parking

Did This Landlord Prove That Parking Reform Can Lower Rents?

July 15, 2016 By TonyJ 3 Comments

Portland is getting a new bike share service starting on July 19th and the city is installing 100 bright orange bike corrals all over town to support the system. Despite a process for bike share that has taken years and a public outreach and comment period that has spanned several months, some residents were surprised (and unhappy) to see the bike racks installed where they usually park their cars.

But perhaps the most interesting part of this story, so far, is a quote from the landlord who owns the duplex directly behind the new racks. Mike Papas, who runs a blog called “LandLordZen” claims that the loss of on-street parking will force him to reduce the rent he is charging to his tenants.

Landlord Mike Papas told KOIN news he will lose $250 in rents due to the bike rack removing parking. — Landlord Mike Papas told KOIN news he will lose $250 in rents due to the lost parking.

Charging For On-Street Parking?

Papas’ duplex doesn’t have dedicated parking for his tenants so, assuming they have cars, they park on the street. Although the building is on a duplex, SE Cesar E. Chavez is a busy street with no parking. Papas’ tenants will have to park at least 50 feet from their home from now on. Although the street usually has available spaces on the block face (Note: the author commutes by bike on this street every day) the inconvenience and loss of parking in front of the residence is apparently valued by Mr. Papas at $125 per month.

Access to that amenity is reflected in the rent Mr. Papas, whose tenants say is an extremely honest and ethical landlord, is charging them. This is no surprise. One common argument against reducing or removing minimum parking requirements is that allowing developers to build less parking doesn’t lower rents. Opponents to parking reform have gobs of tables showing rents for comparable studios in buildings with and without parking which reflect little to no discount (and surely not the $200+/month the parking is likely adding to the cost burden).

The problem with that argument is that given ample free or underpriced on-street parking, there is no major difference in the amenities offered by the building with parking and the building without parking. Often, when developers do build parking, they charge for it and if the off-street is cheap the lot will be mostly vacant.

Photo of sign reading "Got Bikes, Need Parking!" in front of new BIKETOWN station. — Neighbors at SE Taylor and SE Cesar Chaves have put up signs protesting their loss of parking.

Reform Parking and Reduce Rents

If cities permit parking, charge market rates, and only sell as many permits as there are parking spaces, then we expect to see developers build the amount of parking they need. If a developer chooses not to build parking in such an environment, the expectation is that the rent for the building will be cheaper and fewer residents will own cars.

In all likelihood, Mr. Papas will not be lowering his rents by $125 a month. Parking on this block is not extremely congested and even if it were, the market rate for off-street parking in this neighborhood is likely closer to $50/month rather than $125. The area doesn’t have permitted parking, yet, and in the event neighbors ask for permits, the monthly cost of on-street parking is unlikely to be above $10/month.

Nevertheless, if Papas does lower his rent because the BIKETOWN station was put in front of his property, one can imaging tenants all over Portland begging for a station to be put in front of their home next.

Perverse Incentives: Transit fares, parking rates, and fringe benefits.

November 15, 2015 By TonyJ 5 Comments

We are doing it wrong.

Global CO2 concentrations are regularly above 400 parts per million. Drought and famine caused by climate change are destabilizing our political environment as well as displacing and killing millions. Driving directly kills more than 30,000 Americans a year (just barely less than firearms). According to MIT, air pollution from driving kills more than 50,000 additional Americans every year.

Financially, the toll of automobile dependency is no less severe. In 2014, federal, state, and local governments spent $165,000,000,000 (165 billion) on roads, with much of that money being spent on construction of new roadways while our existing roads decay.

In the face of these (and many, many other) downsides, we should be using every tool available to discourage unnecessary driving. but we’re not. In fact, not only does the underlying policy of the federal government not discourage driving (even alone), it encourages it. Locally, Portland is trying harder than many cities, but we still maintain a bevy of policies that subsidize and prioritize the most wasteful and dangerous mode of transportation over the rest.

The Pyramid of Convenience

Graph showing differences in cost between various modes, ranked by convenience and time of trip. — Infographic Courtesy of Charlie Tso

Being driven in a private-for-hire vehicle from your location to your destination is the most convenient and, likely, pleasant way to travel in the city. As such it’s quite expensive. To take a taxi or a Lyft from inner SE Portland (4 miles out) to downtown will cost upwards of $12 to $15 each way. A two way trip for a dinner and a movie will cost a single traveller $30 in transportation. Additional travelers add to the economy, however, and taking a friend along doesn’t double the charge. Nevertheless, the cost is rather high and reflects the convenience.

The second most convenient (and therefore valuable) mode is driving yourself or being driven with a friend and parking on street near your destination. The same 4 mile round trip will cost roughly $4 in vehicle wear, gas, etc. Street parking in downtown Portland for a 3 hour stay will range anywhere from $0.00 (after 7PM) to $6.00. Additional passengers add negligible cost. A couple going on a date from 6-9PM will spend ~$6.00 on transportation.

