Low-income renters pay a high, and hidden, price for city parking requirements

Municipal parking requirements — rules that are imposed on developers of apartment buildings, among other builders, to provide parking spaces for their tenants — are partly to blame for the crisis in affordable housing in cities like Los Angeles, a UCLA adjunct assistant professor and an assistant professor at Santa Clara University said.

A study by Gregory Pierce of the UCLA Luskin Center for Innovation in the UCLA Luskin School of Public Affairs, and C.J. Gabbe of Santa Clara University’s Department of Environmental Studies and Sciences, analyzed the affordability effects of parking provisions on America’s urban renters, who pay a hidden cost for garage parking that’s bundled into their rent, even if they don’t own a car.

“We find that parking requirements impose a high cost on renters, and particularly on low-income carless renters who collectively spend more than $400 million dollars annually on parking that they may not even need or want,” said the researchers in the May issue of the UCLA Ziman Center for Real Estate’s Economic Letter. The study was also published in Housing Policy Debate.

While bundling has recently been recognized as a problem, there have been few reliable estimates of the implicit cost of this practice until now. Using 2011 data from the U.S. Census Bureau’s American Housing Survey, Pierce and Gabbe produced the first analysis of how much the typical U.S. renter household was implicitly paying for garage parking spaces.

They found that the average American renter with garage parking spends $1,700 per year — or an additional 17 percent of the housing unit’s rent — on garage parking.

Their analysis showed that approximately 708,000 renter households in the U.S. without cars pay an average of $621 per year — or a 13 percent premium — for garage parking. These carless renters pay the equivalent of $440 million per year for garage parking that they may not need or want.

“We refer to this as a deadweight loss,” the researchers said.

Most cities’ off-street parking requirements were codified during America’s post-World War II growth and suburbanization, the researchers explained. So, many of these mandates are out of date.

These minimum parking standards have become a national burden since cities around the United States — especially those in Southern California — require that developers build parking spaces, which are bundled into the price of every housing unit, the researchers said.

There’s no doubt, the researchers explained, that parking is expensive to build. According to a study done in 2012 by UCLA emeritus professor of urban planning Donald Shoup, the average cost to build space in a structured parking garage is $24,000; an underground parking space costs $34,000 to construct.

But decades of minimum parking requirements have meant that there are now few rental units available without on-site parking. However, more than 7 percent of American renters don’t have a car, and the typical carless renter has about half the median income of all renters, they noted.

While some of these carless renters might make some use for their parking spaces, it’s likely that many carless renters would prefer to have reduced rent rather than pay for parking they don’t need. “So minimum parking requirements are an equity issue, particularly for low- and moderate-income renters,” the researchers said. “The cost of this excessive on-site parking supply is both hidden and high.”

Bundling the cost of parking into the cost of housing has resulted in several problems.

First, some tenants tend to use more parking than they need. Second, because developers have been required to provide lots of parking, parking supply has exceeded natural parking demand. And third, as cities continue to require high minimum amounts of parking, these requirements have perpetuated auto-dependent development patterns, which many cities are now eager to overturn.

To address this inequity, Gabbe and Pierce recommend that cities reduce or eliminate minimum parking requirements and allow developers to “unbundle” the price of housing from the price of parking.

A few Southern California cities have piloted some reductions in parking requirements for such areas as L.A.’s Cornfield Arroyo Seco Specific Plan area and downtown Long Beach. But reforms are needed much more broadly, they said.

The baseline off-street parking standards in cities’ zoning codes should be reduced across the region and be replaced with more market-based and flexible parking regulations.

“The ultimate objectives of these reforms are more efficient and equitable allocations of parking and the reduction of an unnecessary burden on housing affordability,” they said.

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