Monthly Archives: March 2013

What would happen without parking requirements? Part 2 – Process

CC image from Joe Philipson

Following up on the previous post…

Matt Yglesias links to Michael Manville’s paper, also highlighting the dual areas of inflexibility with zoning parking requirements: that the requirement is fixed at a level above market demand, and that the parking must be provided on site. On top of the rules themselves, the additional process required to earn flexibility from the requirements adds substantial time and cost to any applicant seeking flexibility.

Matt highlights a piece from Aaron Wiener in the City Paper’s Housing Complex column that demonstrates the real-world impact of these requirements, not just for real estate developers but also for entrepreneurs looking to open a business in an under-served neighborhood:

It’s a challenge that’s playing out across the city, with some developers opting to apply for exemptions from the parking minimums, which are usually granted, while others are discouraged from undertaking projects. But it’s a particularly acute problem in Anacostia, where retail is sorely needed and the market is still sufficiently unproven that developers are reluctant to take risks on ventures that could lose money. A requirement to build parking or apply for a variance adds an extra expense that can scare would-be retailers away—particularly when there’s not even space on site for parking, a common scenario in the historic neighborhood.

The documented example of the former H St Playhouse (looking to move to Anacostia) is a contrast to the flexibility in LA, where the adaptive reuse ordinance allows for developers to provide parking off-site. In Anacostia, the theater has control of the required spaces, but those spaces are not located on the exact same property. One could argue that the law mandating parking is misguided, but even when a business seeks to address the spirit of that law, it gets stuck on the letter of the law.

Some flexibility from the rules can be granted, but that requires a great deal of additional costly process for the applicant. So much real estate development simply follows the path of least resistance, meaning that cities should ensure that the path of least resistance leads to the city’s desired outcomes. More from Wiener:

“The city gave $200,000 in a grant to renovate [the Playhouse space],” saysDuane Gautier, CEO of the nonprofit ARCH Development Corporation, referring to funding last summer from the D.C. Commission on the Arts and Humanities; ARCH also provided a $50,000 interest-free loan to the Playhouse. “So basically one part of the city government is hurting the other part of the city government who wants this done quickly. It doesn’t make a lot of sense.”

A change like LA’s ARO is a strong step in that direction. Similarly, DC’s pending zoning code re-write is also a step in the right direction. The process spelled out by law matters a great deal and has tremendous impacts on the outcome (the kind of ‘seriatim decision making’ highlighted by David Schleicher).

I’m also reminded of another good DC parking article from previous Housing Complex writer Lydia DePillis one year ago, containing many anecdotes from developers with underutilized parking and/or experiences where the parking requirements forced them to reduce a development in size or abandon it completely.

 

What would happen without parking requirements?

Downtown Los Angeles. CC image from Nadia Kovacs.

The paper of the day, from Michael Manville: “Parking requirements as a barrier to housing development: regulation and reform in Los Angeles”

Abstract: Using a partial deregulation of residential parking in downtown Los Angeles, I examine the impact of minimum parking requirements on housing development. I find that when parking requirements are removed, developers provide more housing and less parking, and also that developers provide different types of housing: housing in older buildings, in previously disinvested areas, and housing marketed toward non-drivers. This latter category of housing tends to sell for less than housing with parking spaces. The research also highlights the importance of removing not just quantity mandates but locational mandates as well. Developers in dense inner cities are often willing to provide parking, but ordinances that require parking to be on the same site as housing can be prohibitively expensive.

Background: Los Angeles had a lot of underutilized office buildings that were not competitive in the office market any longer. The city passed an adaptive reuse ordinance to encourage the re-use of these buildings by offering flexibility on zoning requirements, including use and parking.

The paper shows how developers for these conversions, given flexibility from the code by right, to build less parking than would otherwise be required (new construction in the area is still subject to the parking requirements of the code).  But, unlike the cases in Portland, all of the developers still provided some parking – this is Los Angeles after all (and yet another case for letting the market prevail based on local and regional conditions).

