Greater Greater Washington

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Development


Businesses no longer want office parks, and that can mean more revenue for cities

Businesses are making moves toward neighborhoods that are accessible by transit and easy to walk around in. For cities, it's a smart financial move to view the change in preference as one that's here to stay.


Pike + Rose. Photo by Dan Reed on Flickr.

A recent story in the Washington Post covered a move by Merrill Lynch from a Montgomery County office park you can only get to by driving to the Metro-accessible Pike & Rose development on Rockville Pike. Though commercial lease terms are typically confidential, experts say Merrill Lynch chose to pay 40% higher rent for the new location, which is a five- to ten-minute walk to the White Flint Metro station.

This isn't an aberration. Just a few miles south of Merrill Lynch's office, Marriott is considering move its headquarters from a conventional office park in Bethesda to somewhere else in the region. The CEO told the Washington Post, "I think it's essential we be accessible to Metro and that limits the options."

This preference isn't just limited to two companies. A report in late 2013 found that 83% of the new office space under construction in the region is within a quarter-mile (a five-minute walk) of a Metro station. That is no coincidence.


Headquarters of Marriott International in a Bethesda office park. Image from Google Maps.

Local tax bases will shift

These trends are telling, and local leaders concerned about future budgets should take notice. Buildings like the one Merrill Lynch is moving into command higher rents and are more valuable to investors. And because cities and counties raise much of their revenue from real estate taxes levied ad valorem, meaning the tax is a percentage of the assessed value of the property, they mean more tax money.

Also, local governments often prefer office development to housing development since offices tend to pay more in local taxes than they use in services.

In Loudoun, for instance, the county claims that each new home costs the county $1.62 in added county services—schools, roads, sewers, etc.—for every extra dollar collected in taxes. Homebuilders say the cost is more like $1.20, but either way, each new house is a net cost to the county under its current tax structure. Communities with a healthy mix of commercial and residential development can provide excellent public services at manageable tax rates.

The moves of Merrill Lynch and Marriott as well as the Metro-proximity of new office space show the direction the office market is moving. If state and local governments want to attract and retain the offices of large Fortune 500 companies like Marriott and Merrill Lynch (a subsidiary of Bank of America), they need to plan for and support the types of mixed-use, walkable, transit-rich development companies seek and are willing to pay a premium for.

The future is already here

Fortunately, much of the infrastructure is already in place. The Washington region still has plenty of Metro stations that have not met their full development potential. Furthermore, the new development Metro spurs doesn't necessarily burden the existing infrastructure. In fact we found that car traffic in Arlington's Rosslyn-Ballston corridor declined while development boomed.

It's too early to tell whether leaders are fully aware of what it's going to take to attract commercial development. In good news, the Silver Line's expansion into Virginia has already sparked office construction in Tyson's Corner and the Wiehle-Reston East station, allowing the commonwealth and Fairfax County to expand and capture more economic activity.

Likewise, Maryland Gov. Larry Hogan chose to continue the Purple Line, an investment that will improve mobility and will create more places in Maryland that attract taxpaying office tenants. Montgomery County Executive Ike Leggett successfully pressured the state to reconfigure Old Georgetown Road near White Flint as a narrower complete street, not the wide auto-sewer the state had suggested.

But the region has made its share of mistakes, too. The cancellation of the Columbia Pike streetcar with no credible plan for any transit improvements ensures that new economic development will largely bypass that section of Arlington.

Creating neighborhoods that give residents and workers practical options to walk, bike, ride transit, or drive will improve the quality of life and also helps the jurisdiction's bottom line. Leaders who want to continue providing high-quality public services to residents without raising tax rates need to attract commercial tenants who are willing to pay higher rents and thus generate more tax revenue.

Leaders have a choice with limited funds: they can use public money to build new arterial roads and fail to spur economic growth or they can invest in the harder, but rewarding, transformation of places like Tysons and White Flint into the nodes that spur the economic development patterns of the future.

Parking


Montgomery won't make (some) businesses fund parking anymore

Builders in downtown Bethesda, Silver Spring, and Wheaton are now free to build as little parking as they want, without violating zoning rules or paying extra taxes. The change eliminates a major subsidy to driving and will help these suburban centers evolve into walkable urban areas.


Photo by BethesdaNow.com Staff on Flickr.

The new policy, enacted as part of the new county budget, is the result of the simpler, more modern zoning code approved a year ago. The rewrite of the zoning ordinance sharply cut the amount of off-street parking required near Metro stations, upsetting a long-established system for financing the county's public parking garages.

When the county first opened public parking lots, they were a way for stores in old downtown buildings to compete with new malls and their ample free parking. Meter rates were low and downtown buildings paid an extra "parking tax" to meet the expenses. Newer buildings with their own parking were exempt from the tax.

After Metro came to Bethesda and Silver Spring, the downtowns grew denser. But for many years the county kept the tax high to encourage the construction of as much parking as possible when new buildings went up. Unless a building met the parking requirement that the zoning code imposed on auto-oriented development far from Metro, it paid the entire tax.

