Unbundling parking isn’t simple, but it’s worth it

Municipal parking policies were not created with bad intentions, or without some thought. Though they have evolved into somewhat mindless orthodoxy, they do still serve the purposes of managing parking supply. Undoing this supply-sided management scheme in favor of a demand-sided management scheme is not a simple task.

Unbundling parking, which involves separating the cost to rent a parking space from the cost to rent an apartment, is one vital tool in managing parking demand. To be effective, though, it will need to address the same issues bundled parking addresses.

So how might a city cope with the concerns opponents will raise when considering unbundling parking?

Parking will overflow into the streets!

This is a real concern. Parking minimums were originally enacted to stop drivers from taking over neighborhood streets. Simply abolishing them today without concern for the consequences would be wrongheaded.

The basic concern, ensuring neighborhoods near to downtown don’t get overwhelmed, is resolved by a residential parking permit program. The city gives or sells residents the right to the street parking in their neighborhood and also grants them the ability to temporarily give permission to their guests. All others are either strictly limited in how much time they can spend in a given space or are banned from parking in that zone entirely. To target the program more narrowly, perhaps dwellers of new apartments could be barred from receiving parking permits.

It will become impossible to park downtown!

With all of downtown’s parking demand now squeezed into its own borders, the city will have to get creative to manage it.

While the first impulse is to boost parking supply, generally parking problems are a result of poorly managed demand. Studies into the view that there’s “nowhere to park” have found that sentiment to generally be illusory. Even in Tiburon, a study into their downtown’s parking problems found that there was more than enough off-street parking to handle demand; people simply weren’t looking for it.

In San Francisco, their SFPark program addressed the issue with price signals. They lowered the price of parking in their garages, which were generally underutilized, and on low-demand side streets and raised the price of parking in high-demand main streets. Even though some prices went up, overall the average cost of parking declined and street spaces opened up.

Paired with this demand-based pricing – which would have as its goal one open space on each block – should be transportation demand management policies. These policies, proven effective in communities across the country, are designed to reduce driving and therefore parking demand. Reduced ZipCar memberships, taxi or Uber discounts, transit discounts, and bike-supportive services and infrastructure are all proven to reduce demand for parking.

In short, building new supply should be the last thing a city tries. It shouldn’t be taken off the table entirely – no tool should be – but managing demand is much cheaper and effective than shelling out $50,000+ for a new parking space. Once the cost/benefit ratio of adding new parking is greater than the ratio of demand management schemes, supply should be considered, but with care: each parking space will be one or more new trips to the garage on roads that might already be clogged.

Low-income people won’t be able to afford a parking space!

Sometimes, a family does need a car. Herding a gaggle of kids onto a bus isn’t terribly feasible, and commuting to, say, Oakland by transit just doesn’t work on a daily basis. But with parking spots going for upwards of $600 a month, a low-income family might not be able to afford it.

The simplest way to approach this conundrum is to determine the ratio of how much a parking space costs to rent to how much an apartment alone costs to rent, both at market value, and to apply that same ratio to the affordable apartment rent. Okay, that sounds less simple that it did in my head, so here’s an example.

Let’s say a market rate two-bedroom apartment goes for $2,400 a month alone and the attendant parking space costs $600 a month. Together, the market rate for this place is $3,000: 4/5ths going to the apartment and 1/5th going to parking. Since the building has unbundled parking, the $600 is an optional add-on.

Now, let’s say the maximum rent a very low income family can afford for a two-bedroom is $1,200.* If we apply the same ratios as before, the family should be charged 4/5ths of their rent for the apartment itself and 1/5th for the parking. Since this building also has unbundled parking, they are charged a maximum of $960 for the apartment (4/5ths of $1,200) and $240 for the parking spot (1/5th of $1,200), meaning the most they would pay is still the most they could afford.

While $240 still sounds like a lot to charge per month, consider it in the reverse. While a low-income family may want a car, they might want the $240 per month more. Bundled parking makes that choice for them; unbundled parking allows the family to make that choice for themselves. And, even if they do choose to take the parking spot, they won’t be paying more than one-third of their income.

You just irrationally hate parking!

No, I just really hate unnecessary traffic, and I hate it when government makes choices for people. Bundled parking, an outgrowth of the latter, causes the former.

Donald Shoup, professor of urban studies at UCLA, has said that free parking is like a fertility drug for cars. It removes the price signals that tell people maybe there’s a better way to move around and creates a shortage of the road space and parking required to support car trips.

As with any goods shortage, this means that what people don’t pay in money they pay in time: time spent in congestion, time spent hunting for a space, time spent walking from wherever that space was found. As IJ columnist Dick Spotswood observed recently, population density in and of itself doesn’t cause traffic. It’s the number of cars those people own, and how often they use them, that causes traffic.

