Do Park and Ride Lots Make Sense?

Park and ride lots for transit are common in the US, especially on commuter rail systems and outlying stations of rapid transit systems. Many urbanists do not like park and ride lots, seeing them as a waste of space that could be better used for housing, which would not only provide riders, but reduce car dependence and avoid the capital costs of parking. So, I thought a brief look at the economics of park and ride lots from an agency perspective might be interesting.

Suppose we have a site adjacent to a transit station. We could build a parking lot or garage, and let drivers park for free, in which case a portion of the transit fare is actually covering the cost of parking construction. We could build parking and charge enough for parking to cover the cost of parking construction, so none of the transit fare is subsidizing the parking. Finally, we could build housing, at some density – single-family houses, townhouses, podiums, or hi-rises. In that case, some of the residents would become riders, and the transit agency may be able to collect some profit on the housing.

The analysis below runs the numbers on 8 hypothetical scenarios for a 10 acre transit-adjacent site: free parking lot, $3.00 parking lot, $5.00 parking garage, $10.00 parking garage, single-family subdivision, townhouses, podium-style apartments, and hi-rise development. The assumptions are all laid out in the spreadsheet. Housing profit margin is based on what the National Association of Homebuilders reports. The equivalent zone is what the development would be per City of LA zoning. Transit fare and service cost are per LACMTA data for heavy rail.

As one might expect, free parking loses money for the agency. Since the service cost is greater than the fare, the cost of building the parking is entirely a loss. If the agency can charge a modest amount for parking, in this example $3, the surface lot turns into a little bit of a money-maker. $298k/year is not a huge amount of money, but it’s something, and this option actually performs better financially than the single-family housing or townhouse options.

Due to high capital costs, a parking garage can be either a big winner or a big loser. If the agency can charge $5 for garage parking, the result is a loss of over $8m/year, but if it can charge $10, the result is almost $4m/year in profit, by far the best option. Note, however, that this is dependent on the ability to consistently fill a nearly 1100-space parking garage at $10/day. There are some locations where this will pencil out, towards the edges of the city and some commuter rail stops. (People might pay $10 to park downtown, but then they won’t even bother to ride transit, which is sort of self-defeating from a transportation and land use policy perspective.)

All of the housing options are guaranteed to generate at least some money by virtue of the profit from selling the housing. Obviously, the podium and hi-rise options do best and beat surface parking in nearly any scenario. If you are in a neighborhood where podium or hi-rise development pencils out, you probably don’t want your transit agency to be in the business of building parking garages anyway.

One thing to note here is that the analysis is quite sensitive to the interest rate. This is because the parking options have large up-front costs, while the housing options have large up-front profits. An increase to 5% turns both garage options into big losses, with even a $10/day garage swinging from $3.8m gain to a $1.1m loss. In contrast, the financials of the housing options improve.

Lastly, please note that this is a very rudimentary analysis and does not account for benefits and impacts to other policy goals. For example, a 5445-space parking garage might be a winner for the agency, but if it’s not located close to a freeway, it may cause a lot of neighborhood congestion. Building housing creates the opportunity for more people to live in the city, while building parking only creates the opportunity to live somewhere else and drive. And of course, parking lots and garages create border vacuums and dead zones in the city fabric, which is undesirable.

Bottom line: park and ride lots may make sense in suburban and exurban areas if parking fees are enough to cover the cost of lot construction and help subsidize transit operations. Otherwise, build more housing.

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Podiums Are the New Dingbats

Apologies for light posting lately; hopefully things will be back to normal soon. I’m working on some longer items, but in the meantime, just a quick post to build on a few things I’ve written about before.

Last weekend, I checked out some new apartments that were opened a few months ago at the corner of Palms and Motor. They’re renting for about $2.50-$3.00/SF, with the cheapest 1BR checking in at $1,775. That’s not exactly cheap, but it isn’t terrible for new construction, especially considering that the building must have had higher construction costs due to building a couple levels of parking. With new true podiums nearby on Motor and Palms coming online soon, we’ll see how they’re priced. I’m paying much less, but I’m in a considerably older building.

