Bill Hulet Editor

Here's the thing. A lot of important local issues are really complex. And to understand them we need more than "sound bites" and knee-jerk ideology. The Guelph Back-Grounder is a place where people can read the background information that explains why things are the way they are, and, the complex issues that people have to negotiate if they want to make Guelph a better city. No anger, just the facts.


Sunday, October 23, 2016

The High Cost of Free Parking in Guelph

Executive Summary:

One of the forces that is most influential in creating low-density, carbon-intensive, and, extremely expensive cities to live in are parking regulations. Unfortunately, their pernicious influences are pretty much invisible to most voters. This article shows how regulations hidden within Guelph's planning regulations add tens of thousands of dollars to the cost of condominiums, raise rents significantly, prevent the creation of walkable urban neighbourhoods, and, ruin public transit. 

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 The High Cost of Free Parking in Guelph

"The right to have access to every building in the city by private motorcar, in an age when everyone possess such a vehicle, is actually the right to destroy the city",  Lewis Mumford 

Lewis Mumford
Primitivojumento,
 Wiki Commons
During my Quixotic attempt to run for Guelph Council, I found that the one issue guaranteed to generate the most phone calls was parking. People get absolutely enraged when they receive a parking ticket. And no more vicious and brutal animosity seems to be created than a battle between two neighbours over a parking spot. Since I've never actually owned a automobile (although I had two motorcycles and a moped), I've always found this emotional commitment hard to understand.

After working through parts of Donald Shoup's encyclopedic The High Cost of Free Parking, I think that I am starting to "get" parking.  The key issue is the assumption that anyone who has made the investment of buying a car believes that they automatically gain the right to free parking for as long as they own it.

It's easy to see how this idea came to be. At first, cars were just something that rich people had. And this meant that there was plenty of space at the side of the road for them to park. And since rich folks tend to live on large properties, there is generally a place for them to store their cars. The problem with parking only started when cars became very popular.

When middle-class people started to own autos, a new business was created in large cities---commercial parking garages. These places stored your car when you weren't using it. They came about because existing apartment buildings---being built in the pre-automotive era---didn't have parking spaces provided for tenants. In fact, if you watch old movies you will often hear dialogue or plot devices that hinge around the fact that a person has rented a space in another building to store
Donald Shoup by his permission
their car. When these middle-class folks went downtown, they found that most businesses didn't have parking either. This meant that they either parked at the curb---if they could find a space---or paid a fee to park in a private, for-profit, parking lot. Since there was no guarantee that they will find a space at the curb, or a lot near where they were going, they often decided to just take a cab or public transit. People didn't hop in their cars to go downtown, because parking was often too much of a hassle, so cars were not only less commonly owned, they were used less often.

Enter the planning departments of all North American cities. They decided that if lots of people were going to drive cars, then there had to be places for people to park them. This wouldn't have been much of a problem if drivers had been forced to pay the actual cost of parking. This would have meant that a few more privately-developed, paid parking garages and open-air lots would have been built.

Unfortunately, what happened instead was that planning departments all across North America decided to force every single new building to provide free parking for the people who rented apartments, bought condos, went to the library, worked at an office tower, ate at their restaurants, or, shopped at stores. For a variety of reasons, this has proved a disaster for cities.

All this parking dramatically increased the cost of building a new structure. When someone decides to build an apartment building, for example, they have to build not only the apartments, but also the parking that goes with it. If the apartment complex is built in an area with cheap land, then the parking can go outside the building on a basic lot. But it also means that the developer has to purchase a much bigger lot. There are other costs too, such as snow removal in the winter. All of these costs are passed on to the person who rents an apartment. This means that the parking isn't "free"---it's just a hidden cost that everyone has to pay, whether they drive or not.

Now consider a situation where planning doesn't force developers to provide "free" parking. As I mentioned before, this situation used to exist in apartment buildings that were built before the rise of the automobile. In this situation, a person who decides to live in this apartment complex and also decides to purchase an auto will be forced to find a garage or lot to park his vehicle and pay a monthly fee to do so. This also means that anyone who lives in that apartment building and who doesn't choose to own a car no longer has to subsidize the guy who does.