This means the people who really do need a car, like the family with the gaggle of kids, the contractor heading to a job, or the long-haul commuter trying to get to work, will get stuck behind people who really don’t need a car but have one anyway, all thanks to decisions made on their behalf.

San Rafael and other cities should look carefully at how they manage their parking supply. If they stay on the same path, they will only make more problems for themselves and residents.

*It’s actually $1,138 in San Rafael (PDF), but I’m rounding up for the sake of example.

How to improve the San Rafael apartment proposal

On Wednesday, news broke that San Rafael could soon find itself home to another 162 households, thanks to a proposed redevelopment of the Third Street garage and a couple ancillary buildings. This is the kind of development San Rafael needs more of, and the unique parking situation means it could get even better.

The basics

Lennar Multifamily Communities wants to build a 60-foot, 162-home building on Fourth Street across from Courthouse Square. Of these, 11 percent will be affordable. This is within the scope of downtown zoning and height limits, as well as within the realm of San Rafael’s place as Marin’s urban core.

Thanks to parking minimums, the lots where Lennar wants to build – 1001 Fourth Street and 924 Third Street – are too small to fit homes, businesses, and parking all on-site. To make things work, Lennar wants to incorporate and rebuild the 180-space Third Street garage, fulfilling San Rafael’s long-time goal of rebuilding the old structure.

This is on top of the minimum parking requirements for the apartments themselves, which comes to 194 spaces.

Parking is hella expensive

The Third Street garage is curiously expensive. The cost to tear down and rebuild has been estimated by the town to be about $10 million, or about $55,556 per space. This is well above the average for above-ground parking garages. Although some of the cost may be in demolition, it is still over 3.5 times the national average (PDF) ($15,552), and well over twice the cost of construction in San Francisco ($19,253) and New York City ($20,326).

If this is the cost of building a parking garage in downtown San Rafael, then over $20 million of development cost will be absorbed by parking alone - $10 million for the garage, $10 million for the additional spaces. The rest of the construction will probably cost around $14.3 million*, which means 60 percent of the cost of construction will be taken up by parking. It speaks to the huge demand for homes in Marin that this is even considered feasible.

Parking reform

Given the astronomical cost of parking in this project and the eminently walkable nature of downtown San Rafael, this may be a good place to eliminate parking minimums for affordable units, and to unbundle parking rental from apartment rent.

About a month ago, Dick Spotswood proposed eliminating parking requirements for affordable housing. Although I don’t believe he was serious – he regularly backs car-centric activists, politicians, and thinkers – perhaps we should take him seriously anyway.

Doing so here, with the current 11 percent affordable ratio, would eliminate 23 spaces from the project. That would shave $1.3 million from construction costs. If the affordability ratio were raised to 20 percent, it would cut 40 spaces, shaving $2.2 million from construction costs.

For the developer, that’s huge. Affordable housing is a legal requirement, after all, and its costs are subsidized either by taxpayers (in the case of nonprofit housing) or by market rate renters (in the case of for-profit housing). In this project, the parking requirements add $694 per month to the rent of one- and two-bedroom apartments and $1,042 to the rent of three-bedroom apartments.** Cutting out that cost would be nearly enough to subsidize the apartments on their own. Indeed, it may be enough to improve the ratio of affordable homes to 20 percent or higher.

Another concept that San Rafael should pursue is unbundling the cost of parking from rent. Providing the parking space as a benefit of renting encourages car ownership. Whether they want a car or not, renters would be paying for an extra 270 square feet of space in the garage.

Unbundling would allow car owners to pay for a space to park if they want it and lower rents for those that don’t, putting these homes within reach of more people and keeping more of renters’ money in downtown.

Indeed, there would be a multiplier effect of encouraging car-free living within downtown. People who walk or bike to retail tend to spend more money per month in their own neighborhood. And, by encouraging car-free living, new residents would be incentivized to stay downtown, raising sales tax revenue for the city, reducing traffic costs, and adding revenue to downtown businesses.

Further reductions could be made with transportation demand management strategies, such as providing residents and employees with subsidized Clipper cards and ZipCar memberships, and providing bicycle parking.

This will be a much-needed infusion of new homes to Marin and downtown San Rafael. The city has hardly grown at all in the past five years despite a crushing need for new revenue and new homes. This is precisely the right place, and the right form, for these homes to take.

*San Rafael has a floor-area ratio of 2.0 along Fourth Street, and the three parcels that will be part of the Lennar development have an area of about 59,900 square feet. If we assume the 70,686 square feet dedicated to parking will not be included in the floor area calculation, then the structure will be 119,800 square feet. Given its size, it can be wood frame construction on top of concrete, which costs $119.77 per square foot to construct. $119.77 * 119,800 square feet = $14,348,446.

**This assumes each parking space costs $55,556 to build and a market capitalization rate of 1.25 percent.