Diversifying Portland’s Parking Toolkit with Unbundling Parking and Parking Cash Out
Two weeks ago, Portlanders for Parking Reform wrote about the proposed Central City 2035 (CC2035) Plan may create more parking by increasing existing parking maximums in some of the Downtown parking sectors. While “parking is a fertility drug for cars”, to change travel behavior, parking policy cannot only target the supply side of this issue. If the City of Portland wants meaningful parking policies to help meet its mode-share targets–85% non-single occupancy vehicle (SOV) trips–and climate goals, such policies must address both supply and demand. Not only may the CC2035 Plan take a step backward on curbing parking supply, it also does not mention any parking demand management policy.
The good news is that there are viable parking policy options that can be applied to Portland’s downtown and neighborhoods to reduce the demand for parking. The Planning and Sustainability Commission and City Council ought to consider adopting unbundling parking and parking cash out for Portland’s Central City and gradually expand these policies into other neighborhoods.
Bundled Parking: Desserts You Don’t Eat But Must Pay For
Building and operating parking has high costs. Unbundling parking means separating the costs of parking and charging the users of parking directly. To illustrate how parking is currently bundled with the prices of housing, goods, and services that we consume and the need to unbundle it, let us think about the following scenario:
Imagine that the City of Portland requires restaurants to provide free dessert with every meal ordered by customers. The price for meals would increase to cover the cost of “free” desserts. While this may be good news to people who love desserts, such requirement has negative consequences. First, all diners now have to pay more for each meal whether or not they want to eat dessert. Second, some people would eat desserts they would not have ordered if they had to pay for them separately. Bundling desserts with food induces people to over-consume desserts, which leads to more obesity, diabetes, and heart diseases.
The City of Portland does not require free desserts with every meal but it does have parking minimum requirements for new development. Although the Central City district is exempt from such requirements, there are no guidelines on unbundling the costs of parking from development. Just as unbundled desserts would give diners more control over what they eat, unbundled parking will give travelers more choices by allowing people to decide how much parking they need and want to pay for.
When cities require developers to build off-site parking spaces, the cost of parking usually doesn’t get separated from the other costs of the development, making unbundling parking difficult. The good news is Portland’s Central City has no parking minimum requirement, which makes implementing unbundling policy more feasible. Parking can be unbundled from housing by offering residents the option to lease apartments and parking spaces separately, thereby reducing the cost of housing for those who do not own cars. Parking can also be unbundled from office and retail leases, allowing businesses to only purchase the number parking spaces they deem necessary for their employees and customers. Alternatively, parking costs can be listed as a separate line item in commercial lease agreements to show tenants how much parking costs and allow businesses to recover such cost by charging parkers directly.
Unbundling: Tried and Tested
Many cities in the U.S. has adopted unbundling parking policies. For example, San Francisco’s zoning code requires off-street parking spaces for residential buildings with 10 or more dwelling units to be sold or leased separately from the rental or sale of dwelling units. Berkeley also adopted a similar ordinance that requires unbundling parking. In central Seattle, approximately 50% of all multifamily units have unbundled parking from rent.
Lastly, Los Angeles’s Adaptive Reuse Ordinance (ARO) has permitted developers to unbundle parking to encourage converting and redeveloping old buildings. A recent research study shows that ARO apartment units with bundled parking cost about an additional $200 per month, proving that housing does become more affordable when it gets separated from parking.
Unbundling parking may be difficult to apply retroactively to all existing buildings, but it is not impossible. The City should at least explore the option of unbundling parking for current affordable housing units. This will offer existing low-income residents the same benefits of not paying for parking they do not use, freeing up more budget for housing. Portlanders for Parking Reform urge the Planning and Sustainability Commission and the City Council to consider adopting unbundling in CC2035 first for new development and then apply the same policy to existing affordable housing units.
Parking Cash Out: A Second Paycheck
According to the Parking Cash Out Report, “free parking is the most common fringe benefit offered to workers in the U.S., and 95 percent of American automobile commuters park free at work.” Most employers in Portland either provide parking for free or partially-subsidized employee parking. Even though many workplaces provide additional commuter benefits such as transit passes, the financial subsidy for parking often exceeds the subsidy for transit or other modes. Therefore, free or partially-subsidized parking is an invitation to drive alone to work.