The second key area of flexibility is in parking location – developers wishing to re-use properties downtown could provide parking for tenants off-site, often allowing for shared use parking in under-utilized office garages nearby. Traditional requirements not only arbitrarily set the level of parking to be built, but also demand it be provided on site, even if off-site options may be more feasible and cost-effective.

In terms of the housing stock, this code flexibility allowed developers more flexibility in their target market. Those targeting the higher end provided more parking, but the lack of a hard requirement allows devleopers flexibility in which markets they target.  Parking has a great market value, of course, so the units built with fewer or no parking spaces would rent for a lower price, allowing the market to create a wider range of products.

The end result is more housing, a wider range of housing price points, a smaller supply of off-street parking spaces, and re-use of under-utilized buildings.

While this paper focuses on LA’s adaptive re-use ordinance, the same pricinples apply to zoning and parking requirements in general.

Managing on-street parking: zoning is not the way

Park sign. CC image from Pixel Jones.

We don’t manage our limited parking resources very well. However, that leaves us lots of room to improve our policies.

A recent Freakonomics podcast entitled ‘Parking is Hell’ provides a nice entry-level synopsis of the challenges involved in using market forces to better manage this valuable resource. The podcast features interviews with parking scholars, including Don Shoup. They address the fallacy of the idea of ‘free’ parking, the idea of using price to better allocate this resource, and the practical challenges to better management of on-street parking (such as the abuse of handicapped parking placards, as well as the rampant illegality in parking practice).

Despite the cold, hard logic behind the idea of performance parking, it’s not an easy political sell. Similar experiences with de-congestion road pricing in Stockholm show reluctance at first, and then broad support for the program once the benefits can be demonstrated, and revenues directed towards locally-controlled improvements. Still, no one likes the idea of someone proposing an increase to your daily costs in exchange for uncertain benefits.

That risk-aversion applies to parking, too – and perhaps explains a great deal of the reluctance to embrace a whole host of parking reforms, both for on-street parking management, but also for zoning code off-street parking requirements. The evidence for the ineffectiveness of these requirements in managing on-street parking is huge; the unintended consequences are large.

Zoning requirements won’t manage on-street parking for you. Consider this case from Boston, where air quality regulations capped the total supply of off-street parking garages, but the city fails to manage on-street parking effectively:

The steep costs at our garages mean that only the well-off and the truly desperate ever wind up parking in them. The rest of us find ourselves in a never-ending chase for metered street parking, which is an absolute steal. Because the price is absurdly low for such a rare commodity—there are around 8,000 metered spaces in Boston—drivers are willing to circle the block for as long as it takes to find an opening, like vultures in search of prey. The $10-an-hour difference between a garage and a metered spot in Boston gives “drivers a license to hunt,” says Mark Chase, a local parking consultant,“but it’s not a guarantee of a parking place.” The result, naturally, is congestion. Studies from around the country have shown that as much as 34 percent of all traffic in downtown areas involves drivers just looking for parking spaces.

Meanwhile, Boston has set aside a ton of spaces for resident-only parking in neighborhoods, and it charges nothing for the permits to use them. And what happens when it doesn’t cost anything to keep cars parked on the street? They stay there. Today more than 311,000 vehicles are registered in Boston, and more than 87,000 of them have residential parking permits. Each of those cars takes up around 160 square feet—the size of a street spot—of prime city real estate.“You have some of the most valuable land on earth, and you’re giving it away for free to cars,” says Donald Shoup, a professor of urban planning at UCLA, and the author of The High Cost of Free Parking. “It’s preposterous.”

Enter a new development proposal, aiming to build car-free, promising not to rent to car owners and therefore not make Boston’s off-street parking problem even worse:

Paul Berkeley, president of the Allston Civic Association, said residents support Mariscal’s plan for an airy, green building, but said the no-car idea would not fly.

“It’s well-intentioned and it could be successful, but people felt that in that location there was too much of a risk of people having cars and just putting them in front of houses nearby,” he said.

