The Hidden Reason Behind Seattle's Skyrocketing Housing Costs Do You Realize How Much It Costs to Build a Single Parking Space?

Velo apartments in Fremont: Although the building was marketed as bike-friendly and has a bicycle incorporated into its logo, the developer waited until parking spaces went unused before it decided to build more bike storage. Malcolm Smith

Seattle is in the midst of a housing crisis. Politicians are arguing in public debates about rent control. Growth is booming, and rents are skyrocketing. More than 100,000 people are expected to move here over the next 20 years. As of May 2015, the average rent for a one-bedroom apartment in Seattle was $1,501—an increase of 11 percent over the previous six months, according to RentJungle.com. More than half of Seattle renters pay more than one-third of their income in rent. At this pace, we're on track to become a metropolis for the ultra-wealthy.

The lack of affordable housing in Seattle has been blamed on factors such as the absence of rent control and the fact that about 65 percent of the city is zoned for single-family housing. But there's an often-overlooked reason that's also exacerbating the affordability problem: cars—or, specifically, the cost associated with parking them.

The cost of building one parking stall in residential garages is estimated to be between $20,000 and $50,000. This can add several hundred thousand to millions of dollars to a project, depending on the size of the building and other factors. Parking also takes up precious space where more housing units could be built. Developers build parking because the city requires them to and/or because they believe the market demands it.

But all evidence points to the fact that we build too much parking. Even in areas of the city where buildings aren't required to have off-street parking spaces, developers still construct them. And many of these parking spaces go unused—more than 30 percent in apartment buildings constructed after 2008 are empty at night, according to a 2013 report by the Sightline Institute.

Who's paying for these parking spots? We all are. Even people who don't have cars.

Developers rarely—if ever—recoup the costs of their investments in parking spaces through fees. So landlords pass on this exorbitant expense to their tenants through rent. Their losses on parking can add up to roughly 15 percent of monthly rents, or $246 per month for each occupied apartment, according to Sightline's report. In Portland, Oregon, a 2012 study found that garage parking would lead to rent that was as much as $500 higher per month in a typical low-rise apartment development. This would be true whether or not you have a car.

"All the negative effects of parking quotas are hidden," Alan Durning, executive director of the Sightline Institute, told me in an interview. "The benefits are clear in the form of free parking to the person parking the car, and the costs are distributed among everyone else and are hidden in other people's bills."

There's also evidence that off-street parking worsens economic disparity and gentrification and hurts public transportation options (to say nothing of the traffic and environmental implications related to encouraging people to own cars). Seth Goodman at ReinventingParking.org notes that parking construction costs are the same within urban areas, regardless of whether the building is a luxury high-rise or modest apartments, so lower-income residents are disproportionately impacted by parking costs.

Plus, low-income residents are less likely to own cars, but they still have to subsidize other people's cars.

Although Seattle has taken steps to minimize or eliminate parking requirements over the years, affordable-housing advocates believe the city should go even further.

Recently, Mayor Ed Murray's Housing Affordability and Livability Agenda (HALA) submitted its final recommendations for improving affordable housing in Seattle. Among its proposals are more reductions and removals of off-street parking requirements—particularly for multiunit buildings and, possibly, for all single-family homes and smaller-format housing such as cottages and duplexes. "Off-street parking requirements or quotas have a large impact on the financial viability of new housing for both market and affordable housing development," the report states. "Parking quotas act as density limits, inflate the average size and price of housing units, and prevent some smaller properties from being developed altogether."

But Seattle's political leaders will likely face an intense battle if they try to increase multifamily housing or remove more parking requirements—especially from NIMBYs who resent the rapid growth that's happening in Seattle and want to prevent it from spilling into their quiet, low-density neighborhoods.

"The planners and the government agencies, they know that the parking requirements are stupid, but their political bosses are under intense pressure from neighbors to keep the requirements in place," said Durning, who's also a member of the HALA committee. "No one advances their political career by working on parking."

But if Seattle hopes to truly tackle its housing problem, convincing people to break their attachment to their cars—and the ease with which they can park them—will have to be part of the solution.

Off-street parking requirements in Seattle first appeared in 1950, when the city began getting rid of streetcar lines and cars became more ubiquitous, according to Mike Podowski, the city's land use policy manager. In most areas of the city, the off-street parking requirement is generally one space per dwelling unit. This includes single-family homes, artist's studios, caretaker's quarters, cottage housing developments, floating homes, and some multifamily units.

But the parking requirements established by municipalities are largely arbitrary, says Durning. "They are totally bogus. There is no science at all. Jurisdictions kind of copy each other, but there is no basis, no empirical analysis."

Seattle actually recognized this fairly early on. Parking requirements for downtown housing were eliminated in 1985, and that policy was extended to housing in urban centers and urban villages in 2007, 2011, and 2012. (Urban centers and urban villages take up 36.5 percent of total city land. Multifamily units that are outside of urban villages and centers but that are close to a frequent transit stop are eligible for a 50 percent parking requirement reduction, although a hearing examiner recently limited what's considered a frequent transit stop.)

But developers usually build parking anyway—for a variety of reasons I'll get to.