Another policy to effectively reduce demand for parking is to offer workers the option to “cash out” their employer-paid parking subsidy. Parking cash out provides commuters the option of cashing out their employer-paid parking subsidy, and use it on other transportation modes or to keep it as a second paycheck. In addition, parking cash out would reward commuters who do not use parking by giving them financial incentives to use healthier and greener modes of transportation, such as walking, biking, and public transit, thereby changing travel behaviors and contributing to the City’s mode share targets and climate goals.
California passed a state law in 1992 that requires many employers to provide cash out options to their workers. A 1997 study in Los Angeles County estimated that mandatory cash out reduced the number of daily vehicle trips to work by 11 percent and commuter parking demand by 13 percent, or 0.4 spaces per 1,000 square feet of office space. If Portland wants to meet its mode-share targets for Downtown (85% non-SOV trips), it would need to set parking maximums at 0.25. That is an ambitious number that will undoubtedly cause a lot of political push back. However, parking cash out is an appealing policy option to help meeting that goal because it brings modest and incremental change and does not require employers and commuters to suddenly change behaviors.
Good For Employers
According to the U.S. EPA, “employers provide an estimated 85 million free parking spaces for commuters—spaces with a net worth of nearly $31.5 billion”. The same U.S. EPA report estimates that annual per space costs vary between $360 and $2,000. In the High Cost of Free Parking, Donald Shoup shows that employers save $40 a year per $1 annual cost for doing parking cash out, with the assumption that the capital cost per parking space is $10,000 (this number is likely far below the average cost of an office parking space in downtown Portland).
Subsidizing parking costs employers a lot of money. Coupled with unbundling parking, parking cash out can significantly reduce demand for parking and offer savings to businesses. There are several benefits to employers associated with decreasing commuter parking demand:
(1) Employers can reduce costs associated with leasing or owning and maintaining parking spaces.
(2) Lower parking demand allows businesses to convert employee parking to customer parking, which may attract more customers.
(3) Businesses can also convert parking spaces into profit-generating activities.
(4) Reduced commuter parking demand will eliminate the need for new parking construction.
(5) Recruit and retain workers by offering parking cash out as a valuable fringe benefit.
Good for Employees
Not only does parking cash out create benefits for employers, it also does for employees. For starters, it increases equity among all commuters. Employer-paid parking does not benefit commuters who ride public transit, walk, or bike to work. However, cash out allows commuters receive the same benefit regardless of how they travel. Secondly, cash out benefits non-auto commuters without disadvantages for auto-commuters. Workers who want to park for free can continue to do so, but they will be able to receive the same amount of benefits if they decide not to drive.
Research in transportation planning has repeatedly demonstrated that higher-income individuals are more likely to drive to work alone, while lower-income individuals are more likely to carpool, ride public transit, bike, or walk. As a matter of fact, using the best available data from the Census Transportation Planning Products, BikePortland reported that only about 5% of all downtown Portland workers who drive alone to work are low-income.*
The same general trend is also applied for homeowners versus renters (Portland renters are 6 times more likely to not own a car). Thus, without parking cash out, many employers regressively provide subsidies to help wealthy commuters save money on transportation but excludes poor commuters from the same benefit. In addition, just as unbundling parking would lower housing costs, cash out would provide financial benefits to car-less low-income households and renters who are increasingly getting priced out of Portland’s housing market.
Basically, parking cash out is a win, win, win.
On July 26th, Portlanders for Parking Reform asked the Planning and Sustainability Commission to amend the proposed CC2035 draft, incorporate unbundling parking and parking cash out as recommended policies, and direct city staff to study how these policies will be implemented and administered. Portland has set ambitious transportation and climate goals for the next twenty years, but our currently proposed policies, namely parking ratios, only focus on managing parking supply and lack demand-based approaches.
Unbundling parking and parking cash out are the other side of the parking equation that have proven to be effective, low-cost, and more politically favorable. These policy ideas are not only important to Portland’s long range plan but will also influence the results of the City’s current parking projects, such as the residential permit program, performance-based pricing, and shared parking. Unbundling and cash out will diversify our current parking toolkit but most importantly, they will also contribute to other community goals such as housing affordability and access to more travel options.
Update: *The author added a sentence and a chart to highlight percentage of drive-alone downtown commuters who are low-income