Dingbats were the prototypical affordable housing in built-up areas of LA. They feature efficient parking design, with parking tucked underneath on a lower level, and the wood-frame apartments above. However, the open nature of the lower level means it has less shear strength, so if a big earthquake hits my apartment might be going for a short but spicy ride that ends on top of those cars. To avoid this design flaw, you need to beef up the performance of the lower level, which usually means podium style construction: reinforced concrete columns and deck for the lower level, wood-frame construction above.

Once you’ve triggered the expense of  concrete construction on the lower level, you might as well go as tall as you can with the wood-frame above, to  distribute the costs of the high-cost portion over more units. That’s generally about five or six stories, provided the zoning allow you to do so and you can meet the parking requirements with only one level. In other words, podiums are the new dingbats – the best way to max out a site with low-cost housing.

Of course, if you can avoid the need for the podium through something like reduced parking requirements, you can keep housing costs even lower.

Barriers to Fine-Grained Urban Development

Ok, so here’s the long-delayed compliment to these posts on LA density and mid-rise development, regarding the problem of enabling smaller footprint projects and different development models. The size of a development’s footprint was raised by Neal Lamontagne in criticism of mid-rise developments that take up the whole block, but really, it is just as applicable to high-rise development.

I agree that this is an important issue, for many of the same reasons I outlined for supporting mid-rise development in general: it opens the door for a wider variety of people to try their hand at land development. That means more new ideas, more development models, more sensitivity to local market conditions. If you ask me, communities are much more empowered to control their own future when many people in the community are potential developers than when a handful of the most active community members try to control a handful of developers through a handful of city planners.

So why don’t we see more fine-grained development? Let’s explore a few causes. They are somewhat varied, but they mostly come down to the fact that impediments to building have fixed components and variable components, so the larger the project, the greater the number of units upon which to distribute the fixed costs.

High Up-Front Costs

These costs are related to up-front project activities like doing traffic studies. Obviously, there’s an incremental cost too, since larger projects will have more impacts, but all activities have some mobilization cost – an amount that will be incurred no matter how small the actual task.

Here’s a simple analogy. Suppose it costs you $100 to rent a delivery truck for a day, plus $10 in gas for every delivery trip you make, and that you make $20 per delivery. Obviously, you need to make at least 10 trips to break even, and many more trips than that to turn a decent profit. If the fixed costs of $100 were to go down, a delivery business making fewer trips would be feasible. Likewise, high fixed costs for development make smaller projects more difficult, because there are fewer units amongst which to distribute the costs.

Cities have direct control over some fixed costs, through things like permitting requirements and fees. Many cities charge a fee for plan review, often on a basis of how many units or square feet there are in the development. The per unit fee may decline as the number of units increases, because the city also faces fixed costs in doing the reviews. The result is that larger projects are saddled with smaller costs per unit, so they take less of a hit to the bottom line.

Permitting requirements also favor larger projects. Once you are required to do an EIR, for example, you incur some pretty large costs, which encourages you to go for the biggest project possible. In addition, due to the high fixed costs of doing an EIR, it is much more logical to try to permit one large block-sized project than four quarter-block-sized projects. The requirements to do things like EIRs create a market incentive to consolidate properties into the largest possible projects, so that the hassle and cost of going through the permitting process will only be incurred once.

Perhaps the most underappreciated fixed cost that cities have control over is time. Time is money. If you are trying to build a project, all of the time you spend in the permitting phase is time that you are paying architects, paying engineers, paying lawyers, paying planners, paying property taxes, and bringing in no revenue. For large developers, this is a nuisance – the cash flow from other completed projects will keep you going. If you are a small-time developer, who has a harder time getting financing anyway, delays in permitting and legal processes can be a death sentence. Indeed, there is a long tradition in urban planning of simply waiting until recalcitrant actors exhaust their resources and fold.

