Parking! (What else)

[Nathan Miller]

Interesting article that goes into the costs of adding on-site parking in new residential developments. The article is Seattle-centric, but I think it contains some interesting facts and ideas.

http://www.thestranger.com/news/feature/2015/07/29/22612207/the-hidden-reason-behind-seattles-skyrocketing-housing-costs

Lots of good information, so it is a bit hard for me to summarize, but my personal highlights:

• Developers estimate $20k-50K cost PER PARKING SPOT
• Article estimates that passing on the cost of below grade parking can add $250-500/month to rent even for tenants that don't lease a space. Essentially developers are not able to recover the full cost of the spot through usage fees.
• Even in locations that don't have parking requirements, most developers provide 1-1.5 parking spots per housing unit due to lending requirements or just based on previous experience: Even though Hackleman notes that his company built more parking than was necessary at Velo Apartments and another nearby complex, "We tend to see that as better than too little parking because some people won't rent there if they can't park," he said. And by "some people," he means rich people. "If you're not providing any parking, then you're going after a different demographic," Hackleman continued. "They probably pay less rent."
• "It's not effective to talk neighbors into accepting more competition for street parking," said Durning. "It's better to bribe them."

• Durning is advocating for creating parking benefit districts (one of the possible "innovative" solutions mentioned in HALA's report). The concept is similar to community benefit districts, in which property owners decide to tax themselves to pay for various services such as street cleaning and security. In parking benefit districts, the city charges for curb parking in neighborhoods, via either meters or parking badges, then gives that money (or some of it) back to the neighborhood.

• "The magic of that is it breaks apart the local political coalition," Durning explained. "In some California cities, they have parking improvement districts in urban areas, revenue comes back to the community council, and they can use it for whatever they want. Those people then stop arguing, they stop pushing for off-street parking. It's in their interest to have scarce off-street parking because then they make more money. Then we can cut the Gordian knot of parking politics."

These parking benefit districts are a new concept to me, anybody had any experience with them? 

Nate

[Nathan Miller]

Rereading some of the article, I think I misinterpreted the impact on monthly rent to those who don't use parking, but the point stands that the developers are not able to fully pay for the parking through user fees, so there is cost that is passed onto all tenants. 

Nate

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[Zack Barowitz]

Nate,

Thanks for sending this. There is a lot of information but it isn't easy to digest. 

I have been wondering how much lower the rents would be if parking were eliminated from big developments and replaced with ground floor housing. But the article makes the point that prices are not based on costs but on the market, so the answer is anything but clear.

Zack

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[Christian MilNeil]

"Parking benefit districts" were a recommendation of the Peninsula Transit Study we worked on a few years ago (link), but the obvious agent to implement such an idea – the Portland Downtown District – hasn't shown much interest. If we succeed in getting a task force together, that's an idea we should resurrect.

Re: parking's impact in housing prices, I'd argue that the bigger impact on housing prices is in how parking requirements have prevented potential apartments from ever being built or even considered for development at all.

Portland's supply of 1- and 2-bedroom apartments is at least 1,000 units short of what a city of our population and demographics demands, and that's the driving force behind they city's skyrocketing rents. Wealthy newcomersare outbidding middle- and low-income renters for market-rate homes.

As an aside, Census data shows that wealthier residents are also more likely to own more automobiles, and they're less likely to bike or walk for short trips across town. The city's rate of car ownership is declining as a whole, but rapidly-gentrifying Census tracts on Munjoy Hill and the inner West End are actually showing an increase in the rate of car ownership – which is a shameful waste of resources in the city's most walkable and bikeable neighborhoods.

