Charging for apartment parking

Featured, Policy — By on April 22, 2012 9:57 pm

At last week’s Lowry Hill East Neighborhood Association Annual Meeting, one item caught my attention: apparently some (or all?) of the new apartment buildings in Uptown are charging people to rent parking stalls, and that is causing some frustration in the community.

A quick glance around the interwebs and it can be verified that at least Flux and Solhem are charging for its parking. Both have heated, underground parking and Flux charges $100 per month per stall and Solhem starts at $125 per month per stall.

To most who look for apartments in Uptown, this should come as no surprise. When I was looking to lease an apartment back in the early and mid-2000s, nearly every building with more than 4 units charged for parking. Lucky for me, I didn’t have a car and had I needed one, I wouldn’t have paid because I am good at parallel parking and don’t mind walking up to a block to park.

On to the frustration. The Chair of the Zoning and Planning Committee, Brian (good guy) was mentioning this bit of surprising news and said that Council Member Tuthill was working on a solution that may require these buildings (new apartment buildings?) to include the parking free with rent. [Edit: CM Tuthill has since said (in comments below) that this is incorrect and she has not suggested such a solution and that she and other council members on the Zoning & Planning Committee at the City are asking a few questions and that's it. I will openly admit that I should have asked the question first.]

Since this was third-hand information that I haven’t confirmed with CM Tuthill myself (though she was there and could have corrected Brian), I will suggest people not criticize her for alleged plans. Be my guest and provide feedback on the concept though.

So what do you think? Should new apartment buildings be required to provide renters free parking (if available)?

Since you may wonder where I stand on the issue, and of course acknowledging that I work for a developer though we don’t have any apartments in the Hennepin-Lake area but do have a public parking garage, I find the issue rather interesting. Below are a few comments:

- Developers, the City, and neighborhood groups often find themselves negotiating over how much parking will be provided at a project. So when the develop commits to 1 stall per unit, the underlying assumption is that it is included in the rent. Neighborhoods generally seem to want to minimize on-street parking impacts so they want those living in the building to park in the building.

- Developers ultimately are balancing construction costs, net operating income (income minus expenses), and debt costs. With underground parking usually costing $20,000 to $30,000 per stall, they want to minimize the number of stalls but want to build enough so they meet the market demand (re: have enough parking to fill it up and rent all the units). Renting a parking stall allows them to reduce the base rent costs and allocate them based on demand (some apts may want to stalls and other just one and others none).

- Including parking penalizes those who don’t own a car or who can’t afford to rent off-street parking. If the going rate is $100 per month per stall and you don’t own a car, you would be losing $1,200 annually if you were required to rent that stall and not fill it. While most of the new units getting built are luxury units with high price tags, it is still worth mentioning that not everyone can afford to pay $1,200 per year on parking.

- A principle and equitable dilemma is raised if the government requires some residents to have to pay for privately owned and managed parking and others not to simply based on the year of construction. On the opposite side, some in the community feel that there is a density dilemma, in which older, less-dense buildings become neighbors to newer, more-dense buildings that likely will put a higher degree of demand on the on-street parking supply unless there is ample off-street parking that those residents utilize. Others see parking as a market issue and prefer to have the market (not government) manage the supply.

- It isn’t just new buildings that charge for off-street parking in Uptown.

I generally think that no one should feel entitled to on-street parking stalls, especially in a dense community where many buildings have few, if any, parking stalls. However, I do recognize that if people move into an area and have an understanding that there is only a certain amount of change likely or allowed, that it may be a difficult and bitter pill to swallow that the on-street parking supply may get tighter. I prefer finding a middle ground, but I don’t agree with the concept of requiring someone to rent a parking stall (via having it included in rent) because it penalizes those with less income or without a car.

Instead, I think it is worth working with a willing property owner to see what sort of parking occupancy rates they accomplish (90% of stalls rented?) to see if there really are that many people flowing onto the streets. It would also help to validate parking requirement assumptions.

Thoughts?

<Flux Apartments

This photo shows construction of the underground parking at Flux, which charges its residents $100 per month per stall.

Thatcher Imboden

How cities work and change, how they are the product of their inhabitants and outside forces, and the resulting livability keep me thinking and dreaming about the future. I work in transit oriented development and have a background in urban real estate development. I am Past President of an Uptown business organization, grew up in Uptown, was on an Uptown neighborhood association Board, and am an Uptown and Lyn-Lake historian.

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26 Comments

  1. Andrew says:

    You already covered a good deal of the rational response to your question.

