Shoup, Donald

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UC BerkeleyACCESS MagazineTitleInstead of Free ParkingPermalinkhttps://escholarship.org/uc/item/58898049JournalACCESS Magazine, 1(15)AuthorShoup, DonaldPublication Date1999-10-01Copyright InformationThis work is made available under the terms of a Creative Commons Attribution-NonCommercial License, availalbe at https://creativecommons.org/licenses/by-nc/3.0/ Peer reviewedeScholarship.org Powered by the California Digital LibraryUniversity of California8A  C  C  E  S  SWE AMERICANS first learn about free parking when we play Monopoly.Players pay rent, buy houses, build hotels, or go to jail after a toss of thedice, and one toss out of forty lands us on “Free Parking.” The odds of landing onfree parking increase dramatically when we begin to drive cars because—notwith-standing the experience of commuters in some large cities—American motoristspark free on 99 percent of all trips.But there is no such thing as a free parking space. Someone must pay for it. If motorists don’t, then who does? Initially, developers pay for parking when they provide spaces to meet requirements in zoning ordinances. Because the required parking spaces raise the cost of development, the cost of parking is thentranslated into higher prices for everything else, and everyone pays forparking indirectly. Residents pay through higher prices for housing,consumers pay through higher prices for goods and services,employers pay through higher office rents. Only in our roleas motorists do we not pay for parking.Instead of Free ParkingB Y  D O N A L D  S H O U PD o n a l d  S ho u p  i s  p r o f e ss o r  o f  u r b a n  p l a n n i n g  a n d D i r e c t o r  o f  t h e  I n s t i t u t e  o f  T r a n sp o r t a t i o n  S t u d i e s  a t  t h e  U n iv e r s i ty  o f  C a l i f o r n i a ,  L o s  A n g e l e s  9 0 09 5- 1 65 6 ( s h o u p @ u c l a . e du ) .  T h i s  a r t i c l e  i s  a b s t r a c t e d  f r o m  a  r e po r t  i n  t h e  Jo u r na l  o f  P l a n ni n g  Ed u ca t i o n  a n d  R e s e a r c h ,  S u m me r  1 9 9 9 .9 A  C  C  E  S  SN U M B E R  1 5 ,  F A L L  1 9 9 9Where the cost of parking a car is included in higher pricesfor other goods and services, people cannot choose to pay less forparking by using less of it. Bundling the cost of parking intohigher prices for everything else therefore distorts consumerchoices toward cars and away from other options. Minimum parking requirements in zoning ordinances pro-mote free parking, but they often hinder development on siteswhere it is difficult to both construct a building and provide therequired parking. They can also hamper adaptive reuse of exist-ing buildings where the new use would require expensive newparking spaces. To mitigate these problems, some cities allowdevelopers to pay a fee in lieu of providing the required parking.For example, Palo Alto, California, allows developers to pay thecity $17,848 for each parking space that’s not provided. The citiesthen use the fee revenue to provide publicly owned parkingspaces in lieu of the privately owned parking spaces that devel-opers would have provided.A SURVEY OF IN-L IEU PARKING FEE PROGRAMSI surveyed the in-lieu parking programs in forty-six cities—twenty-four in the United States, seven in Canada, six in theUnited Kingdom, six in Germany, two in South Africa, and one inIceland. I examined the ordinances and supporting documentsfor the programs and interviewed the officials who administert h e m .Officials in the surveyed cities contend that in-lieu fees haveadvantages for both cities and developers. The following fivepoints summarize these advantages.1. An Option. In-lieu fees give developers an alternative tomeeting parking requirements on sites where providing all therequired spaces would be difficult or extremely expensive.2. Shared Parking. Public parking spaces allow shared useamong different sites whose peak parking demands occur at different times. Shared public parking is more efficient than ºsingle-use private parking because fewer spaces are needed tomeet the total peak parking demand. Parking that is sharedamong different establishments also allows motorists to parkonce and visit multiple sites on foot.3. Better Urban Design. Cities can put public parking lots andstructures where they do not deter vehicle and pedestrian circu-lation. Less