Much-needed zoning deregulation is beginning to allow a few new apartment buildings to go up with less parking. At the Portland Housing Authority we're about to break ground on a new 40-unit building with no on-site parking, which is going up on a corner where a parking lot used to be, so I count that as a double-win. But we're still dealing with a 30-year backlog from when building new housing simply wasn't considered, mainly because of the city's excessive parking mandates.

http://christianmilneil.com

The Vigorous North:
A field guide to the wilderness areas of American cities.
http://www.vigorousnorth.com

[Nathan Miller]

Adding onto a previous topic of discussion, I think this (slightly outdated- 2013 but recently re-posted) blog post does a better job digging into the costs and trade-offs of onsite parking than that previous (more inflammatory) article I linked to.  I think there is probably some reference checkingto be done before quoting the costs mentioned here, but I like the discussion (and graphics) of below grade vs. above grade parking and impact on number of housing units and the return on investment for the developer.

http://daily.sightline.org/2013/08/22/apartment-blockers 

Also, there is a good amount of seemingly reasonable back-and-forth in the comments sections, though it seems like everyone is an "expert" in construction costs, zoning, and developer motives. Grain-of-salt warning. 

An interesting excerpt from the post (I understood idea that there is added cost to on-site parking, but the loss of rentable space/units  hadn't occurred to me):

Imagine you’re starting business as a developer of housing.

You take a loan from a bank and buy a city lot zoned multifamily. You sit down with your architect and start laying it out for apartments. The more apartments, the more housing you can provide, and the more money you can make. So the architect fills the lot with housing, right out to the city-required “set-back” boundaries near the edges of your property. She builds it as tall as the legal height limit for that zone too. You can erect 50 one-bedroom apartments, she announces, each of about 550 square feet. You do some figuring and realize you can earn a 7 percent return on investment while charging $800 a month in rent. That’s not a screamingly profitable venture, but it’ll do. And you’re sure that price will be popular with tenants, which will keep the building full. 

But there’s a problem, the architect points out. She reminds you that your city requires you to provide off-street parking on the property for each of the apartments you build.

She tells you that the access ramps to the underground garage will subtract six apartments, and your general contractor estimates that excavating will cost $55,000 per parking space—almost as much as the $60,000 you’ve budgeted to build each apartment. To make a 7 percent return on investment, you’ll have to raise the rent up to $1,300 a month on the remaining units.

Not surprisingly there isn't a lot of agreement on the "true cost" of onsite parking, the blog mentions studies that peg it as anywhere between 6% of rent cost to 35%. 

I don't know if any of this lines up with other's experience. Christian, did you do any of this analysis on the PHA job you mentioned? Did you have to jump through significant hoops to get sign-off for not providing parking? Off the top of my head I don't know what is actually required in Portland on new multifamily projects. 

Nate

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From: c.neal....@gmail.com
Date: Thu, 30 Jul 2015 11:37:25 -0400
Subject: Re: [pbpac] Parking! (What else)
To: PB...@googlegroups.com

[Zack Barowitz]

Nathan,

I was talking to a developer in town about just this very example. He said that he'd like to do-away with parking minimums and pursue other types of parking reform but there are a few realities to the market.

- Rents are set by the market not by the cost of construction. (I think this point was made in the last thing you posted).

- $1,300 is the minimum he can charge for a 1-bedroom, people paying that much often want parking

- The cost of building affordable housing is about the same as the cost to build luxury housing

So while there may be some savings by eliminating parking in favor of more units, it doesn't really work for market-rate projects and affordable units would still have to be subsidized.

That isn't to say we shouldn't build dense downtowns, but it'd be nice if there were a comprehensive strategy.

Thanks,

Zack

[Christian MilNeil]

Yes! Good article. But again, the bigger impact, I think, comes from all the apartments that don't get built at all. This article references that impact lower down, but when it's talking about the options for this hypothetical building...

You’re stuck with no good options: a long and risky waiver (from the parking requirements), underground parking with extremely high rents, or a half-sized building with high rent and slots out back.

... there's actually a third option (and it's the most common of all): rather than risk millions of dollars, just walk away and don't build anything.

Instead of fighting the parking mandates and the bourgeoisie neighbors who are hiring lawyers and PR campaigns, you can just give the zoning code what it was designed to favor: an empty parking lot without any housing.

