The Office of Planning (OP) has used
housing affordability as a rationale for a number of proposals in recent years; the reduction or elimination of parking minimums, matter-of-right
conversions of garages to rental apartments, and the relaxation or abandonment
of Height Act limits are a few examples. Yet OP is not trying to reform or
replace the part of the zoning code that is expressly designed to produce more
affordable housing – the inclusionary zoning (IZ) provisions. This leads me to
question whether affordability is a problem that OP actually wants to solve –
or whether it serves too useful a function as an always-available justification
for upzoning and other pet projects.
This post is the first in a series
that will explain why various proposals in the ZRR will not make housing in the
District more affordable – and how some are actually likely to make housing
even less affordable.
Today’s topic: Parking requirements and housing affordability
The first thing to remember here is
that car-free housing is easy to find in DC, and has been for decades.
(My own household has been carless in DC for 25 of the past 26 years, so
I know whereof I speak.) This is true for two reasons:
· On-site parking requirements weren't imposed in DC until
after 1958. Thousands of apartments, as well as single family homes of
various types (detached, duplex, rowhouses, and flats), still in use today were
built before that time. In fact, such housing exists in sufficient
quantity to account for on-street parking problems in areas like Capitol Hill,
Logan Circle, Dupont Circle, and Georgetown where historic housing stock is
common. It is not at all clear that,
empirically, car-free housing in DC is cheaper than housing with on-site
parking, but, at any rate, it is certainly already available in this market.
· Our fractional parking minimums (generally one space for
every 2 to 4 apartments) mean that parking in multifamily buildings is
typically sold separately (or “unbundled”). So even in buildings that do have
on-site parking, people who don’t need or want parking don’t have to pay for
it. Long story short, we already know
what the price of housing without parking is in various neighborhoods. And it’s not going to change. There’s no reason to believe that housing in
new construction with no on-site parking will be offered at lower rents (or
sales prices) than units in existing buildings that are sold/rented without
parking.
Arguments that parking requirements
increase housing prices assume that housing prices are, essentially, a function
of how much it costs to build housing. But cost-plus is not how housing is
typically priced; rents are market-driven. And, in DC neighborhoods, there's
one market for housing and a separate one for parking. Each commands what
people are willing to pay, regardless of how much a particular unit cost to
produce (e.g. surface parking spaces aren't necessarily cheaper than spaces in
an underground garage in the same vicinity). This also means that, to the
extent that parking costs have been smuggled into rent, even buildings without
parking costs can/will claim that rent because they know that’s what the market
will bear.
In fact, at least one local developer
seems quite aware that car-lessness makes higher rents possible. “Matt Klein, president of Akridge, a commercial real
estate company, and chairman of the Urban Land Institute’s Washington Chapter,
said that 50 percent of all new residents moving into apartments in the
District do not have cars. ‘That’s part of the way people afford units,
by shedding other costs,’ he said.”
It’s also important to remember that
the reduction or removal of parking minimums would primarily affect new
construction. Yet the most affordable housing in an area is typically found in
older residential buildings. Even the cheapest market-driven new construction
is likely to be priced higher than older units in the same area, and this is
especially true in hot housing markets and in gentrifying areas.
Experience in Portland bears out the
claim that eliminating parking requirements does not increase housing affordability. Residents say the new car-free buildings are
expensive. This graphic indicates that new construction
in many areas of Portland rents for nearly twice what pre-1997 buildings do. Perusal of marketing info corroborates that
car-free buildings are being marketed as luxury buildings at high-end prices.
Basically, buildings without parking tend to be clustered in neighborhoods
where there is a seller’s market. An article in Willamette Week (Portland’s
City Paper-equivalent) offered this explanation:
Randy
Rapaport, a longtime developer of condominiums and apartments on the east side,
including the Belmont Dairy Apartments and Lofts, disagrees with the parking
exemption. He says it simply allows developers to cut costs while creating
gridlock for the neighborhood.
“These
are sophisticated developers,” Rapaport says. “They know they can fill
their units because this area is so hot. They know better. But they’re not required to know better.”
A NYC residential parking study
affirms that when housing is scarce, developers know that it will command high
prices with or without parking. In fact, a few developers have discovered that,
in that market, fewer parking spaces can be more profitable than sufficient parking – on-site parking will command astronomical rates (with lower excavation costs) if most people in the building can’t have parking but a select few (who are willing to pay whatever it costs) can.
Ultimately, if developers are not compelled to internalize at least some of the costs of providing parking for their tenants, then the public will pick up the tab for the parking scarcity that results – see, for example, calls in Cleveland Park and Logan Circle for municipal garages. In the shorter-term, expect to see substantial increases in the cost of Residential Parking Permits (and increasing restrictions on on-street parking). Housing costs won't decrease, but parking costs will increase. That's not a way to make living in DC more affordable.