There is another, very important element to this issue. If a developer doesn't have to provide parking for his customers, he can dramatically shrink the size of the lot that he has to purchase. This means that it will be easier to do "in fill" development. It also means that the density of the community will rise. This will mean that the city can save money on servicing the properties. It will also increase the viability of public transit, which will lower the need to own a car in the first place. With more density, there will be more places that a renter can walk to to shop, work, or, socialize. And with more viable transit, there will be more frequent buses, which will make that option more convenient too.

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It is hard to define the cost of a generic parking spot. This is because a large part of the cost comes down to the cost of the land---which not only varies widely from city to city, but also from
neighbourhood to neighbourhood. Also, in parking structures the cost per unit is going to change based on the size of garage---simply because of the economies of scale. But Donald Shoup has come up with an approximation that will helpfully give us an "order of magnitude" to understand this issue. (All that follows comes from Chapter 6 of The High Cost of Free Parking, "The Cost of Required Parking Spaces".)

Shoup analyzed fifteen parking structures that were added to the University of California, Los Angelos (UCLA) between 1961 and 2002. He reasoned that he could ignore the land cost element of the price by calculating the number of cars that could be parked just on the footprint of the land that the building sat on, and subtracting that from the total number that could be parked in the finished structure. That net result would divided into the cost of the building (less the land acquisition price) would be the real cost of each parking spot. He then factored in inflation to come up with a price per car based on standard 2002 dollars. Since parking structures are pretty much the same in Ontario as in California, this will give us a number that is probably the same here.

In Shoup's analysis, above ground parking at UCLA came to $14,500/added space, in 2002 US dollars. Using inflation and currency converters from the Internet, this converts to $19,400 in 2016 US dollars, and $25,400 current Canadian dollars per parking spot.

One complexity that needs to be understood is that above ground parking is a lot cheaper than below ground parking. But in very dense areas developers often put below ground parking into their condominium and apartment developments, so it is very important to separate these two costs. Shoup parses out this number by looking at five different below ground parking structures and came to the following number of $25,800 US in 1998. This converts to $38,100 US in 2016 and $49,900 current Canadian dollars, per unit of underground parking.

Of course these numbers are probably a bit off one way or another. But I suspect that they do give a rough idea of how much the cost of parking adds to every building.

Now, let's look at the Guelph planning regulations vis-a-vis new apartment and condominium construction. According to the General Provisions of the Guelph Zoning Bylaws, Section 4.13, the minimum required parking spaces per unit are 1.5 for the first 20 units, and after that, it is 1.25 per unit. Since I cannot see any separate listing for condominiums, I will assume that the same rules apply. This would suggest that a condo tower or apartment with seventy-five units would require 99 parking spaces (that is 20 times 1.5, or, 30, plus 55 times 1.25, or, 68.75 or 69. 30 plus 69 equals 99.) Since space is at a premium in downtown Guelph, if they go there, these towers would have to build parking garages. At this point, by plugging in Shoup's numbers I can calculate that if they are above ground the parking spaces would cost $2,514,600 and would add $33,500 to the price of each condo or apartment. If the developer has to do below ground parking, the total cost would be $4,940,000 or $65,900 per unit.

Seeing those numbers explains to me at least part of the reason why condos cost so much!  It also probably has something to say about rents.



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These regulations raise the costs not only for housing, but also for businesses. And office building (like the Co-Operator's) requires one space for 33 square meters of "Gross Floor Area" (GFA), 16.5 square meters in a retail establishment, 7.5 square metres in a restaurant or tavern (think the Albion), and, 9 square metres in a take-out restaurant (think MacDonalds.)  It also says that Hotels have to provide a space per room plus one per 10 square metres of space open to the public (I assume things like restaurants and bars.) It also says that if a developer wants to build an apartment over top of a business (like most old downtowns), each unit must provide an off-street parking space per unit---in addition to the spaces it must provide for the business (see  4.15.2.4.)

I won't try to come up with estimates of how much these spaces cost, because that would involve an analysis of land costs in Guelph, which varies from neighbourhood to neighbourhood. The zoning regulations do set out in great detail---depending on area---the minimum size of a parking space (from 3 metres by 6 metres, to, 2.5 by 5.5.) They also prescribe "set backs" plus rules governing access to each spot, which add space requirements. Also, above a certain size of lot, a certain number of handicap spaces need to be offered.