The author mentions the effect of this in bullet #2 under the "Five Rent Raisers":

2. Less Housing. Parking quotas constrain the supply of dwelling units, particularly of modest, economical ones, which causes their price to rise. (Dr. Kasper affirms: “Supply and demand, not cost . . .”) You may end up building only 25 apartments (or zero apartments), rather than 50. The same goes for every other builder in the city. Fewer new apartments mean more competition for all apartments. Rents go up.

For the Bayside Anchor, PHA was willing to take the political risk of getting a waiver from the parking quotas, but we were doing so in a neighborhood (East Bayside) where there's both a clear surplus of parking and also a strong desire for more egalitarian housing. Most homebuilders aren't going to take that kind of risk, especially in the richer/snobbier neighborhoods where wealthy homeowners are lawyering up. It's much easier to do business in Windham or Buxton instead.

On a practical basis, here's how that plays out in Portland: more middle-class households just drive out to Windham to find housing (and put more cars on the road and pump a few thousand more pounds of fossil fuel emissions into our air every year in the process). Unluckier renters who can't drive will have to pay even more to stay here as rents continue to escalate. The rare projects that do get built include lots of parking and are priced for the upper stratum of the market. And narcissistic 1%-ers living in their adorable single-family homes pat themselves on their calloused backs for keeping the soul of Portland livable and saving us from the scourge of apartment buildings.

[Zack Barowitz]

One thing that did not get discussed in this article was parking requirements for commercial projects. 

This is a killer. In our Portland a cafe can't put in a seat for a counter without obeying to parking requirements. The renovation of the Williston West Church a c. 50 high tech jobs was thwarted over neighbors "concerns" about parking in the west end. Without downtown jobs and places to go at free living is less attractive. 

The article did have a few questionable assertions, like this one:

"Fewer new apartments mean more competition for all apartments. Rents go up."

Fewer new apartments do NOT mean more competition for all apartments, indeed it means the opposite (assuming the population is stable and housing isn't being taken off the market) because we are talking about new construction it is still adding to the supply. 

But all in all I agree with the long-winded author. 

Zack

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[Peter Monro]

Christian's points about parking and new development are well made.

Unsaid is the (un)willingness of US governments, including Portland's, to limit parking despite professed interests in new development, population growth and affordable housing, all thwarted to greater or lesser degrees by the amount of parking provided.

In Bayside, for example, the city's primary objective--and $9 million subsidy-- is explicitly for car parking. So we taxpayers are underwriting the suburbanization/sprawl/ car dependency of one of the city's biggest new developments. (That is, if city staff does an about-face and allows it to be built.)

Meanwhile, across the Atlantic Europe is targeting cars, using many tools including parking maximums, not minimums, for new development. http://www.nytimes.com/2011/06/27/science/earth/27traffic.html?pagewanted=1&_r=2&hp

The problem with lowering parking minimums is that for-profit developers will still  include more parking than the minimum to assure themselves that condos will be sold/apartments will be rented. Only government action can prevent that.

And heaven only knows what our Hydra-headed city government wants these days.

[Nathan Miller]

Some further information on the approach the city of Portland (Oregon) MIGHT take to better manage the supply of parking spots in that city. I'm not clear how much this is merely a proposal vs. actually being considered, it sounds like this plan comes from a "stakeholder committee" the DOT is deciding whether to adopt it. 

http://www.sightline.org/2016/01/14/portland-may-offer-a-parking-win-win-win

TLDR Summary:

• Dynamic metering in commercial districts and limited permits in residential districts, with some of the collected funds going back to the neighborhoods. 
• "Neighborhood" permits would be for a relatively small area. Ensures that the parking car owners pay for would close to where they want it.
• Neighborhoods would have to opt-in to form a parking district, would get to decide how many permits to issue and how much they cost. 
• Neighborhoods could choose to add a neighborhood charge to the price of the permit and spend the collected revenue on neighborhood improvements.

Nate 

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Date: Tue, 25 Aug 2015 10:39:55 -0400

Subject: Re: [pbpac] Parking! (What else)

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