    There’s no way to ensure that parking is included in rent “for free.” Building owners spent money to create those parking spaces — in fact, it is likely they were *required* to spend money to create them via zoning requirements — and they are not just going to write off that cost if they are prohibited from charging separately for parking. Instead, the cost of the parking will be averaged across all units and added to rents, regardless of whether the occupants use a parking space. What are the incentive effects on renters in that situation?

    Imagine a single apartment in two scenarios:

    Scenario A: rent is $1200/mo, parking is $100/mo
    Scenario B: rent is $1275/mo and parking is “free”

    Consider the relative costs of “living in Uptown” and “parking in uptown” under these scenarios. In scenario A, “living in Uptown” is cheaper and “parking in Uptown” is more expensive. In scenario B, “living in Uptown” is more expensive and “parking in Uptown” is cheaper.

    When something is cheaper, and all else being equal, people consume more of it. Under scenario A, we can expect more people to live in Uptown and a smaller percentage of them to park in Uptown. Under scenario B, we can expect fewer people to live in Uptown but a greater percentage of them to park in Uptown.

    So, the resolution to this situation is clear once we decide which we want people to do more of: live in Uptown, or park in Uptown? If we want people to live here, make living cheap. If we want people to park here, make parking cheap.

    • Urbanite says:

      This is too true. Uptown in a urban commerce hub! not a parking lot! It’s purpose is to live in and shop in, not just to park!

  2. Jason says:

    I think that forcing landlords to include stalls in rent is a market distorting idea that goes against the environmental objects of Uptown area plans. This new regulation, if passed, would be an implicit tax on all renters of new buildings. It would penalize those who are more budget conscious, environmentally concerned or who simply want to live without a car. In the end this market distortion lowers the cost of car ownership compared to going without a car — which will only make parking and congestion problems worse in Uptown! Parking spaces are already greatly subsidized by the developer, they cost 25% of the unit cost to built but generate less then 10% of unit revenue. If the true cost of parking = the market rate for parking ($350-$480/mo. per spot) we would have many more people choosing to forgo owning a car which would make for a safer, more environmentally friendly and economically productive Uptown. The proper way to regulate street congestion is on a hyper local level, block by block. Take into account specific conditions while minimizing intervention in the overall rental market, this is precisely what we have with the parking by permit option now.

  3. Anonymous says:

    Yet another anti-urban, pro-driving view of Meg Tuthill that will hinder the sustainable growth of Uptown as one of the states only true and ideal urban neighborhoods.
    I hope somebody with a more progressive view on how our cities function challenges here come re-election time.

  4. Zack says:

    I love your site, follow it often, and you’ve identified an issue that hits close to home (as a resident living on the 2700 block of Fremont, next to the new Flux). I can verify that parking availability in the 28th & Fremont area has become much more sparse, although it has yet to pose a problem for myself or neighbors (although I wonder how full Flux is at the moment).

    That being said, having lived in one of these high rises in the area, forcing owners to include parking in the rent is not the solution. As seems to always be the case, Tuthill is once again on the wrong side of her constituents (who the hell is she serving). I like your idea of working with landlords to help them reach a certain % of building parked vehicles (making their pricing on more of a supply/demand model).

    Another option (I encountered living in Madison, WI), was issuing permits for overnight street parking. They were relatively affordable ($40/annually), but were not issued to tenants of buildings where there was adequate parking available. This forced tenants of said buildings to rent the space from their building, rather than the city.

    An interesting read on the cost of free parking: http://www.nytimes.com/2010/08/15/business/economy/15view.html

  5. uptownpatty says:

    Here we go again.

    This isn’t a new thing. Every Uptown-area apartment building I’ve live in charges for parking. This is the case for most people I know in the area, as well. These are not fancy new complexes, either — just your run-of-the-mill older buildings.

    This policy is based on an outdated view of parking and car culture which has no place in a modern urban center like Uptown. It’s in conflict with city efforts to increase bike/walk/transit usage, and it financially penalizes those go carless and have no need for “free” parking. Renters who are carless primarily for economic reasons will find it more difficult to afford a home.

    Hiding the cost of parking in the base rent also helps encourage car ownership, leading to more congestion and more pollution. I doubt that would please whoever is behind this proposal.

    We need to look at what’s best for the neighborhood and city as a whole. This proposal might satisfy certain drivers who live within a few blocks of an apartment project, but it’s bad for Uptown and bad for Minneapolis. Policies that put more cars on the street help nobody. Let’s not turn our back on the goals we’ve set for our neighborhood and our city by implementing this profoundly backwards policy.

  6. Janne says:

    Jason’s comment wonderfully describes how policy makers should be thinking about the issue.