To put this into a context, the old downtown Budd's building is currently listed as on offer for leasing as office space, with 16,606 square feet.  This converts to 149 square metres, which would require 5 parking spaces (the zoning regulations say that partial numbers are always rounded up to the next whole parking spot.) If Budd's were being newly build as a retail space, it would be required to provide 10 parking spaces. What this means is that if you want to build a new store like Budd's, you would have to provide a parking space that would be at least 180 metres square. But that number doesn't include required set-backs and access lanes, which might add as much as one third more to the size of the lot, making the ultimate size about 240 metres square.

In it's present configuration, the Budd's building has a basement. If a developer was going to build a new structure like it, he would be purchasing much cheaper land outside of the downtown core, which means that he probably wouldn't be building basement space into it, as this is only done when land costs go above a certain amount. So I'd suggest that probably this new store would probably only be two stories at most, which means that a 149 square metre store would probably end up having a footprint of 75 square metres at the very least. It would be fair to say, therefore, that the parking regulations would result in the developer having to assemble a lot that is at least 255 square metres, or, 2744.8 square feet. This is also how parking regulations dramatically lower the density of cities.

As a result of these parking regulations, it is effectively against the law for anyone to build a store like the old Budds, Ackers, and, other downtown businesses. The only way they were able to survive as long as they did was because they had been "grandfathered" as legal, non-conforming. If anyone wonders why we have big, sprawling cities that are too low density to have a proper public transit system, the answer is simply that it is against the law to build them any other way. The laws that force businesses to do this all come down to parking.


The old Budds store. It would be totally illegal to build something like this today.
Photo by Bill Hulet

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If we are ever going to build the sort of higher-density, sustainable cities we are going to have to stop forcing all developers from having to devote enormous amounts of resources to providing off-street parking. The fundamental problem is a misallocation of resources. People who do not own a car, and have no interest in ever owning one have to pay as much as $74,000 extra on their condo unit simply because our zoning assumes that everyone will own a car. The fact that most people who buy condos in the downtown do so specifically because they don't want to have to drive everywhere is completely lost on these regulations.

Of course, there are going to be people who really do want to own car and have a parking space in their building. But the way to deal with this problem is to let the people who want to drive cars PAY for the privilege instead of forcing everyone who doesn't to subsidize their lifestyle choice. Developers will learn how many units that they actually need in a building.  If they build too few, they will suffer. If they build too many, then they will get "stuck" with spaces that they will have to rent to outsiders. Some business people might see an opportunity and build parking garages outside of condominiums in cheaper parts of town for the people who will be happy to use transit for commuting and just drive on special occasions.

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The obvious response to the above suggestion is that people will drive cars without paying for a parking space and businesses will have customers with no place to park. The result will be total chaos. The essential answer to this problem is to allow the marketplace to set the price.

The best way to understand this point is to consider the lowly parking meter. The first thing to
Let this light your Way!
Lorax, Wiki Commons
realize is that parking meters are not about raising money. Instead, their job is to ensure that people who really want to park on the curb will be able to find a spot. Consider the number of parking spaces that would be free in downtown Guelph if parking were totally free. The fact is that the folks who work downtown would park their cars on the curb and the "lot" would be full all day long. The other option to consider is what the curb parking would look like if the meters charged $20/hour---there'd be no problem at all finding a place to park. The issue is to figure out what to charge to find the "sweet spot" where there are always going to be spots available, but you aren't chasing away everyone who really does want a place to park.

Traffic engineers have done studies and found out that there actually is an optimal amount of curb parking usage. According to Shoup, they suggest that one in seven spaces (15%) should be free at any given moment. This amount is probably going to be high enough during peak times of the day to ensure that if someone wants to park their car for extended periods of time---like an entire eight hour shift---they won't be willing to pay that much money. As a result, they will seek out lower cost alternatives, like either taking transit, car-pooling, or, finding a lot with lower charges.

There will be "hardy folks" who will attempt to bypass the free market by parking at the curb in surrounding residential streets. There are ways to discourage this behaviour too. Locals who live in the area could be issued passes that allow them and visitors to park at the curb. Anyone without a pass on their dashboard would be subject to fines. What if someone decides to rent out or sell their pass? No problem! The amount that they charge the person parking is itself part of the marketplace. The only thing that the city might want to do is to take steps to prevent counterfeit parking passes and to publish a "going rate" for passes to ensure that people charge enough to ensure that same 15% turnover that will ensure that there are still spaces when the locals need to put their car on the curb. (Presumably this will be significantly less than the downtown rate because of the inconvenience of having to walk downtown after parking.)