If cities want to encourage more small-footprint development, they need to do all they can to eliminate these barriers. That means increasing the size and variety of projects that can be built by entitlement. It means processing applications quickly. And it means eliminating many of the pointless studies required of developers.

Zoning

Zoning requirements act in two primary ways: one, they specify how much of the property can be developed through setbacks, height maximums, and floor-to-area (FAR) ratios; two, they may also specify the minimum size of development for a particular use, e.g. a minimum square footage for a one-bedroom apartment. Setbacks and height maximums may be fixed (e.g. setback always 20 feet) or they may have fixed and variable components (e.g. 5% of lot width but no less than 5 feet).

These rules make it more difficult to configure buildings on small sites. Setbacks take up a larger percentage of the site on a smaller property. Minimum square footages might make a site more difficult to use. For example, if the minimum apartment size is 500 SF, and the maximum FAR on the lot is 1350 SF, you couldn’t build three apartments. Maybe the market for three 450 SF apartments is there, but you won’t get to find out.

Now of course, you could ask the zoning board for a variance. The ability to grant variances means that municipalities can have almost limitless power over development – set very restrictive zoning, and arbitrarily grant variances to whoever you feel like giving them to. Variances take time and money, and there’s no guarantee you’ll get one.

Parking Requirements

If you’re laying out a parking lot, you need space for the aisles and the entrance/exit. If you have a multilevel structure, you need space for the ramps. Now, a huge garage might need more than one entrance/exit, and rarely you will see more than one set of ramps up and down between levels. But up to a certain size, one entrance/exit and one set of ramps will do. The larger the size of the parking lot, the smaller the percentage of total space lost to entrances/exits, ramps, and aisle ends.

This means you can accommodate the required parking (and developers rarely build more than the minimum) more efficiently on a larger lot. A block-size development with two entrances/exits and sets of ramps loses less space than six small developments on the same block. For small parcels, it might be geometrically impossible to meet parking requirements, or might require resorting to expensive treatments like robotic car lifts.

The doubtful wisdom of parking minimums has gotten a lot of attention from people with a much bigger platform than me, like Matt Yglesias, so there’s no need to go into detail here. At the very least, cities could eliminate the requirement that parking be provided on site, which would open up the market for efficient use of existing parking capacity and allow for developers of small properties to meet requirements by providing leased spaces elsewhere.

Elevators

Current regulations provide an exemption from elevators for very small buildings: anything two stories or less, and anything with less than 3000 SF per story. Once you hit the threshold of needing an elevator, though, it makes sense to go as big as possible. Again, it makes financial sense to build the whole block so you can distribute the costs of the elevators on more units.

Banks and Insurers

Banks and insurers drive residential construction towards full-block apartment buildings constructed by big-name developers the same way that they drive commercial development towards suburban office parks and malls. It’s a model they have great familiarity with and a ton of data on. Numbers to plug into their spreadsheets; lots of similar deals in the past to make investors feel warm and fuzzy. You want to build a plaza with a Target and a Ralph’s? Done. You want to build a few hundred SFRs? Done. Wanna build a four-story building with half the first floor as retail, no pre-lease, and limited parking? Slow down.

Note that this is one of the reasons that immigrant communities are often forced to self-finance; banks are uncomfortable with development models that those communities want to bring with them, and that prevents good ideas from spreading. For example, many supermarkets in Asia have a food court inside, and you’ll find this model in K-town and other Asian immigrant neighborhoods. It’s a very successful model, yet for the most part, it hasn’t been adopted by the major supermarket chains.

Promoting Fine-Grained Development

Now, some of these things can’t be changed. Cities have limited power to coerce banks into changing lending practices, and city financing schemes like tax subsidies tend to have undesirable side effects. It would be pretty heartless to argue for going back to a time when people with disabilities couldn’t access housing or shopping. But a lot of what worked 100 years ago would work today:

• Reduced requirements for up-front studies
• Fast processing of permit applications
• Liberalization of zoning schemes
• Elimination of parking minimums
• Investment through local or regional financial institutions that are more responsive to local conditions

In other words, like many urban development issues, making progress on this issue is simply a matter of getting out of our own way.