So, they tried to reconfigure the development with 35 spaces for the 44 units. Even that is not enough to satisfy the zoning code, as the article notes that the current code requires an absurd two spaces per housing unit. Patrick Doyle notes that the real problem here is not with community skepticism about all the new residents being car-free, but with the absurdly low price for on-street parking. Such ignorance of the basics of supply and demand is not a recipe for good management.

Consider the opportunity costs. It’s not as if requiring parking only hits a developer in his/her pocketbook (though it does). Parking takes up a lot of space, and the geometric requirements for cars to circulate into a garage and have appropriate turning radii to get in and out often do not match up with the geometry of small urban lots ripe for infill development. In Atlantic Cities, Emily Badger writes about the same Boston development:

His proposal also highlights the hidden reality – true in cities everywhere – that our modern buildings largely take their first architectural cues from cars.

“When you remove the car component as the main design challenge,” Mariscal says, “your way of thinking about design is completely different. The possibilities that open for a more environmentally friendly and human design – they are endless.”

Furthermore, the kinds of older neighborhoods we love in our cities usually pre-date zoning requirements for parking. Their very existence is non-conforming. When you suddenly add a very different geometry to design around as a legal requirement (the car and associated parking), you fundamentally change the shape and design of the kind of buildings you build and of the city that will result.

Do your requirements actually make sense? It seems like a basic question to ask. However, lots of requirements exist because they were the default when a code was written, often without much in-depth consideration or any easy mechanism to regularly re-evaluate them.

Consider New Haven, CT. The City asked some out-of-town developers what it would take to make New Haven an attractive place for them to do business. In the vein of a dating game show, the city wanted to know what a developer’s ‘turn offs’ might be:

Demands for lots of parking ranked high on the turn-off list.

“You asked what is an automatic turn-off. … Market research shows [the amount of parking] needed is X. We flip open the zoning code and we find out the requirement in the zoning code is two times that,” replied Patrick Lee, co-founder of a Boston firm called Trinity Financial. “It is a lightning rod … Oftentimes we often just say, ‘That one is too, too hard.’ … When the zoning catches up with the market or gets close to it, we’ll come on back and have the conversation [about building]. Even if you’re doing surface parking, it eats up so much land it ends up being a cost-driver in your pro forma.”

This raises the question: why even require parking at all if the market is a) willing to forgo it, or b) willing to build it? Eliminate that problem, and you don’t have to worry about forcing your zoning to “catch up” to the market. At the very least, some mandatory periodic review of the requirements (in the same vein as the zoning budget idea, but for a specific provision of the code) would help ensure the requirements in place make sense.

None of this changes the need for rational management of on-street parking. Zoning requirements cannot do that for you.

‘Snow’ links: finding the right level of regulation

Mush on my windowsill.

I’m sitting in DC, looking out a window at a mushy, mostly liquid ‘snow’ storm named after an obscure federal budgetary procedure. There’s a joke in there somewhere about failing to meet the hype. But instead, I’ll offer some links to articles of interest over the past few weeks.

Regulatory challenges. Slate blogger Matt Yglesias is buying a new house, and instead of selling his old condo, he plans on renting it out and turning it into an income property. He documents the bureaucratic red tape encountered in the process to make this business legal, highlighting the absurdity that drives people nuts about government bureaucracy – the fact that none of the hoops you must jump through seem to actually matter to the regulatory issue at hand:

The striking thing about all this isn’t so much that it was annoying—which it was—but that it had basically nothing to do with what the main purpose of landlord regulation should be—making sure I’m not luring tenants into some kind of unsafe situation. The part where the unit gets inspected to see if it’s up to code is a separate step. I was instructed to await a scheduling call that ought to take place sometime in the next 10 business days.

Yglesias notes that DC fares poorly on many metrics of regulatory efficiency and friendliness to entrepreneurs. Granted, those rankings all ought to be taken with a grain of salt, as they often fail to measure what really matters and instead focus on indicators not directly linked to entrepreneurship (there is also the matter of state-by-state rankings lumping in a city-state like DC into their metric – not exactly an apples-to-apples comparison).