If you really want to get fancy, the meters could all be controlled electronically to allow the city to charge different rates at different times of day. Obviously there are going to be "busy" and "slow" times. The rates needed to keep 15% of the spaces open will be different at different times. There may be variation from one day of the week to another, and perhaps from one season to another.
Hi-tech parking meter!
Wiki Commons
"Smart" meters would be able to keep track of all that information and help parking departments keep up with change. They could also be linked to cell phone apps that would help motorists find the spaces that are open and pay for the time that they wish to park.  

The important issue is that people who drive cars would begin to start understanding the real cost of having to provide parking for their vehicle. The flip side is that anyone building apartments, condos, burger joints, or, dress shops would no longer have to create parking spaces that people may or may not want to use. At first, this probably wouldn't make much difference, as most businesses would be afraid of losing customers who couldn't find a place to park. But eventually some plucky pioneers would decide that the savings in cost would be worth the risk. They might even put some apartments over top of the store to augment the income from commercial renters. Some business people might decide that they want to live upstairs from their business.

The first places where this might happen would probably be at spots where there is a lot of public transit. Some place on the Gordon street transit corridor would be a good spot, perhaps. There would probably have to be some sort of direction from City Hall. Perhaps a consortium of business people could plan a new secondary "downtown" for the city where the goal is a walkable neighbourhood. It could be specifically aimed at that fraction of the population that really doesn't care to own a car. This might be a mixture of those young "hipsters" who aren't interested in cars and older "boomers" who are retired and don't want the hassle anymore.

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One thing that probably is going to make this transition happen even faster is the rise of both Uber and self-driving cars. The government of the USA is "fast tracking" the introduction of self-driving cars, this means that they are probably going to quickly become part of the landscape here in Canada. And this is going to mean a great deal to parking. When they become an accepted part of society, a lot of people are going to have apps on their phones that will allow them to call for a self-driving car that will pick them up and take them wherever they want to go. This means that they really have no reason at all to own or park their own car. This means that there will no longer be as many people who need a parking space where they live or work. It also means that when they go shopping instead of parking a car, they will just get let off and call for another one when they are finished. In the interim, the cars will be off driving other customers around instead of sitting in a parking space gathering dust.

This won't be much different from calling a cab, but they will be cheaper. This is because they will have all the same upfront expenses but without having to pay for a driver. Since running your own car costs something like $10,000 a year in Canada, increasing numbers of people are going to start asking "why do I have to pay all this money, plus grotesquely-subsidize parking fees in the price of everything I buy, when I can just take transit or push an app on my phone to get a car?"

A Google self-driving car---the final nail in the coffin for subsidized parking?
Steve Jurvetson from the Wiki Commons

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This issue of where parking is going is tremendously important for Guelph's future. Right now the city is developing a parking master plan for the future of the downtown. As the city website says:

Through the Places to Grow Act the Province of Ontario requires increased population density for communities including downtown Guelph. As well, over the next 16 years the number of people who work and live downtown will double from 8,000 to about 16,000 people and jobs and as a result there is a need to plan to have sufficient parking for people living, working and visiting downtown.
Public parking infrastructure downtown has not increased since 1983 when Guelph had a population of 70,000 and as a result, on-street parking and parking lots in the downtown core are at capacity. To accommodate downtown population and employment growth targets, an additional 1,300 to 1,700 parking spaces are needed by 2031. These new parking spaces will be created by replacing downtown parking lots with a series of parkades, starting with 350 new stalls (anticipated to be the Wilson Street parking lot) and followed by 250 new stalls (anticipated to be the Neeve Street parking lot).
I am assuming that these 1300 new parking spaces will be in above ground structures, which means that according to Stroup's numbers ($25,400 per space), the cost of building them will be about over $33 million dollars. Now, Stroup has worked through a mechanism for estimating how much money drivers need to pony up to pay for each space. I will try to work through his reasoning as follows.

The first cost is that of paying for building the structure. Stroup assumes that this can be done over 40 years. Let's assume that the city can get the money at 3% for 40 years. I Googled an amortization calculator and plugged in the numbers. At 3% over 40 years, the total capital cost is $56,705,000 (capital plus interest.) This translates into a monthly cost of $118,000. Divide that into 1300 spaces, and each parking space will have to create an average of $91 of revenue a month---just to pay the capital costs. Stroup's analysis of UCLA's parking budget says that it spends a further $33/month on maintenance, administration, and so on. These are 2002 US dollars, which convert to $58 in 2016 Canadian dollars. Add them together and it should cost about $149/month.