on-site parking allows continuous storefronts withoutdead gaps for adjacent surface parking lots. To improve thestreetscape, some cities dedicate the first floor of public parkingstructures to retail use. Developers can undertake infill projectswithout assembling large sites to accommodate on-site parking,and architects have greater freedom to design better buildings ina more pedestrian-friendly environment.4. Fewer Variances. Developers often request variances from parking requirements. These variances create unearnedeconomic windfalls, granted to some developers but denied toothers. If developers can pay cash rather than provide therequired parking, cities do not need to grant parking variancesand can treat all developers equitably.5. Historic Preservation. The in-lieu policy makes it easier topreserve historic buildings and rehabilitate historic areas byallowing for alternative locations of parking garages. ➢10A  C  C  E  S  SOfficials in all the surveyed cities judged the in-lieu fees as suc-cessful, and they reported that the fees had become a form of admin-istrative relief for developers who do not want to provide therequired parking spaces. WHO DECIDES?Most cities allow developers the choice of paying the in-lieu feeor providing the required parking, but a few cities require d e v e l o p-ers to pay. Officials in these latter cities say mandated fees encour-age shared parking, discourage proliferation of surface parking lots,emphasize continuous shopfronts, improve pedestrian circulation,reduce traffic congestion, and improve urban design.Some cities also allow property owners to remove e x i s t i n grequired spaces by paying in-lieu fees. This option can consolidatescattered parking spaces, facilitate reinvestment in older buildings,and encourage more efficient use of scarce land previously com-mitted to surface parking.IMPACT FEES IMPLICIT IN PARKING REQUIREMENTSMany cities require developers to pay impact fees to fin a n c epublic infrastructure—such as roads and schools. Parking require-ments resemble impact fees because developers must providerequired infrastructure—parking spaces—to obtain building per-mits. The cost of required parking is typically buried in the cost ofdevelopment, but in-lieu fees expose the true cost of parking spacesand allow us to express the cost of parking requirements in termscomparable to municipal impact fees. When cities require d e v e l o p-ers to pay the fees rather than provide the parking, the in-lieu feesare de facto impact fees.To compare the price of parking requirements with impactfees, we must first convert the required parking into a cost persquare foot of building area. We can do this because the cities’ 11 A  C  C  E  S  SN U M B E R  1 5 ,  F A L L  1 9 9 9in-lieu fees are their estimates of the cost of providing parkingspaces. The in-lieu fees therefore reveal the impact fees implicit inthe parking requirements themselves.The parking impact fee depends on (1) the parking requirement(how many spaces per 1,000 square feet), and (2) the in-lieu fee (perparking space). Table 1 presents parking requirements and in-lieufees for office buildings in the central business districts of twenty-nine cities. The last column shows the parking impact fees implicitin the parking requirements.The first row shows that Palo Alto requires four parking spacesper 1,000 square feet of gross floor area for office buildings. PaloAlto’s in-lieu fee is $17,848 per required parking space not provided,so the parking requirement is equivalent to an impact fee of $71 persquare foot of office space (4 x $17,848 ÷ 1,000). A developer whodoes not provide any parking must pay the city a parking impact feeof $71 per square foot of office space.The parking impact fees range from $71 per square foot in PaloAlto to $2 per square foot in Waltham Forest. The median parkingimpact fee is 2.5 times higher in the US cities than in the Canadiancities—$25 per square foot of office space in the US but only $10 persquare foot in Canada. US cities have higher parking impact feesbecause they require more parking, not because they have higherin-lieu fees. The median parking requirement is almost three timeshigher in the US than in Canada—2.9 spaces per 1,000 square feetin the US but only one space per 1,000 square feet in Canada. Themedian in-lieu fee is lower in the US ($9,125 per space) than inCanada ($9,781 per