Would You Trade a Parking Spot for an Extra Bedroom?
(Bloomberg Opinion) -- A bill wending its way through the California Legislature could suddenly make a lot more new housing economically feasible.
Known as AB 1401, the legislation would abolish local parking requirements for new residential and commercial developments near bus or train stops. It applies to counties with more than 600,000 residents and cities with more than 75,000 people.
The bill does not prohibit or restrict parking. It merely deregulates it, allowing developers to decide what works best for a given project. It opens up the possibility, for example, of providing parking in an off-site garage or lot. It permits tandem parking to save space or subsidized shared ride services. It doesn’t prescribe a one-size-fits-all solution to how buildings can best serve the people who use them, and it allows flexibility as transportation options evolve.
Most homeowners and tenants want some sort of parking, but local mandates can be extreme — and extremely expensive. Twenty-one California towns even require more than three parking places for a three-bedroom single-family home.
In Westwood Village, the commercial district next to the University of California, Los Angeles, a tenant who wants to transform a vacant storefront into a restaurant, or vice versa, must add ample on-site parking. It’s an impossible demand without demolishing the historical structures that give the neighborhood its charm. Nearly every place I’ve lived since moving to Los Angeles in 1986 would be illegal to build today because it lacked two side-by-side parking places.
Adding an above-ground parking spot in Los Angeles costs about $27,000, just for construction, while an underground space runs around $35,000, according to 2014 estimates by UCLA planning professor Donald Shoup, author of “The High Cost of Free Parking.” That means the typical two-spot requirement adds between $52,000 and $70,000 to the cost of a new housing unit before a single two-by-four goes up. And that doesn’t include the land.
The estimate also hides some of the most important effects of parking mandates. “The real issue,” says UCLA planning professor Michael Manville in an email, “is that sometimes the marginal cost is extraordinary. The first space that requires a second underground level might cost a million dollars. If you have to do that to build, say, four parking spaces, you're going to get less housing. AB 1401 prevents that scenario.”
Shoup’s book gives the real-life example of a standard-size L.A. parcel whose zoning allows eight apartments, with required parking of 2.25 spaces each, or 18 total. The lot is only big enough to accommodate 16 spaces on one level of underground parking, however. Going from seven to eight apartments means digging down another level, which is prohibitively expensive. So the builder settles for seven units. The parking requirement costs one more family a home.
The biggest beneficiaries of abolishing parking requirements would probably be the sorts of projects both planners and ordinary city dwellers tend to like: smaller infill buildings, mixed-use projects with street-level retail that neighbors can walk to, repurposed historic buildings, and nonprofit low-income projects. Stringent parking requirements encourage large buildings that can spread garage costs over many units and charge luxury prices. Add in the parking minimums for commercial operations, and many mixed-use developments become impossible.
Under current law California cities, including Los Angeles, sometimes allow more housing units in buildings near mass transit if developers add deed-restricted lower-income units. Regulators can also loosen parking requirements, as well as such restrictions as the minimum yard size. AB 1401’s most influential opponents don’t want to give up a potential bargaining chip. If developers can decide how much parking to include, they worry, there won’t be an incentive to add affordable units to these projects.
Yet all the evidence suggests that the big incentive for adding income-restricted housing isn’t fewer parking spaces but the right to build more full-price units. Allowing less parking just keeps the number of required spaces from blocking the extra units.
Besides, such mixed-income buildings actually account for only a small fraction of California’s income-restricted housing. In 2020, they made up only 12% of the deed-restricted units approved in L.A. Far more important are buildings where all the units are limited to low-income residents. For those, parking can be a significant added cost.
A 2020 study of Low-Income Housing Tax Credit developments, conducted by the Terner Center for Housing Innovation at the University of California, Berkeley, found that a parking structure cost nearly $36,000 a unit. “For a 100-unit building required to include an on-site parking structure, this would mean that roughly $3.6 million of the project cost goes to parking,” write the Terner Center’s David Garcia and Julian Tucker in a report on AB 1401.
Manville points to San Diego as an indicator of the bill’s likely results. In 2019, the state’s second-largest city eliminated parking requirements for new projects near transit. “Housing production of all kinds went through the roof,” says Manville.
In the first year, the number of new units added rose by about 24%, even as housing production fell statewide. Contrary to dire predictions, the number of affordable units in projects given density bonuses jumped to 1,564 from 272. “All of a sudden, if you were either an affordable-housing developer, or a someone considering a mixed-income development, this huge piece of geometry that you worried about disappeared,” says Manville. “And so, so many more parcels became buildable.”
Given such evidence — amplified by vehement social-media pressure — the California chapter of the American Planning Association changed its position and now backs the bill. Authored by Assembly Transportation Chair Laura Friedman, a former mayor of Glendale, the legislation passed the state Assembly in June and has gone through two committees in the Senate, where it has been amended. Its fate will be determined after the legislature returns from its summer recess on Aug. 16.
If it passes, the law could provide a test of two contrasting theories: Is the best way to increase the supply of affordable housing to extort a couple units per building from developers of more expensive apartments or to lower the cost of constructing housing in general? There’s no such thing as free parking, and many Californians would rather have an extra bedroom in a place they can afford.
Santa Barbara County, for instance, has fewer than 600,000 residents, so its smallertowns wouldn’t be affected. The city of Santa Barbara has more than 75,000 people,however, so it could no longer mandate parking.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Virginia Postrel is a Bloomberg Opinion columnist. She is a visiting fellow at the Smith Institute for Political Economy and Philosophy at Chapman University and the author, most recently, of “The Fabric of Civilization: How Textiles Made the World.”
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