The new zoning code recognized the downside of too much parking, and it lowered the parking minimums near Metro. When it went into effect last year, many buildings that previously paid the parking tax became exempt. This brought confusion at first, and then a recognition that the parking tax had lost much of its revenue-raising potential.

The new county budget solves this problem by setting the parking tax to zero, and making up the difference with other revenue. (The tax has technically not been abolished. If the county fails to pay back money borrowed to build garages, bond holders can demand its resumption.)

At work here is the interconnected nature of land use planning. Automobile-dependent development has a logic in which parking and highways create a need for more of the same. Once that cycle is broken, a new logic sets in. When things work well, as they did here, advances in livability and walkability beget more progress.

Parking


NIH says: Our scientists are too important to pay for parking or take transit

The National Institutes of Health (NIH) wants to expand at its Bethesda campus, but despite being on top of a Metro station, wants to build a lot more parking. Why is that necessary? NIH thinks its "high-ranking scientists" can't be asked to pay for parking or ride Metro in greater numbers like "regular people."

Sound unbelievable? Just listen to this:

The National Capital Planning Commission (NCPC) slapped down NIH at a meeting on April 2. NCPC has a policy defining how much parking is appropriate for federal facilities. At locations outside the core but right near Metro, like NIH, that level is one space per three employees.

NIH, however, currently offers one space per two employees. It wants to plan for 3,000 new employees and build new parking garages with 1,000 new spaces. That's 1:3 for the new employees, but doesn't bring NIH into compliance for the other employeees with NCPC's policy, which has been in place since 2004.

If, instead, NIH fully met NCPC's standard, it could remove 2,300 spaces even with the new employees, said Drew Morrison, aide to Councilmember Roger Berliner, who represents the area. Berliner and other local elected officials have asked NIH to meet NCPC's standard, so far to little effect.

Morrison said that the traffic from all the cars driving to NIH impedes economic development in downtown Bethesda. "Many property owners in downtown Bethesda are telling us right now that they can't attract new businesses to Bethesda precisely because of this traffic problem." Reducing parking and driving to NIH, Morrison said, would improve that situation.

At the meeting, Ricardo Herring, NIH's Director of Facilities Planning, repeatedly said that it was "impossible" for more NIH employees to get to work by transit. He said this is because many employees live in far-flung areas not near Metro (though he didn't really explain why driving to Metro parking, like at Shady Grove, is not an option).

Of course people drive if parking is free

However, NIH also offers free parking to every one of its employees and contractors. Small wonder that so many people drive when it's subsidized by their employer (and by Maryland, which has to pay for the roads).

Mina Wright of the General Services Administration pressed Herring on why NIH can't try charging for parking. Herring said that was tried in the Carter Administration, but "there was a major rebellion." Wright acknowledged that it might not be popular with everyone, but said that sometimes management has to do unpopular things.

Besides, it's not unreasonable to ask scientists of the National Institutes of Health to respect their impact on the health of people who live around them. Presidential appointee Elizabeth Ann Wright asked, "What does it say when we encourage our nation's top scientists to drive?"

Commissioners noted that the Bethesda Naval medical center, now called Walter Reed after the Army's facility on Georgia Avenue closed and moved in, is able to operate with a 1:3 ratio.

National Park Service representative Peter May said, "There are ways to achieve 1:3 at NIH. There is no doubt about it. Other agencies do it." NIH seems uninterested in trying.

Herring's dismissiveness irritated many commissioners, who ultimately voted to disapprove NIH's master plan. May said, "It seems apparent to me that the policy that NCPC has adopted and has been trying to communicate to NIH for ten years has not gotten through and not been communicated at high enough levels at NIH."

The board's recommendation is technically advisory, but chairman Preston Bryant pointed out that federal agencies rarely if ever directly flout NCPC's express will, and strongly urged NIH not to either.

Watch the juiciest 13 minutes of the video below, or the full thing here or by scrolling in the timeline. Watch Drew Morrison talk at 54:20, then Herring respond at 57:17, May at 1:01:25, and Wright bring up charging for parking at 1:02:42, which elicits some of the most jaw-dropping statements from Herring until 1:07:13 when they move on to talk about bollards.

Oh, and check out those graphics showing the Metro service at 9:46 near the start of the video. Where could they have gotten those from?

Parking


Bethesda's parking district is going broke while its most popular garage remains free

The fund that pays for parking garages in Bethesda may soon run out of money, Montgomery County officials say. The reason is simple: The county just built an expensive new garage, yet it continues to under-charge for parking on weekends.


The Bethesda Row parking garage is full and free. Photo by the author.

Montgomery County has special Parking Lot District entities to manage public parking in Bethesda, Silver Spring, Wheaton, and Montgomery Hills. Each one gets the revenue from meters along with a special tax that property owners pay if they want to build without the otherwise-required amount of parking. Each pays to maintain existing garages and lots and build new ones.

According to a report by county staff, the Bethesda district is in trouble. It will likely earn $21.7 million in revenue, including $13.9 million from meters, but spend $24.8 million.

