West Broadway Advisory Committee Final Report

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i I j E~ONorthwest I ECONOMICS FINANCE PLANNING I I Phone • (541) 687-0051 Suite 400 Other Offices FAX • (541) 344-0562 99 W. 10th Avenue Portland - (503) 222-6060 info@eugene.econw.com Eugene, Oregon 97401-3001 Seattle • (206) 622-2403 June 16, 2007 ~ TO: West Broadway Advisory Group ~ FROM: Anne Fifield, Kate Coddington, and Terry Moore SUBJECT: THE ECONOMICS OF DOWNTOWN PARKING Parking is a necessary element of a thriving downtown core. In order to have successful businesses, residential development, and entertainment, customers; employees, residents and patrons must have somewhere nearby to park. The question for developers, customers, .employees, residents, patrons, and local governments is: who should pay for the parking that everyone needs? ~ Economic theory and the most recent planning literature on parkingl are very clear on the proper transportation solution: parking should be priced. For residential parking, it typically is: the cost of driveways and garages are bundled in single-family housing pricing, and the price of a space j in a surface lot, a carport, or a structure is part ofmulti-family price or rent (usually bundled; sometimes sold. separately). The big issue is commercial space. i Commercial space (retail, office) tends to not charge customers for parking. It is important to understand the basic relationships. If a developer builds parking, he or she will definitely try to ~ charge a building purchaser for the parking. If the market for the space is strong enough, the developer will be successful, and the new owner will successfully charge building tenants rents that cover that cost, who will pass on-the cost to customers and clients. Somebody pays for free parking-the issue is that the people parking do not pay for it directly as a parking charge. The result is that there is more demand for parking-more parking spaces are needed-than would be the case with proper pricing. I The "price" of parking may include different elements and the feasibility.. of development may be determined in different ways depending on who is looking at the question: a private developer or I a public entity such as a city. The private developer generally sees the development of parking facilities as a calculation of the costs and revenues involved. The costs of developing and maintaining downtown parking include land, capital improvements, and operations and maintenance costs. Higher land costs imply a greater demand for a central, downtown location, and require, the substitution of capital improvements (parking structures) instead of using more of the higher-priced land (open parking lots). Private developers may have economic objectives beyond simply the profitability of the parking structure: they may use the parking to subsidize other profit centers, such as downtown, I ~ Donald Shoup. 2005. The High Cost of Free Parking. American Planning Association Press. Chicago. i i , i ~ ~ .