Steve Spillette

What Can We Do By 2022

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PARKING, WALKABILITY, AND OUR TAX BASE

It’s often said that in Houston, and Texas, we love our cars. And I venture to say that as much as Houstonians are devoted to driving, they are obsessed about parking. Perhaps some Houstonians think that having convenient free off-street parking at the front door of just about everywhere is something that makes our city great, and better than those older “walkable” cities, where parking is often a hassle, or expensive, or both. In this perspective, when convenient free off-street parking next to your destination is missing – meaning you have to search for a parking spot on the street, or go to a garage blocks away, or actually pay for the privilege of storing your car temporarily while you go about your business – then something is, well, sub-optimal, and hurting quality of life.

I suppose if you strongly dislike walking, biking, taking transit, or using services such as taxis and rideshare, then such a reaction is logical. I would venture to say that the perceived dominance of this perspective has been a major driver of land use regulation in Houston over the last few decades – specifically expressed by minimum onsite parking requirements – because people who are upset about what they consider parking injustice can get pretty noisy, and elected officials and bureaucrats generally pay attention to noisy.

However, I wonder if people who endorse this perspective realize the prices paid for all the vast supply of parking that is deemed to be needed to be just about everywhere. While I could highlight many ways that the omnipresence of parking as a land use can negatively impact us, such as excessive and polluted storm runoff and urban heat islands, I want to focus on two main impacts: the reduced appeal and effectiveness of walking and the terrific financial burden our obsession with parking places on both the private and public sector.

The negative impacts on walking as a means of mobility and access are pretty obvious. Massive on-site parking supply pushes destinations apart, meaning fewer destinations are available within a reasonable walking distance, diminishing the practicality of getting around on foot. Off-street parking facilities are also generally unpleasant to walk next to or through, reducing the qualitative experience of being a pedestrian as well. With such conditions, even folks who might not be predisposed against walking will be more likely to drive to and between their destinations (thus creating more traffic and pollution). In short, excessive on-site parking and walkable environments are not terribly compatible.

Of course, the traffic congestion and health impacts are becoming more widely known as consequences of a lack of walkability. Not to mention the burden placed on those who walk because, for whatever reason, they’re unable to drive. Finally, from a more purely qualitative perspective, there are those who actually like walking in cities and who are denied that experience.

The negative impact of the financial burden of excessive and poorly located parking may be even more pernicious, however. It would be silly to declare parking unnecessary at the present time, especially for most commercial uses in Houston; our relatively lower densities and sparse public transit network (hopefully being improved now) mean that outside of the Central Business District parking is necessary for a sufficient number of employees, customers, and visitors to access destinations. But onsite parking, mandated by Houston city code (outside the CBD) and perceived as necessary regardless of code by most developers, comes at great cost – it takes extra money to build parking, not to mention to acquire and use the underlying land for that purpose. What ends up happening is that enormous resources are spent purely for vehicle storage, rather than using that capital and land for actual economic activity.

Where does the Houston economy actually take place? Usually in buildings, not in parking lots or garages – yet how much underutilized financial resources are locked into parking? How much more expensive, or financially tenuous, is a development project than it would have been if more land could be used productively? How might our built environment improve if more could be spent on creating quality buildings and more affordable housing rather than creating more parking?

There are serious ramifications for the City’s fiscal health in this regard. Inspired by the work of the Strong Towns organization, I researched an example of how unwalkable parking-oriented development produces a dramatically less productive tax base. I examined the 2014 assessed value of the Sawyer Heights retail center, near the Taylor Street exit from I 10. This typical big-box commercial development covers nearly 24 acres. The combined assessed value of its various property parcels was nearly $58 million. That’s about $2.4 million per acre, which seems pretty substantial. But then I looked at the nearby apartment complex recently built at the corner of Washington Avenue and Sawyer Street. That property, on approximately two and half acres, was valued at over $31 million, or nearly $13 million per acre. In that project, structured parking is stacked under the residential units – there’s no surface parking lot. In the retail center, it’s all surface parking lots; a typical suburban-style strip or big-box center will be at least two-thirds parking by land area.

Even single family housing beats a typical strip center when it comes to property tax generation. I looked at a townhouse pod just off Washington Avenue, where HCAD has valued the individual homes generally in the $400,000s. The sum of the lot sizes totaled under ½ an acre, but the total assessed value was approximately $4.5 million. Assuming a 20 percent homestead exemption on all units, it works out to $8.4 million per acre.

One might point out that while retail lags on property tax generation, it also produces sales tax for the City. This is true, but my calculations indicate that Sawyer Heights would need to contain 300,000 square feet of retail space generating $500 annually per square foot in taxable sales to even approach the fiscal productivity of the apartments. For the vast majority of one-story retail centers in Houston, such sales productivity will be well above what they are capable of.

I can tell you from my other experiences in consulting work that these examples of assessed value generation are quite typical. Parking, however seemingly necessary, hurts walkability, and hurts municipal fiscal productivity.

So where does this leave Houston? The city has enormous fiscal challenges. While certainly managing the expenditure side of the budget is critical regardless of how much revenue is coming in, allowing or encouraging low fiscal value development forced by both the mandatory and perceived need for excessive on-site parking is not a situation that should continue. Solutions will likely include some mix of relaxation or elimination of onsite parking requirements, community shared parking facilities, improved public transit, and eventually autonomous (self-driving) vehicles that do not have to be parked right at the destination. And as or more importantly, Houston needs improvements in both in the design of developments and in the public rights of way to facilitate safe, comfortable walking. Houston’s current densification trend provides a great opportunity to try out these options.

We often think of walkability’s potential to improve our health, our natural environment, and our city image. But just as importantly, it can help save our collective checkbook.

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Steve Spillette will speak about this on the panel at the first What Can We Do By 2022 Luncheon on Walkable Urbanism, Strengthening Communities, and the Tax Base of the City of Houston.

This will be Tuesday, July 7, 11:30 am - 1:30 pm with Patrick Kennedy, Jim Kumon, Raj Mankad, and Susan Rogers joining him on the panel.

GET YOUR TICKETS TODAY

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STEVEN R. SPILLETTE

President, CDS Market Research

Steve Spillette is an urban development strategist providing real estate and urban planning guidance to both public and private sector clients. He evaluates the options available for obtaining desired market-supported results to create better developments, districts, towns and cities. Mr. Spillette has engaged in a wide range of services and products for his clients, including market analysis, economic development agreements, special district planning, and public development and planning policy. He holds economics, city planning and business administration degrees from Stanford University, UC Berkeley and Texas A&M. His 23 years of work experience includes positions with the national research and analysis firm Economics Research Associates, the Uptown Houston Improvement District, and the Real Estate Research Center at Texas A&M University. He headed his own firm for 12 years and in 2013 merged with CDS Market Research, a Houston firm with nearly 40 years experience in real estate market research and urban development economics.

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