What Are the Arguments Against New Freeway Capacity?

The current conventional wisdom in urban planning is that freeways are bad. As a result, the usual response to any plan to build a new freeway or widen an existing one is to throw the book at it, and hope something sticks. This is straight out of the NIMBY playbook, and if you have enough money and good lawyers, you can usually find some technicality that will at least delay the project and force the proponents to pretend that they like to waste their money on “mitigation”. These arguments don’t have to be logically consistent, they just have to work. For example, you can argue that the new freeway lanes will be filled with cars before you know it, and that the new freeway lanes will go unused. Take your pick.

Engineers, though, we’re pretty agnostic. You go to school to learn how to design railroads, and in calculus, you sit next to someone going to school to learn how to help the CIA blow up railroads with unmanned drones. Whatevs. And that’s how it should be. You don’t want the police selectively deciding what laws they’re gonna enforce and who’s gonna be on the receiving end of that enforcement based on their personal opinions. And you don’t want your engineers to do a crappy job on your track design because they have a philosophical disagreement with streetcars. By the time things reach the engineers, all the relevant planning decisions have already been made. Even if I think your project is a bad idea, I’m gonna give you the best damn design possible.

When I look at things at a planning level, I try to bring that same sense of doing things efficiently. When I get upset about a freeway project, it’s not because it’s a freeway per se, but because (a) it’s in a place where there’s no need for any new transpo or (b) there would be a better way of meeting the travel demand. There are lots of bad freeway projects in the US, that are a waste of money and resources because they’re not very efficient. The planning level is the right level at which to stop these projects. So with that in mind, here’s an engineer’s assessment of the quality of planning level arguments against new freeway capacity.

No Demand

An easy one to forget, but like the do-nothing alternative, sometimes it’s the best. If there’s no demand for the facility, there’s obviously no point in building it. Since there is usually pent-up travel demand in cities, this argument is best applied to the pointlessly proliferating pork barrel rural freeways like the I-99 and the I-69.

Induced Demand

If anything, this is an argument in favor of new freeway capacity. Induced demand, as Kurumi whimsically put it, is the tragedy of a highway, once built, being used as intended. When urban planners talk about induced demand, they always do so as if it were some evil willed into existence by the freeway – like the additional people and goods moving around are just out there for the hell of it. But that additional traffic represents people who were able to move to the city for a better job, businesses that were able to reach more customers, friends who were able to head across town to meet for dinner.

Put another way, let’s say that we decrease the peak period headways on the Blue Line from 6 minutes to 4 minutes, and in a couple years, all the new trains are just as full as the existing trains today. Would anyone make the argument that the project was a failure because the trains are just as crowded? Of course not.

Increased traffic volumes do result in an increase in negative externalities like air pollution. The proper course of action is to appropriately price the negative externalities of driving. Indeed, if externalities were appropriately priced, the apparent need for many freeway projects would vanish. Controlling them by restricting capacity is like controlling people’s sewage output by not installing a larger pipe. It might work, but it’s not pretty.

Declining VMT

Now we’re getting somewhere. In the past, traffic predictions were usually too low. Today, they seem to be too high. If you’re reading this, odds are there’s no need for me to go into too much detail, but per capita vehicle-miles traveled (VMT) has been declining since 2004. This is due to a combination of the Baby Boomers aging (old people drive less), young people wanting to drive less, a significant increase in the price and price volatility of gasoline, stricter licensing laws, and the general economic malaise of the last decade. The relative importance of each of those factors is determined, of course, by the writer’s preexisting bias.

Declining per capita VMT can be a pretty solid argument against increasing freeway capacity, but it depends on the rate of population growth in your region. Let’s say that per capita VMT is declining at 1% per year. If you’re Houston, and your population is growing at 2.2% per year, the total VMT in your region is still going to up. Empty capacity in Cleveland doesn’t do you any good. Now, you could argue that something else would be a better transportation alternative than a freeway to meet that demand, but that’s a different argument, discussed in more detail later.

