West Broadway Advisory Committee Final Report

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~ ~ _ The Economics of Downtown Parking July 2007 Page 2 retail, office space, hotels, or hospitals. They also may use parking structures as a form of banking the land for a future development use. The public has objectives beyond the profitability of parking. Downtown parking may contribute to the health of downtown by creating spaces competitive with suburban retail and office locations, where parking is plentiful. Evidence suggests that proper pricing of parking, over the long run, is compatible with (and ' necessary for) successful commercial activity. It does several good things: (1) it makes parking available for the people that value it most, especially if on-street parking is metered and priced to encourage a proper rate of turnover; (2) reduces wasteful traffic (some estimates are that more II than half of the vehicle-miles traveled in congested downtowns are generated by people circling i, and looking for a parking space; and (3) it generates revenues that can then fund streetscape maintenance and improvements (including pedestrian amenity). But pricing parking creates some problems for a downtown area. Major retail areas in the Eugene-Springfield area are surrounded by free parking. Many retailers believe that they must offer "free" parking (i.e., absorb its cost in their cost of sales) to keep sales volumes up. Offices (especially ones with expensive professional employees) believe that free parking must be part of a competitive benefits package. The point of this long explanation is that parking ratios have typically been established based on the assumption that parking will not be paid for directly by the parkers. That lowers the price, which increases the consumption. Pricing the parking would lower the amount needed (the parking ratios), but the vicious cycle is that most retailers are used to the free parking and the parking ratios they generate, and believe that their businesses will do poorly with anything less. Given these market realities, this memorandum briefly discusses the costs and revenues associated with parking, and whether public subsidy of parking in downtown areas is necessary. I i COSTS ' The costs of private parking depend on the land costs, the type of parking developed (e.g., surface or structured parking), the operation of the parking facility, and any potential cost sharing with other development. If the parking is structured, the costs will differ depending on the size of the structure and whether the structure is above or below ground. The design of the parking facility affects both the construction and the operations and maintenance costs, which depend on whether the facility is attended or automated. The cost of a parking facility generally is made up of three different elements: capital improvements (construction costs), land costs, and operations and maintenance costs. • Capital improvements. The average cost of a surface space varies, depending primarily on the amount of amenity (landscaping, lighting, stall and aisle width) that gets specified. An average price for a space (which average 300-400 square feet) in an open parking lot is $2,500. The cost for a structured space is roughly $20,000. Downtown residential dwelling units may require 1.5 parking spaces per unit, where as office and retail space may require up to 3 and 4 spaces per 1,000 square of space of gross floor area. • Land. Values for land in downtown Eugene in 2007 range from $23 to $40 per .square foot, which translates into $1.0 million to $1.7 million per acre or $6,900 to $16,000 for a 1 i