Most of what we know about parking's impacts on a city come from Donald Shoup, a professor of urban planning at the University of California, Los Angeles who's considered the foremost expert on parking. His 2005 book, The High Cost of Free Parking, made the case that "free" parking is never, in fact, free. In the 2014 book Parking: Issues and Policies, Shoup writes: "City planners should begin to consider minimal, not minimum, parking requirements. 'Minimal' means barely adequate, or the smallest possible number, depending on the context."

While national data on parking's impacts is widely available, local statistics have been harder to come by. That changed a few years ago, when King County Metro was awarded a grant by the Federal Highway Administration to "better understand how off-street parking influences rider potential" in King County, said Chris O'Claire, Metro's manager for strategy and performance.

Looking at more than 200 multifamily properties in King County during a nine-month period, Metro found that, on average, there were about 1.4 parking stalls per dwelling unit, but that only about one stall was being used. (Usage was determined based on vacancy rates during the night, the time of peak parking demand.)

"What was most interesting to us, after we reviewed about 100 independent variables—we identified a number of things that might influence parking utilization—we found that the amount of transit service provided to a particular parcel had the most influence on parking use," said Daniel Rowe, transportation planner for Metro and project manager for the study.

In other words, the more transit options a person had access to, the less likely he or she would be to park (and, presumably, own) a car. Rowe said this finding was consistent across the county.

Using its data, Metro created an online tool in February 2012 called the King County Right Size Parking Calculator (rightsizeparking.org) to estimate parking use for multifamily developments so that "cities can regulate development in [a] way that meets local and regional goals and developers can build more housing near transit and sell it for less," according to its website. In Seattle, the appropriate amount of parking recommended in the core areas of downtown, Capitol Hill, Queen Anne, Fremont, and the University District is .5 to just less than one parking space per dwelling unit.

The Right Size Parking Project looked at two approaches to regulating parking: a market-based approach (in which the developer bases parking construction on what's necessary to make the project marketable) and a context-based approach (in which site-specific factors such as surrounding land uses, transit service, and walkability are considered).

Rowe said after performing a national review of best practices, Metro decided to advocate for both approaches. "The market-based approach, after reviewing the literature, is the one that's recommended to achieve the best balance between parking demand and parking supply," said Rowe. "That's what Seattle has been doing for many years now in urban centers."

But the problem with relying on developers in the market-based approach is that their estimates of the market are sometimes wrong. For example, Metro's report notes that in Ballard's urban center, where there are no parking requirements, "all of the recent large-scale multifamily developments have included parking anyway, typically in the range of 1 to 1.5 stalls per unit."

To be fair, Metro's report came out a couple of years ago, and a lot has changed since then. Also, projects take years to develop, so initial developer estimates may not have fully anticipated Seattle's unprecedented growth spurt.

More recent data suggests developers are beginning to learn from their past mistakes—well, sort of. According to a recent city analysis, 75 percent of the 219 new developments built since 2012 in areas where no parking is required provide parking anyway. But they're building less than they used to. The average amount of parking in construction projects built since 2012 is about .55 spaces per dwelling unit.

"In parts of the city where we eliminated the off-street parking requirement, like Capitol Hill and close to downtown, where a huge area of the new apartment construction is going on, developers are deciding for themselves based on estimation of total profits of the building, and the result of those calculations is they're putting in fewer parking spaces than previous generations of buildings," said Durning.

But at Velo Apartments—a new, 171-unit, fully leased building located at 3635 Woodland Park Avenue North in Seattle's Fremont area—just 100 out of 128 parking stalls have been rented, according to Rob Hackleman, associate development and asset manager for Mack Urban, which developed the building. Using the estimated $20,000-to-$50,000 per-stall calculation, that's about $560,000 to $1.4 million worth of unnecessary parking spaces. Ironically, Velo Apartments is marketed as "bike-friendly," with "bike-focused amenities" and close access to the Burke-Gilman Trail. The development's logo includes an old-fashioned bicycle, and its website states, "Your Ride Starts Here." Hackleman said five unused parking stalls were converted to create more bike storage because the existing bike storage wasn't enough to meet demand.

Developers pass off some of the costs of parking spaces to tenants, but evidence suggests they don't fully recoup their expense. In a 2013 analysis by the Sightline Institute of 23 Seattle-area multifamily housing developments, "Who Pays for Parking?" (which used data from Metro's Right Size Parking Project, looking only at apartment buildings constructed after 2008), no development surveyed was able to generate enough parking fees to cover the cost of building, operating, and maintaining its parking spaces.

"We build [parking spaces] because it's what tenants want and need, but we're not making a ton of money on them on a per-square-foot basis compared to the cost," said Hackleman.

Hackleman admitted that building fewer parking spaces would translate to lower construction costs, which "could justify lower rents." But he worries that failing to provide enough parking would jeopardize the viability of his developments. Even though Hackleman notes that his company built more parking than was necessary at Velo Apartments and another nearby complex, "We tend to see that as better than too little parking because some people won't rent there if they can't park," he said.

And by "some people," he means rich people. "If you're not providing any parking, then you're going after a different demographic," Hackleman continued. "They probably pay less rent."

