Following up on a blog post on minimum parking requirements’ impact on inclusionary zoning, I want to further illustrate why requiring parking minimums for residential development is an unwise policy.
Parking requirements reduce the number of affordable units a development can provide.
Housing in Portland has becoming more and more unaffordable. The average market-rate rent for a 900ft2 two-bedroom apartment unit in Portland is $2,007 per month[1]. However, the affordable monthly rent for a two-bedroom apartment for a household of three earning 80% of the area median income is $1,323 per month[2].
Let’s say there is a hypothetical development for 100 two-bedroom units in inner Portland with good transit access. The City of Portland can require up to 20% of units be affordable to households earning 80% of the area median income – so 20 affordable units and 80 market rate units. The developer will be given a choice to pay a fee instead of building the affordable units. .
In this scenario, let’s say providing 20 affordable units with 80 market rate units and no off-street parking can achieve the lowest monthly revenue for the developer. Existing Minimum parking requirements, however, will require this development to provide a minimum of 33 parking spaces[3] (minimum parking requirement for 50+ unit multi-family development near transit corridors is 0.33 per unit). In order to make room for 33 on-site parking spaces[4], the developer might only build 95 units instead of 100 units.
Now, if the developer was required to build 20% affordable units, the development will have to provide 19 affordable units and 76 market-rate units. You might say losing only one affordable unit is not a huge loss. But it is not so simple. Remember, our assumption is that providing 20 affordable units with 80 market rate units can achieve the lowest monthly revenue for the developer. With that in mind, we can estimate the monthly revenue using the average market rate rent and the affordable housing rent for these units. The average market-rate rent for a 900 ft2 two-bedroom apartment in Portland is $2,007 a month and the maximum rent affordable for a two-bedroom apartment for a household of three earning 80% area median income is $1,323 a month.
In the first scenario, the developer makes the lowest monthly revenue by earning $187,020 per month ($2,007 x 80 + $1,323 x 20 = $187,020). In the scenario with 33 required parking spaces, to earn at least as much revenue, the developer will have build 90 market-rate units and 5 affordable units ($2,007 x 90 + $1,323 x 5 = $187,245). In other words, the same development needs to reduce 15 affordable units because of parking minimum to make the development financially feasible.
In addition, the construction plus maintenance cost of the 33 parking spaces will need to be covered by additional revenue streams. This means that either market-rates apartment units will be more expensive or there will be fewer affordable units. The bottom-line is parking degrades affordability for everyone.
Parking requirements make all housing more expensive for everyone.
There are a number of studies in the U.S. that estimate how much renters pay for the hidden costs of parking, even if they don’t own a car at all. For example, the Sightline Institute reported that renters pay about $246 per month to cover landlords’ losses on parking in the Seattle area[5]. Using the average residential parking construction costs in Portland and a parking cost calculator, I developed a more conservative estimate that each unit in our hypothetical development will need to pay $121 a month for the 33 on-site parking spaces[6] [7].
$121 may not sound like a lot of money to some people, but let’s put it in perspective. The difference between the average market rate rent for a two-bedroom apartment ($2,007) and the maximum affordable rent for a household of three earning 80% of area median income ($1,323) is $684. We can consider that an affordable housing subsidy. The monthly parking cost for each tenant, regardless if they own a car or not, is 18% of that subsidy. When people are getting pushed out of their neighborhoods and unable to find housing near their jobs, do we really want to spend 18% of affordable housing subsidy for people to park their cars?
Moreover, for a household of three earning 80% of area median income, $121 is 9% of the maximum affordable rent per month. In other words, requiring parking also means requiring low-income Portlanders to pay an additional 9% of their rent for someone else’s parking space. If our neighbors and elected officials really care about housing affordability and displacement, they should understand that requiring parking for residential development only exacerbates the affordability crisis and helps displacing more people by making rent more expensive.
Parking minimum requires more affordable parking for cars than affordable housing for people.
Even with inclusionary zoning, the City can only require up to 20 affordable units in our hypothetical development. However, minimum parking requirements generously give 33 spaces to cars at the cost of higher rent for everyone, regardless if they own a car or not. Comparing the size of two parking spaces and the size of a two-bedroom apartment, it becomes even more clear that our current land use policy prefers housing automobiles rather than people. Two parking spaces plus the turning aisle take up about 864 ft2 whereas a two-bedroom apartment is about 900 ft2. Put it simply, every time a development is required to make room to store two cars, the same amount of space could be used to house a family of three.
Parking increases housing costs for everyone and reduce the total number of affordable housing units. Parking also takes up valuable building space that could otherwise be used to house people instead of storing cars that sit idle most the time during a day. Portland’s elected officials and residents must recognize that parking degrades housing affordability and equity by requiring renters pay for someone else’s parking space. As long as we continue to require affordable housing for cars, policies that support affordable housing for people will always be thwarted.
[1] Median Rent List Price per Sq Ft, Multifamily 5+ Units, Zillow, February 2016
[2] State of Housing Report in Portland, Portland Housing Bureau, 2015
[3] City of Portland Planning and Zoning Code, Title 33. March 1, 2016
[4] Cost of Onside Parking + Impacts on Affordability. Portland Bureau of Planning and Sustainability, 2012
[5] Who Pays for Parking? Sightline Institute, 2013
[6] Cost of Onside Parking + Impacts on Affordability. Portland Bureau of Planning and Sustainability, 2012
[7] Parking Cost, Pricing, and Revenue Calculator, Victoria Transportation Policy Institute
Charlie Tso says
http://katu.com/news/local/parking-congestion-fears-surround-new-apartment-proposal
KATU News reported last Wednesday that a 100-unit development is proposed at 4224 NE Halsey St, in the Hollywood neighborhood. The development proposes to include 59 parking spaces (26 spaces more than the required minimum), even though it is right next to the Hollywood Transit Center with easy access to three MAX lines and 4 TriMet bus routes. I wonder if the assumptions used in this article is comparable to this 100-unit development. If I can get some numbers on the costs of construction and operating 59 mechanical parking spaces, we can see more clearly how parking affects the cost of housing.