The costs are so high for one big reason: the new underground garage at the corner of Bethesda and Woodmont avenues. There used to be a surface parking lot here, and a new mixed-use project has replaced it. But the county substantially increasd the number of public parking spaces at a cost of $80,00 per space, even though there are other public garages just a few blocks away which don't fill up.

Why is parking free on weekends?

One nearby garage does fill up: the garage in the middle of Bethesda Row, with entrances on Bethesda Avenue and Elm Street. This is one of the most popular since it is so close to the very busy Bethesda Row shops. Yet on a recent Saturday, I found it to be totally full. At the same time, it's free.

You pay nothing to park in Bethesda's garages on Saturdays or Sundays—if you can find a space. Businesses have resisted suggestions in the past to charge on Saturdays, at least. But the businesses are thriving, and most of all, the garage is so crowded some potential customers are getting turned away.

Unlike in the other districts, Bethesda does at least charge until 10:00 pm. But there's one simple step the county can take to increase revenue: charge on weekends at the most popular garages.

Maybe some suburbanites, so unaccustomed to paying for parking, will go to the mall instead. Though while there is also an Apple Store at Montgomery Mall, there are a lot of businesses in Bethesda Row that don't have counterparts elsewhere nearby. It just doesn't seem that Bethesda Row, one of the county's most thriving shopping districts, is anywhere near in danger of dying off or that a dollar or two to park should deter people from spending $50 for a meal or $100 for a pair of jeans.

Alternately, people could park for free at the farther garages and walk a shorter distance to the shops than they would have to if they parked at the mall.

All the space in the new garage might mean that the Bethesda Row garage will stop being totally full, but that still doesn't remove the value of charging. With the new spaces, more people will still be going to Bethesda, and using this infrastructure that cost a lot of money.

The fault isn't transit or smart growth policies

The report also tosses backhanded criticisms to county council actions that have used some of the parking district money for the Bethesda Urban Partnership, the local organization that promotes Bethesda, or transit service to and from Bethesda. But if you don't narrowly look at the district's goal as only getting cars to Bethesda, it's clear that spending money on these efforts helps draw more people to Bethesda without requiring more, expensive parking.

County staff also give the side-eye toward the county's new zoning code, which relaxes some parking minimums. That will mean fewer buildings paying extra taxes to get out of too-high minimums, money which goes into the district. But the zoning aims to help places grow less reliant on people driving in. That, in turn, cuts down on the need to build new garages and thus the need to tax buildings to build garages.

We often go to Bethesda, and we do frequently drive there. We don't need a subsidy from Montgomery County to do it, especially if it's bankrupting the parking district. We'll still go to Bethesda if it costs a few dollars. There's a simple path to keep the parking district in the black.

Parking


The NIH has more parking than agencies around it, and that makes traffic worse for everyone

The National Institutes of Health doesn't comply with a federal recommendation for how many parking spaces it should have. Correcting that would probably help alleviate congestion in Bethesda.


Photo by thisisbossi on Flickr.

Whether they use Wisconsin Avenue, East-West Highway or Old Georgetown Road, a lot of cars go to and from Bethesda every day. To alleviate rush hour congestion, the National Capital Planning Commission (NCPC) has suggested parking ratios of one spot for every three employees. The idea is that the high ratio will encourage workers to take transit or carpool instead of clogging up the roads with more single-passenger vehicles.

If an agency manages its parking well, workers who most need parking (whether it's because they don't have good transit or need to make more frequent trips to and from the office) can get it, while those who can use the excellent transit in this location or share a car will have good reason to do so.

But the NIH, which is Montgomery County's biggest employer, has chosen to ignore the NCPC's suggested ratio in favor of 2:1. The 2:1 standard dates back to 1992.

The NIH recently issued the final Environmental Impact Statement for expansions it's planning for its main campus, the bulk of which are an additional 3,000 employees and 17 new buildings. For the new buildings, the NIH says it will comply with the recommended 3:1 parking ratio.

But for its existing facilities, which house its 20,000 employees, the NIH is sticking with the outdated standards.

NIH sits at a busy interchange, and it's not pulling the same weight as its neighbors

The NIH argues that it needs to keep the 2:1 ratio for the bulk of its workforce because so much of it comes from places that are both far from Bethesda and not close to transit. But the same could be said of the Walter Reed National Military Medical Center or the many businesses in downtown Bethesda, and all of these places abide by the NCPC's 3:1 recommendation.

In fact, when Walter Reed Army Medical Center was combining with Bethesda Naval Hospital, employees coped with a ratio of nearly four employees per parking place.

Given that the NIH sits at a major "choke point" between Old Georgetown Road and Rockville Pike, 355, and Wisconsin Avenue and is adjacent to downtown Bethesda, there are major traffic repercussions when it puts its own parking desires above all else. If we can expect an organization to lead the world's Ebola treatment efforts, we can also expect a parking plan that complies with the federal government's suggested ratios. The military has done it right across the street in the face of the same challenges.

Bethesda has changed in the past 20 years. By adapting, the same way its neighbors have, the NIH can do its part to serve the needs of the greater community.

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