Slightly less convenient is driving yourself and parking in a city operated Smart Park. You may spend a little less time driving around, but you will have to travel farther to your destination. Things get a little interesting here, however, because Smart Park charges 24 hours, with a maximum $5 rate for nights and weekends. The same person or couple mentioned above will pay $5 for a 3 hour trip, regardless of whether it is during meter enforcement. Total cost ~$9, ~~twenty cents more~~ one dollar less than a three hour stay at a parking meter before 7 [In February 2016, downtown meter rates in Portland were raised to $2.00/hour, enforcement hours were unchanged].

Public transportation is next on our list. It has its benefits, no concerns about driving drunk, you can, legally, read or text en route, you don’t have to look for parking. But you need to walk to the transit center or bus stop. You need to allow extra time for catching the line and for possible delays. You have to share space with other people and potentially stand. You will probably have to walk to your destination and all the same things apply to your return trip (assuming Trimet is still operating that late). Bus schedules are rarely aligned with social schedules, so you will likely have to arrive early or arrive late and you may spend some time waiting for a transfer. Trimet fees are charged at all hours of the day. A single person going downtown for a movie and meal will need to buy a day pass for $5. Additional travelers pay full fare, so date night will cost a couple $10 in public transportation fares (and they’ll have to leave for home around midnight).

Person power is, by some measures, the least convenient way to travel. You must contend with the weather and with distracted drivers. Bike parking can be, at times, more frustrating than car parking and rates of theft are higher. A cyclist has no secure location to store bags or coats. Transit time is likely longer. Walking takes even longer and may be impractical for most trips. The cost, however, is (currently) free and you can leave whenever you want and arrive very close to your destination.

Transit Fares and Parking Rates

As you can see, the currently policy of the city of Portland encourages the “rational person” of economic lore to drive themselves to their location and to park on the street near the business. The second most convenient, and therefore valuable,non-active mode of transportation is often cheaper than all other non-active modes!

Parking on the street should cost more than parking in a garage and parking in a garage should cost more than taking the bus [In February 2016 downtown meter rates increased to $2.00/hour, but hours of enforcement still end at 7pm, SmartPark charges 24 hours a day].

The problem is even more pronounced when you take families into consideration. Suppose a family of 4 (two adults and two children) who live at Orenco Station would like to go to the zoo, should they drive or take the MAX? Driving, the ~11 mile trip will cost ~$5 (but much of that is sunk cost so it will feel “free”), for a 3 hour trip parking will cost $4.80 (unless the trip is between October and March and then it will be $4), for a total cost of $9-9.80. The trip should take about 30 minutes each way.

The same family taking the MAX will need to pay $15 in transit pass fees (children are 1/2 price) and the trip will take about an hour each way.

Why would any rational person take the MAX in this scenario? A family either needs to have a strong environmental ethic, a deep dislike for driving, or a disability/conviction that prevents them from driving to make this choice rationally.

Fringe Benefits

Portland isn’t the only government providing an incentive to drive. The federal government’s fringe benefit tax policy also encourages driving above all other modes.

Employers can provide tax-free benefits to employees for commuting.

They can provide up to $250 per month in parking permits or reimbursements.

They can provide an additional $130 a month for transit passes.

They can provide, to the exclusion of the other two benefits, $20 a month for the purchase or repair of a bicycle.

They cannot provide a tax-free “cash out” of the parking or transit benefit for employees who choose to walk or bike to work.

By not requiring a cash option for these benefits, the federal government is subsidizing and directly encouraging driving over all other modes of transportation. This is a policy at direct odds with the goals of the state of Oregon and the city of Portland.

So what can we do?

The Central City Parking Policy Stakeholder Advisory Committee has made a recommendation to the City of Portland to raise on-street parking meter rates to $2.00/hour. This $0.40 increase will make the parking for 3 hour stay downtown (during enforcement) cost more than an equivalent transit trip for one person. The policy will also price the more convenient and valuable street parking appropriately compared to Smart Park rates. [Mission Accomplished]

The committee is also likely to recommend that city council set a policy to adjust meter rates based on utilization and for the PBOT to coordinate on-street and garage rates more effectively.

Enforcement hours are set by the city council and it is unclear if the committee will recommend that they be extended or reduced by the director of PBOT. “Free” parking after 7PM completely inverts the economics of evening travel. Congested on-street parking during entertainment hours leads to air pollution, safety hazards, and loss of business.

City Council is likely to be skeptical of giving away their power to set rates and hours. They are likely to feel sympathetic to (false) concerns that performance pricing and extended hours will lead to less business or adversely affect low-wage workers. We should demand that the city collect data on low-wage workers parking downtown and pursue mitigation strategies that do not overwhelmingly benefit affluent commuters and patrons of downtown businesses (namely cheap or free parking).