space).The average parking impact fee for the US cities is $31 persquare foot of office space, which dwarfs the impact fees levied forall other public purposes. A 1991 survey of one hundred US citiesfound that the total impact fees for all purposes (roads, schools,parks, water, sewers, flood control, and the like) averaged $6.97 persquare foot of office space. The average parking impact fee for officebuildings is thus 4.4 times the average impact fee for all other pub-lic purposes combined. If impact fees reveal a city’s preferences forpublic services, then it seems that many cities’ highest priority isfree parking.Officials in most cities reported that they set the in-lieu feebelow the cost of providing a public parking space because the fee would be “too high” if the city charged the full cost. When thecost of required parking is hidden in the cost of development, costdoes not seem to matter. But when the cost of required parking ismade explicit in cash, everyone can see that it is “too high.” ➢Palo Alto, CA $17,848 4.0 $71Beverly Hills, CA 20,180 2.9 59Walnut Creek, CA 16,373 3.3 55Kingston upon Thames, UK 20,800 2.3 48Carmel, CA 27,520 1.7 46Mountain View, CA 13,000 3.0 39Sutton, UK 13,360 2.7 36Harrow, UK 14,352 2.3 33Hamburg, Germany 20,705 1.5 32Lake Forest, IL 9,000 3.5 32Mill Valley, CA 6,751 4.4 30Palm Springs, CA 9,250 3.1 28Reykjavik, Iceland 13,000 2.2 28Claremont, CA 9,000 2.9 26Concord, CA 8,500 2.9 24Davis, CA 8,000 2.5 20Orlando, FL 9,883 2.0 20Kitchener, Ontario 14,599 1.3 19Chapel Hill, NC 7,200 2.5 18Kirkland, WA 6,000 2.9 17Hermosa Beach, CA 6,000 2.6 16Berkeley, CA 10,000 1.5 15Burnaby, British Colombia 7,299 2.0 15Vancouver, British Colombia 9,708 1.0 10State College, PA 5,850 1.3 8Ottawa, Ontario 10,043 0.7 7Calgary, Alberta 9,781 0.7 7Port Elizabeth, South Africa 1,846 2.3 4Waltham Forest, UK 2,000 0.9 2MEAN $11,305 2.3 $26MEDIAN $ 9,781 2.3 $24CITY IN-LIEU PARKING FEE($/space)PARKINGREQUIREMENT(spaces /1,000 sq ft)PARKING IMPACT FEE($/sq ft)T ABL E 1Parking requirements for office buildings in city centersinterpreted as impact fees, 1996 (US dollars)Downtown San Jose $80 $60 $40Areas served by bus and light rail $60 $40 $20Areas served by bus only $40 $20 $10NUMBER OF EMPLOYEESLOCATION 1–99 100–4,999 5,000+TAB LE 2Eco Pass price schedule, Santa Clara Valley TransportationAuthority (annual price per employee)REDUCE DEMAND RATHER THAN INCREASE SUPPLY?Minimum parking requirements impose high costs, butreform is difficult because parking requirements are entrenchedin cities’ practice and legislated in zoning ordinances. Neverthe-less, allowing developers the option to finance public parkingrather than provide private parking suggests another promisingin-lieu option: Allow developers to reduce the demand for parkingrather than increase the supply of parking.One way to reduce the demand for parking is to make pub-lic transit a more viable alternative. For example, employer-paidtransit passes reduce the demand for parking at work, and a citycan therefore reduce the parking requirements for developerswho make a commitment to provide transit passes for all employ-ees at their sites. Suppose that providing free transit passes to allemployees at a site reduces parking demand there by one park-ing space per 1,000 square feet. In this case, a developer’scovenant to provide free transit passes to employees at the sitewould be an appropriate alternative to providing one requiredparking space per 1,000 square feet.Some transit agencies offer employers the option of buyingEco Passes that allow all their employees to ride free on all localtransit lines. Eco Passes are priced according to their probabilityof use, and the price per employee is low because many employ-ees do not ride transit even when it is free. Employers can there-fore buy Eco Passes for all employees at a low cost. In California’sSilicon Valley, for example, the Santa Clara Valley TransportationAuthority (SCVTA) charges from $10 to $80 per employee peryear for Eco Passes, depending on an employer’s location andnumber of employees.Because frequent riders often buy conventional transitpasses, transit agencies must price these passes on the assump-tion that riders will use them frequently. And because transitagencies price transit passes to cover the costs imposed by fre-quent riders, infrequent riders will not buy them. In contrast, EcoPasses are