The real issue, as Yglesias touches on in a later blog post, isn’t whether regulations are good or bad, but whether the regulations we have are effective and if they cover the right topics:

The way I would put this is that the American economy is simultaneously overregulated and underregulated. It is much too difficult to get business and occupational licenses; there are excessive restrictions on the wholesaling and retailing of alcoholic beverages; exclusionary zoning codes cripple the economy; and I’m sure there are more problems than I’m even aware of.

At the same time, it continues to be the case that even if you ignore climate change, there are huge problematic environmental externalities involved in the energy production and industrial sectors of the economy. And you shouldn’t ignore climate change! We are much too lax about what firms are allowed to dump into the air. On the financial side, too, it’s become clear that there are really big problems with bank supervision. The existence of bad rent-seeking rules around who’s allowed to cut hair is not a good justification for the absence of rules around banks’ ability to issue no-doc liar’s loans. The fact that it’s too much of a pain in the ass to get a building permit is not a good justification for making it easier to poison children’s brains with mercury. Now obviously all these rules are incredibly annoying. I am really glad, personally, that I don’t need to take any time or effort to comply with the Environmental Protection Agency’s new mercury emissions rules. But at the same time, it ought to be a pain in the ass to put extra mercury into the air. We don’t want too much mercury! We don’t want too much bank leverage!

The more ideological stance (regulation is bad!) might be easier to communicate; it might resonate with the public based on their experience at the local DMV. It’s a complicated reality, and our regulations not only need to reflect that, but also likely need periodic review and revision.

Regarding a common issue in the urban context, Matt writes:

“This city has too many restaurants to choose from” is not a real public policy problem—it’s only a problem for incumbent restaurateurs who don’t want to face competition.

This reflects some of the tension on liquor license moratoria in DC (see the discussion about IMBY DC). The contrasting position is that restaurants do indeed create some negative externalities that need to be addressed. The challenge for public policy is then in addressing the negatives without falling into the trap of mis-stating the problem.

Regulatory reform. Assuming we correctly state the problem, then what do we do to change things? DC is forming a task force to look at these issues. In some googling of related articles, I ran across an old op-ed from Helder Gil about a potential direction for regulatory reform, radical simplification:

One solution is the radical simplification of existing business laws and regulations. “Radical simplification” is the wholesale rethinking of a law’s original intent, its current actual effect and whether those two points still intersect in a way that advances public policy.
Consider the contrast to DC’s zoning regulation review process, and the power of the status quo bias. Even the terminology of ‘zones’ is no longer useful, Roger Lewis writes:

 Let’s dump the word “zoning,” as in zoning ordinances that govern how land is developed and how buildings often are designed. Land-use regulation is still needed, but zoning increasingly has become a conceptually inappropriate term, an obsolete characterization of how we plan and shape growth.

I would go farther than Lewis and suggest that the terminology is not the only problem; the content of the regulations is also problematic. Lewis goes on to list numerous shortcomings of the existing regulatory framework – perhaps inadvertently making the case for radical simplification?

Beware non-governmental regulation. To be clear, these challenges are not solely governmental. The burden often falls on the government in protecting the public purpose, but governments are not the only entities with the common good in mind. Consider the home-owners association.

Last month, the Washington Post reported on an epic legal battle between a Fairfax County HOA and a member over a very minor size violation for a political sign. HOA representatives on a power trip sought to impose penalties for violating rules that were not expressly granted to the HOA in the association’s bylaws. The HOA lost the case, the resulting legal fees bankrupted the association, forcing it to pursue the sale of a privately-owned park area.

These kinds of battles are common – and often invoke words like ‘tyranny’. They highlight both challenges of regulation and also of governance. Clearly, the content of some regulations are an issue, but so is the process for changing or even just reviewing those regulations.

Perhaps HOAs are not strictly necessary for a grouping of semi-detached homes (as is the case in the Fairfax County example), but some level of common-area administration is necessary in multi-unit buildings, no matter how you slice it. The need for HOAs also raises the question about the role of home-ownership in multi-unit buildings and the regulatory environment that enables it (see Stephen Smith asking “why do condos even exist?” at Market Urbanism) – which, after all, is a relatively young and untested legal field.