Extensions of Trimet service hours, subsidies and/or reductions in Trimet fares are critically needed. The city and federal government could also require equivalence in benefits for active modes of transportation and driving. Even better would be to end parking subsidies for employees.

Parking Permits and Low-Car Lifestyles

November 10, 2015 By TonyJ Leave a Comment

Not everyone can ride a bike.

It’s true and it’s easily a top 5 argument given to oppose policies and projects that either favor alternate modes or ask that people who drive pay more of the social costs of their lifestyles. But it is also true that most of us can ride a bike, most of us can take a bus, and most of us can walk comfortably for a mile. It’s also true that 1/3 of Oregon residents don’t even have a driver’s license.

Managing neighborhood parking projects by pricing permits at a near-market rate can provide benefits both to the people who feel they must drive a car and for those who are already driving less or not at all.

The costs of car ownership.

According to the AAA, a small sedan costs (on average) the owner about $4,500 a year, or $12 a day, before any mileage is accounted for. AAA estimates that driving costs about $0.16 a mile. For a very car dependent person, someone driving 20,000 miles a year, the cost per mile is almost $0.40 (total cost/miles driven). Counterintuitively, someone who only drives their car 5000 miles a year will be paying almost $1.00 per mile (although they will pay less total money in the year, the majority of the cost is fixed). This is for a small sedan, the larger the car, the higher the fixed costs and the more fuel needed.

Currently, where we have them, parking permits in Portland cost $60 a year. For $0.16 a day (coincidentally the incurred additional cost of driving one mile) you can park your car on the public right of way. While many car owners say that even $5 a month is an excessive charge, when taken in the context of the total expense of ownership, the cost is negligible.

For a car owner who drives only 5000 miles a year, the cost of a $60 permit adds barely a penny per mile to the cost of operating. For the car dependent person driving 20K miles a year, the permit adds barely 1/4 of a cent per mile. A $60 permit is unlikely to change anyone’s behavior or mode share, certainly not the car dependent driver.

The less you drive, the less it makes sense to own.

Conversely, if you already own a car, it makes sense to drive it more! All those people who can bike, walk, and take the bus, can do the math and see that they’ve already sunk so much into owning a car that it’s kind of dumb not to drive it. Still, many choose to maintain a car even though they rarely drive it. Common reasons include concerns about emergency transportation, loss of freedom, the desire to make weekend trips, and grocery shopping.

Market rate permits would change behavior.

Suppose the cost of a neighborhood parking permit was $600 a year. This is still a fairly fractional cost of ownership. For the person who drives a lot, it’s an additional cost of $0.03 per mile, but for our low-car household it’s $0.12 cents more a mile, almost as much as the cost of gas.

A household that is keeping a car (or a second car) around for convenience may look at that additional cost and question whether it’s worth it to keep the car. This isn’t entirely rational, after all, if you’re already paying $4,500 a year to just possess the car, why should $600 make the difference? I think there are two reasons, one is universal and one is more particular to a city such as Portland.

When you’re paying fixed costs, you don’t notice it. A certain amount of effort went into setting up the situation one is in and payments are likely automated and budgeted. When a new cost comes along, you take a step back and re-evaluate the situation. When your car needs $2000 in work, you decide whether it is worth the cost. Similarly, if we can implement market rate (or closer to market rate) permits in Portland, thousands of our neighbors will take a step back and consider whether the car they keep on the street for beach trips is worth the extra $50 a month to park it there.

Secondly, a low-car household in Portland has options, lots of them. When I sold my car in 2008 my family was able to take the plunge because we had Zipcar, Trimet, traditional rental cars, and cabs. Now we have access to Zipcar, Getaround, RelayRides, Car2Go, Trimet (with the streetcar loop and orange line added), Curb, Lyft, Uber, traditional rental car, and Spinlister (which gives a household access to cargo and other utility bikes). Next year, the city will add bike share.

Anecdotally, I have asked people who ride their bikes, but still own a car for trips what they’ll do if they need to buy a $300-600 permit to park. The answer is usually, sell the car. When I ask them what they’ll do with a $60 permit cost, the answer is, buy the permit. The price matters.

The framing will be critical.

I suggest the city craft a particular outreach message to low-car households when a permit district rolls out in their neighborhood. For $600 a year, you can rent a car every other weekend all summer. For $600 a year you can spend 50 a month on car share (which is a fair amount of driving). For $600 a year you can buy a new rain jacket, gloves, and panniers. For $600 a year you can buy 10 day passes from Trimet a month.

This doesn’t even take into account the savings from getting rid of your car.

The more that we pass the true cost of car ownership and usage onto the beneficiaries (the owners and drivers) the easier it will be for people to make rational decisions about transportation. The imposition of a market rate parking fee with need-based discounting will not force anyone who “needs” to drive to have to get rid of their car. What it will do is cause occasional drivers to re-evaluate what they are spending money on and have an opportunity to make a smarter decision.