Of course, having lower-income tenants wouldn't be viewed as negative if the developer was able to recoup its costs by not building as much parking. (There's also the question of whether developers would lower rents even if they could afford to.) But parking isn't always up to the developer or the city.

"Lenders—people who finance big projects—are sometimes out of date," said Durning. "Even if there's not a parking requirement, the lenders sometimes require parking, and they just use formulas [to determine how much parking should be provided]."

Neither of the two developers I spoke to—Rob Hackleman of Mack Urban and Matt Griffin of Pine Street Group, both of whom have developed residential properties—said they had experienced this. But Griffin did say that, in general, lenders tend to be less forward-thinking than developers.

"The lenders tend to not be as progressive, and their case is 'I don't care what it costs' and 'I'm only gonna tell you what I'll lend you. If it costs more, that's tough, it's your problem.'"

Still, Griffin agreed that, in general, developers are shortsighted. "People tend to build for the way we lived in the last decade as opposed to the way we're going to live in the next decade," he said. "I think everyone knows we're going to be less car-dependent."

If we're to live in a less-car-dependent future, we'll certainly need less parking. But despite the evidence showing how off-street parking increases housing costs and encourages people to use their cars, there's significant opposition to removing off-street parking requirements by those who live in single-family-zoned areas.

"The reason the parking requirements exist is the neighbors demand it," said Durning. "It's entirely political. There's no economic justification or urban planning justification of parking."

In a Seattle Times article about HALA's proposed changes to Seattle's off-street parking rules, Eastlake Community Council president Chris Leman complained about how the removal of off-street parking has affected on-street parking—the most common complaint about removing off-street parking quotas. Eastlake is considered an urban village and thus does not have parking quotas. "It's been a disaster for us," he told the Times. "We would not wish it on other parts of the city. Parking is absolutely essential to a working neighborhood."

However, studies have shown that cars are not necessarily the best economic drivers. A 2011 study in Portland, Oregon, by the Oregon Transportation Research and Education Consortium found that "people arriving by bus, bike or on foot average more trips per month to convenience stores, supermarkets, drinking establishments and restaurants than do people arriving by car. They also spend more per month at all types of establishments except supermarkets, where the auto users' greater spending per trip balances out their fewer trips."

Durning acknowledges that getting neighbors on board to remove parking quotas is a huge challenge. In fact, he says, it's useless to try to convince them. Instead, he thinks we should pay them.

"It's not effective to talk neighbors into accepting more competition for street parking," said Durning. "It's better to bribe them."

Durning is advocating for creating parking benefit districts (one of the possible "innovative" solutions mentioned in HALA's report). The concept is similar to community benefit districts, in which property owners decide to tax themselves to pay for various services such as street cleaning and security. In parking benefit districts, the city charges for curb parking in neighborhoods, via either meters or parking badges, then gives that money (or some of it) back to the neighborhood.

"The magic of that is it breaks apart the local political coalition," Durning explained. "In some California cities, they have parking improvement districts in urban areas, revenue comes back to the community council, and they can use it for whatever they want. Those people then stop arguing, they stop pushing for off-street parking. It's in their interest to have scarce off-street parking because then they make more money. Then we can cut the Gordian knot of parking politics."

Durning suggests a pilot project on a single street would be a good place to start. But how do you convince cities to give up precious parking revenue?

In San Diego, Durning says, the city established a baseline of revenue it had been receiving in the neighborhood, and then allowed the neighborhood to extend meter hours or charge more for resident parking passes and keep any additional revenue that they generated. In Pasadena, the city just gave the neighbors all the money.

Durning says Seattle makes $40 million to $60 million per year in parking-meter revenue, "so the city council is unlikely to just hand over the money to community councils. But they might be willing to hand over part of it."

Another HALA proposal is to reduce parking requirements in multifamily zones outside of urban villages and centers, if they're served by frequent transit or if the housing is near other services or community resources.

Griffin of Pine Street Group believes we should eliminate minimum parking requirements altogether and let the market dictate how much parking to build. (He said he and his wife got rid of their cars when they moved downtown.) In 2001, Pine Street Group renovated a 100-year-old building at Fourth Avenue and Pike Street, which had no parking. "When we told people there wasn't any parking, people thought we were nuts," said Griffin. "But we had no problem [leasing the apartments]."

At one of Pine Street Group's newer apartment buildings in downtown, Via6, 400 off-street parking spots were built for 650 units, or .65 stalls per dwelling unit. Griffin said parking can be built more efficiently at large sites such as Via6. Still, he said, if you factor in the estimated cost of $50,000 per parking stall ($20 million for 400 stalls), the rent for those stalls covers only about half the cost of building them. "So there's about $10 million of cost that got spread over 650 units." (If you're not good at math, that's about $15,384 of added cost per unit.)

However, Griffin added, what developers charge to rent an apartment has less to do with a building's cost than it does with what the market is willing to pay. So it's not like a landlord can always rely on passing on the entire cost of its parking construction to its tenants. "What it does mean is that people who are worried about it will build less apartments because they're worried about recouping the cost," said Griffin.

Or they could simply build less parking.