OK, not every space is going to be taken up by a monthly pass. Some of them will be rented to shoppers. If a space has to generate $150 of revenue a month, that only means it has to generate $5 a day. That should be relatively easy, shouldn't it?

Well, yes and no. Consider the fact that the lot is not going to be full up most days. Let's be really optimistic and assume that on peak days it will only have 10% excess capacity on any day. That means that only 1170 spaces will be in use. Divide $118,000 by 1,170 and you get $101 a month. But, you don't have to add $58 in maintenance to this number, but instead a larger number---because maintenance is a fixed cost, just like capital. This means that the cost per filled parking space has just gone up to $64 per space. That means that at 90% occupancy, the cost per customer comes to $165 per month.

OK, not every space is going to be taken up by a monthly pass. Some of them will be rented to shoppers. If a space has to generate $150 of revenue a month, that only means it has to generate $5 a day. That should be relatively easy, shouldn't it?

Well, yes and no. Don't forget that parking is something that fluctuates dramatically from day to day. Lots are often empty on specific days of the week, such as Sundays. They also empty out on holidays---such as Christmas. Let's assume that the lot downtown will not be used at all on four Sundays plus one holiday a month. That means that we can only count on 25 days a month when we can generate revenue from casual drivers as opposed to people with monthly passes. That means that the space has to generate $6 a day. Not a huge increase.

If you look at what a monthly pass for parking downtown currently costs, you can see that the biggest charge is only $92 and the cheapest is $40.  Hourly parking in the lots is $2 for a ten hour period, Monday to Friday, with a flat fee of $2 on Saturdays and $5 for special events. Sundays are free.

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The problem with all of Guelph's downtown parking plan is that it assumes that the future is going to be just like the past. And the one thing that I feel confident saying about the future is that just isn't going to be the same as what people are used to. Climate change means that we are going to have to transition to a carbon free economy in a very short part of time. I suspect that there are going to still be personal transportation devices (probably electric)---but there probably going to be a lot fewer of them. And a lot of them are probably going to be more like self-driving, taxis than personally-owned automobiles. Mainly, I suspect that there is going to be a lot more public transit in use. The fact that GO transit is expanding, a high-speed train for the Windsor to Quebec City corridor has been promised, and, Kitchener-Waterloo will soon have light rail all suggest to me that the number of people using cars will be declining in the near future.

Even more to the point, the transition to this new reality is not going to happen everywhere at the same time. I dare say that this new way of living is going to happen in downtown Guelph before just about anywhere else in the city or the province. People move to Guelph to be on the cutting edge of environmental issues, and the people who do that usually want to move downtown if they can.  What this means to me is that if we "get it wrong", the city will be wasting many millions of dollars on parking garages that will spend a large part of their life empty. This would again---as with so many things parking related---a profound misallocation of resources.

I would suggest, in contrast, that---in at least the downtown core---the city should rip up the off-street parking regulations and let the free market decide. Apartments, condos, and, commercial buildings will be a lot cheaper if developers don't have to provide parking spaces for people---whether they want them or not. If it turns out that I am wrong and there remains a tremendous need for downtown parking, let some business person step in and build a private parking garage where he can charge the real cost. Just stop trying to force me to pay for someone else's right to destroy the planet with with their gas-guzzling, climate changing, death wagon.  ;-)



2 comments:

  1. Great article, thanks! I thought it was too late to comment on the Downtown Parking study. Is there still time to comment? You are absolutely correct that it is unfair for those who don't a car to park have to subsidize those who do.

    ReplyDelete
    Replies
    1. I don't really know about commenting in studies. Frankly, I'm more than a little cynical about formal processes for commenting. My belief is that staff are pretty much trained to and selected for not thinking "outside of the box", and most of them have holes in their minds when it comes to thinking about the "big picture". In fact, I think that to a large extent, that's what being a professional is all about.

      I think it's much better to talk to city Council about this sort of thing. It's actually the job of Council to set policy and deal with the big picture, not staff. So if you wanted to see a real change in our parking policy, I'd suggest lighting a fire under the butt of a few members of Council.

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