On the other hand, what if you’re Cleveland or Buffalo or Detroit, or any city that has lost population in the core while growth in the region has been anemic, if that? Well, you might want to reconsider expanding your roads. It’s hard to imagine that any of those three cities needs a major roadway expansion project. You have to wonder what MDOT is thinking when they write an EIR for widening the I-94 that says the city might lose residents due to the negative externalities of the wider freeway, but that they can be replaced with more commerce. Really, Detroit is lacking vacant land for commerce?

So declining per capita VMT might be a good argument; it depends on the city.

Parking Capacity

This starts to get into network effects, which are naturally more difficult to understand and model, and therefore more readily ignored. You could say that you don’t want to make it easier for people to drive to a destination because it will make the parking situation worse. Parking capacity is nominally easy to fix by building structured parking, and at some point, people will just stop driving to the place if they expect parking to be exceedingly difficult to find. This isn’t really an argument against building new freeway capacity so much as an argument for better parking policies, which is a separate issue. I think some guy named Donald Shoup wrote a book about that.

Local Street Capacity

Insufficient local street capacity is a great argument against building new freeway capacity. Local street capacity is limited by the available ROW, the need to provide space for competing uses like sidewalks, bike lanes, and street parking, and the need to split green time between conflicting movements at traffic signals.

Jarrett Walker likes to say that one of the best arguments for transit is geometry, because no technology can repeal its laws. Likewise, an important feature of the local street capacity constraint is that geometry makes it very difficult to resolve. Ultimately, and fairly quickly, you run into the need to do things like grade separate intersections and widen ROWs – things that are very expensive and unpopular, to say nothing of ruining the attributes that made the destination attractive in the first place.

A classic example of this is the 10 freeway in Santa Monica. There is a lot of congestion going westbound in the morning, starting at the off-ramp to Cloverfield and 26^th and building back from there. The two-lane off-ramp queues back onto the highway, and before long, it’s curtains for all the westbound lanes and the ramps from the 405 too. The issue here is that the local streets in that area are saturated. It would be pointless, perhaps even counterproductive, to widen the 10, because it might make the situation on the local streets worse, and there’s no room to expand those streets.

Local street capacity in Long Beach is popping up as a reason to not widen the 405 in Orange County, and it’s a great argument. (Contrast this with the congestion on the 10 east at the junction with the 110, where the primary issue seems to be insufficient weaving distance on the 110 at the downtown exit and the 101.)

Better Transportation Alternative

As an engineer, this is pretty much living the dream. Nothing makes an engineer more content than coming up with a more efficient way to do things. And happily, there are a lot of ways to come up with a better transportation alternative. It could be a transit option. It could be fixing bad parking policies. It could be something that costs less. It could be just making more efficient use of existing infrastructure through things like improving signal timings and ramp metering.

This is the reason that all good engineers should love bike infrastructure. Even if you don’t think biking is fun, even if you ignore the health benefits, even if you think the political left is using it as a pretext to turn ‘Murica into China or Europe, in your cold engineer’s heart, you have to accept that biking is a very efficient way to serve mid-distance trips that are too far for walking, but not long enough to capitalize on the advantages of cars or transit. The advantages of cars and transit increase as the length of the trip increases, but the disadvantages are relatively fixed access problems, e.g. getting to/from the transit station or parking and getting to/from the arterials and freeways.

Los Angeles, coincidentally, is a city with huge bike potential. The pattern of development and density in LA naturally lends itself to trips of that length, and the street grid makes it easy to provide the infrastructure.

Case Study: Expo Line

Let’s take a look at an LA case study: the Expo Line, as compared with the option to widen a competing freeway, the 10, between Downtown LA and Santa Monica.

Note that right away, we can see that induced demand is no good. You’re fooling yourself if you think auto travel on the 10 and transit trips on the Expo Line are zero-sum. We’re certainly hoping that the Expo Line is going to induce some demand! Declining VMT is probably not a good argument here either. The LA area keeps growing, traffic on the 10 is already terrible, and the Westside in particular would be gaining population quickly if we’d get rid of the foolish zoning that prevents it from happening.