    As a landlord, I’m not charging $100/month for a parking spot, but I am charging. I actually reduced the number of spaces I have (turning surface parking into a garden/patio) because I no longer had enough car demand to justify the surface parking.

    The four remaining spots I have (one of which is a secure bike garage) isn’t ‘free’ to me – I’m right now looking at costs to maintain it, and it’ll take about 7-8 years of rent to cover basic maintenance costs, not including the capital and debt service to purchase the garage.

  7. ML says:

    Jason and Thatcher have done a good job of spelling out the issues with this proposal. I have two main objections to the idea, one philosophical and one practical:

    1) It is just flat out not the government’s place to dictate how much parking is built or how a landlord chooses to charge for it. The market is far better off deciding these matters. Parking regulation has had a decidedly anti-urban, pro-auto effect over the past half century or more. (See Donald Shoup, Matt Yglesias, Richard Glaeser, Ryan Avent, etc etc.)

    2) As noted above, including parking in the rent punishes those who choose to go carless and distorts the market in favor of driving. Uptown is incredibly walkable and has plenty of transit. There’s no reason to encourage people to own a car. Costs should be made explicit so people know what they are paying for.

  8. Brian says:

    I do agree that requiring rental companies to include parking in rent isn’t the best solution. However, the current situation at Solheim and Flux may also not be ideal since additional pressure is put on-street parking, which is often used by people living in single family homes in the Wedge. I wonder if there is a third option: Add permitted on-street parking with a preference given to residents of existing dwellings without off street parking options.

  9. Brian says:

    I think it’s quite grandiose to talk about how we should be encouraging people to go carless, but the fact of the matter is that a large percentage of the new residents we see in uptown have cars. I think we should avoid the market distortion of adding another regulation to the apartment complexes on how they price.

    One thing that commenters have missed, however, is that there is another pressure to park off-street, which is the snow emergency and the street sweeping. That pushes new residents into wanting off street parking very quickly.
    If we actually knew the parking vacancy rates for some of these new buildings, we’d know whether they even have spaces left in them. Likely with some luxury apartment rentals, 2 people are coming with 2 cars, but possibly only one spot available for them.

  10. Anon says:

    Things like this make me wonder if we’ll ever see off-street parking MAXimums in Minneapolis.

    • Urbanite says:

      I would be 100% in favor of this idea. We need to stop subsidizing oil companies with stupid policies like required parking

  11. Jason says:

    Great discussion. What I observe happening in Uptown is poor information regarding supply of parking spaces. If any government regulation were to intervene (as described there are problem streets with genuine harms for residents) it should be to provide better information to drivers, renters and visitors regarding parking.
    This is not new, many consultant plans from 5, 10 years ago about Uptown parking and transportation recommended the city establish a parking management and partnership district for Uptown. (why does the city pay $$ for consultants then ignore their recommendations?) If there were consistent signs, a website and standardized (but dynamic) rates — drivers could more easily find spots to match their need. Save for a few peak hours Friday/Saturday night there is plenty, plenty of total parking in Uptown. Most of these newly built parking spots are empty weeknights and during the morning. Set up a market so that residents can find a space to rent in a garage/surface lot during non-peak times (i.e. overnight, weeknights). Why is there “restaurant only” parking in a big lot when the restaurant is closed & the neighborhood street down the block is locked in with parked cars? — a classic lack of information & market problem. The city, business and Uptown associations could address this and make everyone better off.

    Create a public/private Uptown parking program, app & website — don’t tax people though regulation looking for a place to live. Help people during snow emergencies by providing options in ramps & lots when business don’t need the space. Work together to make parking cheaper, businesses more revenue and streets for accessible for residents.

    The new meters could help to price parking more dynamically, the next step is to work this information into a real time map, to show available spaces. This would eliminate a lot of congestion during peak pedestrian times (i.e. 9pm Friday) as 20% of traffic during these times is shown to be circling to find a parking spot. SF has a pilot program to do just this.

    As for permit parking, my understanding is that if a certain % (I think around 75%) of property(?) owners on a block request it then the city will restrict the block. This is what happened on many of the Lake street to 31st street blocks.

  12. Meg Tuthill says:

    Thatcher- Please – the next time you want to write something in which you are unsure of my position, ASK ME FIRST. Once again you are way off base. I have proposed absoulutey nothing. I am asking questions as are my collegues on the City’s Zoning and Planning Committee. This is part of our job as we look at development around the City.

    Council Members with high density areas are hearing from constituents about parking. Parking for the residents, visitors, bikes and Hour Cars – all this is of interest and concern to new and established residents.