priced like employer-paid insurance that covers everymember of a defined population, and the price of an Eco Pass istherefore much lower than the price of a conventional transit pass.For example, the SCVTA’s price for its Eco Pass is only 2 to 19 per-cent of the price for its conventional transit pass ($420 per year).COST-EFFECTIVENESS OF EMPLOYER-PAID TRANSIT PASSESMinimum parking requirements increase the supply of park-ing, while providing Eco Passes increases the demand for transit.We can estimate the cost-effectiveness of providing Eco Passes inlieu of parking spaces by combining their cost with informationon how they reduce the cost of meeting parking requirements.13 A  C  C  E  S  SN U M B E R  1 5 ,  F A L L  1 9 9 9Employers in Silicon Valley pay $10 to $80 per employee per yearfor Eco Passes. If there are four employees per 1,000 square feet ofoffice space, Eco Passes will cost from 4¢ to 32¢ per square foot ofoffice space per year. How does this cost of offering Eco Passes to allemployees compare with the resulting reduction in the capital cost ofproviding parking spaces?The SCVTA serves two of the surveyed cities that have in-lieuparking fees. The cost of providing the parking required for officebuildings is $39 per square foot of office space in Mountain View and$71 per square foot of office space in Palo Alto. A survey of Silicon Val-ley commuters whose employers offered Eco Passes found that com-muter parking demand declined by approximately 19 percent. A citymight in this case grant a 19-percent reduction in the parking require-ment for office developments that offer Eco Passes for all commuters.If the Eco Passes reduce parking requirements by 19 percent, theywill reduce the capital cost of providing the required parking spacesby $7.41 per square foot of office space in Mountain View ($39 x 19percent) and by $13.49 per square foot of office space in Palo Alto ($71x 19 percent).In this example, spending between 4¢ and 32¢ per square foot ofoffice space per year to provide Eco Passes would reduce the capitalcost of required parking by between $7.41 and $13.49 per square foot.We can convert this relationship into the potential return on each dol-lar spent for Eco Passes: spending $1 a year to provide Eco Passeswill reduce the up-front capital cost to provide required parking bybetween $23 ($7.41 ÷ 0.32) and $337 ($13.49 ÷ 0.04). The annual costof the Eco Passes ranges between 0.3 percent and 4.3 percent of thereduction in the up-front capital cost of the required parking. EcoPasses will also reduce the operating and maintenance costs for parking because fewer spaces are required. The low cost of reducingparking demand compared with the high cost of increasing the park-ing supply shows that Eco Passes are a cost-effective way to reducethe high cost of meeting parking requirements mandated by zoningo r d i n a n c e s .CONCLUSION: THE HIGH COST OF MINIMUM PARKING REQUIREMENTSThe impact fees implicit in parking requirements dwarf the impactfees for all other public purposes combined. The evidence of high park-ing impact fees should make it hard for planners to ignore the high costof minimum parking requirements. Given the high cost of requiredparking spaces, planners should not assume that the demand for park-ing automatically justifies minimum parking requirements.Planners who set parking requirements rarely think about theprice that motorists pay for parking. But demand depends on price, andmost motorists park free. Planners who require enough spaces to satifythe existing demand for parking make the mistake of requiring enoughspaces to satisfy the demand for free parking, no matter how much itcosts. In-lieu parking fees unveil the high cost of this mistake. ◆F U R T H E R  R E A D I N GDonald Shoup, “An Opportunity to Reduce Minimum ParkingRequirements,” Journal of the American Planning Association,v. 61, no. 1, pp. 14-28, Winter 1995.Donald Shoup, “The High Cost of Free Parking,” Journal ofPlanning Educaction and Research, v. 17, no. 1, pp. 3-20, Fall 1997.Donald Shoup, “In Lieu of Required Parking,” Journal of Plan-ning Education and Research, v. 18, no. 4, pp. 307-320, Sum-mer 1999.Willson, Richard, “Suburban Parking Requirements: A TacitPolicy for Automobile Use and Sprawl,” Journal of the Ameri-can Planning Association, v. 61, no. 1, pp. 29-42, 1995.

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