-market.

It is a free-market approach - it's providing a product the company wants to provide. Should companies always have to give you whatever split out part of service you want? Should a dry cleaners have to offer you separate services for ironing your left and right pant legs?

The DC area is very difficult to navigate without a car, even if you can commute without one. If you want to go shopping, you need a car. If you want to socialize, you need a car.

Maybe in White Flint this is true, but plenty of us live in DC without a car and shop and socialize using our feet, bikes, and transit.

by MLD on Oct 23, 2012 1:39 pm • linkreport

MLD: but the bundling makes money for the developer because there are all sorts of subsidies for parking. Since those subsidies are outside the control of local zoning boards, unbundling removes the tax and regulatory preferences to parking space.

by SJE on Oct 23, 2012 1:55 pm • linkreport

but the bundling makes money for the developer because there are all sorts of subsidies for parking. Since those subsidies are outside the control of local zoning boards, unbundling removes the tax and regulatory preferences to parking space.

Not sure I understand you here. If you're talking about parking minimums and our overall auto-oriented policies, then yes, you're right, there are lots of subsidies for auto use. But some of those (like the biggest subsidy specifically for parking, parking minimums) ARE within the purview of local zoning, so I don't see why it is any harder to change that than to slap on another layer of regulation so that we are saying, "you must build X number of parking spaces AND you must charge for them even if neither of those is in your best interest." That's just stupid. Forcing developers to build parking spaces and then forcing them to offer a disincentive to own a space just seems silly to me.

If you want a better way to fix the problem, get rid of parking minimums - that will mean a larger variety of housing that bundles parking, provides parking at a separate cost, and doesn't have parking at all. And, to top it off, this approach doesn't appear to be an overextended reach into the business of private companies.

by MLD on Oct 23, 2012 2:12 pm • linkreport

Parking, parking everywhere.... But not a place to shop!

But DC rakes in 178M from traffic fines and makes me want to drop...

We should consider what this might do to future revenue...

if we continue to fight over whether parking to us is due...

by eylngrl on Oct 23, 2012 3:39 pm • linkreport

what.

by MLD on Oct 23, 2012 3:41 pm • linkreport

See I knew that would have you guys "flumoxed" :-)

by eylngrl on Oct 23, 2012 3:52 pm • linkreport

I actually suspect that most developers would actually like to provide less parking that parking minimums would allow - particularly for those projects near metros that are likely to have a higher percentage of residents who go carless. In residential situations those parking spaces - even if they are sold separately - may eat into higher profits that can be made another way (or at least won't add to the cost of a project with parking that might then go unsold).

I don't know that getting rid of parking minimums completely and replacing it with the equally blanket figure of parking maximums is the answer. I know having one rule that can be pointed to regardless of situation is easier than 2 or 3 that can be manipulated but I think we are beyond the one size fits all approach we have going now.

by ET on Oct 23, 2012 3:55 pm • linkreport

There one was a free parking space
To which all commuters would race
But now there's a meter
So I leave my "beater"
At home where it's rusting in place.

by Jim T on Oct 23, 2012 4:02 pm • linkreport

Subsidies for parking:

TAX free parking is not taxed by anyone, yet is a service being provided in exchange for money, albeit bundled with the other use of the property. If you drive to work, and park, there is a federal rebate program. Its far less for transit, and nothing for bikes or walking.

REGULATION: zoning and building codes are relatively strict, while building parking is less so (especially if ground level). You are going to get asked lots of questions about the height of the roof, but very few if any about the parking lot.

ASSESSMENTS
There may also be cost advantages. e.g. if you are assessed according to the average value of improved land, an undeveloped parkland does not count, then a large surface lot lowers the average value.

EXTERNALITIES:
Parking lots, until recently, did not have to comply with pollution requirements in the same way that buildings have to have dedicated sewer lines. They are treated the same as a roof, yet the runoff from parking lots is typically far more polluted than a roof.

by SJE on Oct 23, 2012 7:53 pm • linkreport

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