(Fergie Tower: 300 units, hold the parking costs)
Jake Blumgart at PlanPhilly interviewed Gillen, who estimates that, on average, a parking space is worth somewhere between $18,000 and $28,000 in added home value in Philadelphia.
“The question we tried to answer in a disinterested objective way — we had no agenda for a particular answer — is what is the real value in terms of dollars that Philadelphians put on parking,” said Gillen, who is senior economic advisor for Houwzer. “The problem is that people want it, but they want it for free. That may have been fine when we were a depopulated city, but now we are not.”Gillen took house and condo sales across Philadelphia and compared the prices of units that come with garages or other forms of parking and those without. He controlled for differences in size, type, and age of the housing. Gillen found that the average difference between a home or condo with a parking space and one without is between $18,000 and $28,000.
Gillen frames this in terms of the "value" people place on parking, but this is also just another way of saying "cost," if we're looking at things from the home buyer's perspective.
And these averages understate the added expense in some of the closer-in appreciating neighborhoods. About one mile outside of Center City, Gillen's analysis found a parking space can add between $60,000-65,000 to the price of a home, on average. Over the course of a 30-year mortgage, that $65,000 in additional cost works out to around $180 a month, or $2,167 a year.
The big takeaway from this is that Darrell Clarke's bill doubling minimum parking requirements would increase the cost of living in the very places he says he wants to help. Clarke would force people in Kensington and Brewerytown to pay $180 more each month in rent or mortgage payments, whether they want to have a parking space or not.
And because Clarke's bill would mainly target large multifamily housing developments, it's fair to assume that the parking costs he would force on people would be toward the higher end of the range, since parking costs more to build in multi-family buildings with multi-story underground garages.
"Since the cost of development is much higher in such locations," Gillen writes, "it would seem reasonable to expect that the dollar price of a parking space to be higher, in order to cover the cost of providing that space; [especially] in a multi-story parking garage."
This is bad for the housing market overall because it means developers will likely end up building fewer, but higher-cost, housing units. Parking minimums reduce the overall volume of home construction while pushing the market toward the luxury end of the spectrum. Gillen lays out the stakes for developers thusly:
"If these prices exceed what it costs you to provide a parking space, then you can pass the cost of the bill’s mandate onto the eventual buyers or renters of your project. If not, then there will be a strong incentive to build fewer—but larger and more upscale units—at a given site, in order to both reduce the number of parking spaces you are obligated to provide while simultaneously amortizing the cost of parking over a higher-priced dwelling. In the extreme, if there is no feasible price point at which the cost of the parking mandate can be passed on to buyers, then the project may have to be foregone altogether. Which choice you make will affect the other three stakeholders."
These are all bad outcomes, and it's important to take a step back and remember that the whole reason we're even talking about this is that City Council is mismanaging the curb parking inventory.
Instead of making housing more expensive and scarce just to cram more cars into apartment buildings in greater Center City (the main area Clarke's bill would impact), Council should be dealing with the root cause of the problem—mismanaged curb parking.
Any proposal attempting to deal with neighborhood parking issues needs to start from one important principle: the choice not to pay for parking should be preserved for those who can't or don't wish to own a vehicle. The City should put the cost on the parking users only, and spare people who don't need vehicle storage from cross-subsidizing their neighbors' parking through their rent. That's exactly what parking minimums do, and it's unfair and regressive policy.
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