Parking capacity is a pretty good argument in Santa Monica and Downtown LA. As much as people in Palms and Culver City might complain, the parking situation there is actually pretty liquid. As surface parking lots and low-rise buildings in Santa Monica and Downtown LA are converted to mid-rise buildings, hotels, and high-rises by market demand, the cost of building parking spaces goes way up, because a structure parking spot costs about ten times what a surface spot does. If parking is unbundled and parking minimums are eliminated, many trips to or from these locations will naturally gravitate to transit, which is a more efficient way of serving those trips. This also makes a greater variety of land uses viable, and that’s a good thing. Finally, Carter Rubin would tell us that building more structured parking in Santa Monica will have a negative effect on the economic productivity of the area.

Local street capacity is a really good argument in both Santa Monica and Downtown LA, because in both places, the local street network is saturated during peak periods. In downtown, some of this is spillover congestion from the gridlock on the 110 and the 101. In Santa Monica, the aforementioned congestion on Cloverfield, as well as the greater 3^rd St area (Ocean to Lincoln, Pico to Wilshire), seems to me to be almost entirely a function of local streets being maxed out. Expo Line allows for growth to continue in both neighborhoods without the need to undertake expensive highway projects. Palms and Culver City local streets aren’t terrible, though downtown Culver City can be bad at times.

Right in line with parking capacity and local street capacity constraints, we can see that the Expo Line is a better transportation alternative than widening the 10. A new lane on the 10 would have a capacity of about 2,300 veh/hr, or at an occupancy of 1.5 pax/veh, 3,450 pax/hr. The Expo Line, running 6 minute headways, has a capacity of about 10 train x 3 veh/train x 100 pax/veh = 3,000 pax/hr. The difference is, the congestion on the 10 is so bad, there’s no way it actually will carry that many people during peak periods. (Many people would argue that we could eliminate that issue with congestion pricing; while I’m in favor of HOT lanes, I think the idea of tolling all freeway lanes is impractical – an issue I’ll take up another time.)

Since Expo Line and the 10 don’t follow exactly the same corridor, there’s the benefit of providing better transportation to parts of the city that wouldn’t benefit as much from the 10 project. It lets trips on the Expo Line corridor avoid traveling north-south to the 10. That spreads the transportation wealth, since people near the 10 already have a high-quality transportation facility. (Some people don’t like living near a freeway, but hop on Westside Rentals and see how many listings say “convenient to the 405”.)

In terms of cost, Expo Line is probably a winner too. Widening the 405 by one lane between the 10 and the 101, about 10 miles, is costing over $1b. The project to add four lanes to the 5 between the 605 and Artesia, about 7 miles, is $1.6b but doesn’t involve the amount of retaining walls of the 405 project or a potential project on the 10, though it likely needs more ROW. Adding two lanes to the 10 between 4^th St and Crenshaw, the logical limits and about 10 miles, would probably at least $2b. Add in the costs of additional parking and local street capacity in Santa Monica and downtown LA, and you’re in the neighborhood of the Expo Line’s $2.5b cost. The Expo Line will also make efficient use of available capacity elsewhere in the system (Gold Line and the forthcoming Regional Connector) that is not available to a project on the 10, since the 110 and the 101 are jacked.

Argue Smart

A victory on a technicality might feel great in the short run, but in the long run it’s Pyrrhic. The proponents of projects get wise and produce ever more voluminous studies. The same tactics can be used to stop good projects; pick your favorite transit project, and odds are it’s facing a bogus NIMBY lawsuit. Continued frustrations build a political movement to change the laws on environmental review (which, though I think it needs to be addressed, if done poorly could open the door for harmful projects). You can only win on technicalities for so long, as Expo Line opponents just found out.

Stick to the arguments above, though, and you’ll have a solid case every time. Laws can fix trivial details, but they can’t change the laws of logic, geometry, and efficiency.