    Let me repeat that I made NO suggestion nor did I even hint at the idea of a resolution or anything of the sort on this topic. It was merely a suggestion to a developer regarding concerns from nearby residents. That was it.

    As far as LHENA is concerned. I choose not to challenge Brian as he was giving the report at the annual meeting. I felt it would be very rude to interrupt him in public for something that was a minor mistake. Brian does such a great job chairing LHENA’s Z&P Committee – we are very fortunate to have him volunteer all the extra hours for our community.

    • Thatcher Imboden says:

      Meg, I will openly admit that I should have asked first. I think that is a very fair point that it wouldn’t be wise or polite to correct a Chair at a meeting of that format. I also agree that Brian is a great chair and that he is a great asset for the neighborhood.

      I’ve made a correction to the post and will try to connect with you ahead of time next time. Though I never did say you had proposed a solution and I had asked people to resist scrutinizing a policy that you had only allegedly been considering and rather focus their attention on the dilemma that was raised at the meeting, which was that developers pitch projects with parking and then rent the spots, while neighbors often assume that parking is available to the tenants to use at their will.

    • Brad says:

      Fighting outdoor dining and spirit consumption, sticking up for non community minded businesses (Hennepin Lake Liquors) and being generally anti-density and anti-urban, made me very suspicious about your vision. Now that you support Rybak’s plan for the downtown Vikings stadium I can say the you are my least favorite Minneapolis council member. A close second is obviously Lisa Goodman, several other still seem Minneapolis needs to emulate the exurbs.

      • Anon says:

        I know I definitely won’t vote for her in the next city council election. It’s amazing how the councilmember that represents uptown is so very anti-density, anti-urban, pro-car, pro- vast amounts of parking, anti-business, pro-alcohol restrictions, ie so very anti-uptown.

    • Urbanite says:

      Meg, you only represent the extreme few of the radical anti-transit, pro-car, anti-density. You do NOT represent the residents of uptown accurately, and you are an enormous problem/burden on the growth of the area.

    • Brad says:

      #stopMeg2013

  13. Joe says:

    No, parking should not be made mandatory with rent. IMO we all need to take a good hard look at how much we waste by living this completely wasteful lifestyle of always getting in our car, having and owning a car is a privilege not at right. Again, IMO owning a car should be as painful as it is harmful and the city has no business to make it less painful.

  14. CR says:

    Ha, what a slime-ball she is, attacking Thatcher over semantics… Chatting about this idea in committee sure sounds like a suggestion to me. Too bad the party still likes her, in our single party council, no matter how much most of us don’t agree with her anti-urban policies she’s going to win, the anti-meg vote would be split to the left and right, leaving us with Meg….

    • Anon says:

      Hopefully someone in the party challenges her before the next election comes around. Uptown has passed a tipping point where we should hopefully see persistent and increasingly dense development, especially around the core. Would be such a shame for Tuthill to stifle it.

  15. Cedar Phillips says:

    Fell behind and will read through all comments later, but there is NO such thing as “free” parking. As someone who does not own a car, why should I have to pay for something unnecessary in my rent? It’s an amenity available for those who want it. Offering ample free parking simply encourages more people to drive more often, and isn’t that the opposite of what we say we want? A parking spot is not a right; local residents who want a guaranteed spot have the option to buy or rent somewhere that has parking available (for “free” i.e. included in rent, or at cost). I understand the frustration that comes when someone has been used to getting something for nothing (relatively easy to find free street parking) and suddenly that changes, but forcing buildings to pass along unnecessary costs to tenants — tenants who may not WANT those amenities, and who may not be able to afford them — is fundamenally unfair and not beneficial to the community. Assuming, of course, that our priority is not encouraging Minneapolis residents to prioritize cars as their preferred form of transit. (and yes, I’ms ure there ARE local residents who DO prioritize their car use; in their case, they can rent or buy a parking spot.)

  16. Urbanite says:

    Why should people who don’t drive a car, or even own one be forced to pay for parking just because the neighbors think they are better than everyone else because they live in houses instead of apartments? Parking is not a right. You are not entitled to your free parking space.

  17. Bryan (formerly Brian) says:

    Since I made the comment I thought I would chime in :). Sorry to create such a ruckus.

    Meg, I apologize for mis-quoting, my intent was merely to mention that I liked the fact you were asking developers to consider including it (parking) in the monthly rent instead of separating the two. I thought you had asked the Bennett group to do that at one of their initial meetings but I’m probably off. Anyway, sorry again for the mis-quote.

    Thatcher, thanks for the good guy comment :)!

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