The case for parking reform

And how to make it happen

An exciting law passed the California State Assembly last week prohibiting local governments from imposing minimum parking requirements on developments within a half-mile walking distance of public transit.

It remains to be seen whether the bill can pass the Senate and get signed by the governor, but its majority in the assembly was very strong, so I think the odds are good.

Given the intersecting nature of land-use rules, it’s not totally clear at first blush how much extra housing will be unlocked by this measure. You can’t turn a parking lot into a small apartment building if the zoning prohibits small apartment buildings. But what’s true is that parking minimums constitute an important barrier to development over and above conventional zoning. And that includes being true in places that are not superstar transit cities or anything. When Minneapolis reduced its parking minimums, typical rents for a new studio apartment fell from $1,200 a month to about $1,000 a month. Minneapolis is not a hugely dense city. Most people there aren’t in the market for a studio apartment at all. But there is fungibility across housing markets. Cheaper studios mean you have fewer family-sized single-family homes being occupied by groups of twenty-something roommates and more available for families.

Garage parking inflates the cost of high-rise rentals by about 17%. In most cases, renters will probably see that as money well-spent, and even absent mandates, there should be plenty of parking built. But just as some people live in small homes to save money, some people could live in accommodations with no parking to save money.

But beyond that, parking mandates fundamentally lock land-use patterns in place and prevent useful kinds of spatial evolution in response to social and technological change.

Parking intersectionality

Something worth saying here is that while legislators obviously need to care about the legal technicalities, citizens should see these regulations as all part of a seamless whole. My neighborhood in D.C. is zoned RF-1, which means attached rowhouses. You are allowed to have two units stacked on top of each other. One common way to do that is a three-floor main house and a one-floor basement apartment. Typically a single family owns the whole house and rents out the basement.

Another common arrangement is an even two-two split. Sometimes that’s structured as a condo. Regardless, in addition to the height and number-of-unit rules, the physical structure can only occupy 60% of the lot. There needs to be a front setback in line with the other houses on the block, and then the rest of the lot occupancy requirement can be met out back.

You are also required to have a parking space. My house, as I believe I’ve mentioned, has parking in the form of a garage. But the garage theoretically should count against the 60% lot occupancy rule, so nobody builds them — mine is illegal and was just grandfathered in. The typical situation, illustrated in this photo of an alley near my house, is that behind the house you have a small yard with some of that yard given over to be the designated parking space. Then you have a garage door (so people can’t just break into your house) but no roof, so as to comply with the lot occupancy rules.

In a formal legal sense, relaxing the parking requirement would let people have bigger backyards but not much more than that. And enforcement of whether you really do or don’t have a parking space in that back area is weak.

What it would take to reform the parking situation in Logan Circle would be to simultaneously repeal the mandatory parking rule and the lot occupancy rule, thus letting homeowners actually reclaim their parking space if they want — and use it to build a larger house or a small rental unit.

In other words, in D.C., the parking rule in the rowhouse neighborhood is probably not that binding in practice. The big issue is the lot occupancy rule. By contrast, in Houston, they don’t have lot occupancy rules, but they do mandate parking minimums, so the parking rules are de facto zoning. My point in this piece is not to quibble about what’s a “parking mandate” and what’s “zoning,” but to criticize regulatory policy whose purpose is to mandate that housing come with off-street parking attached.

Good things don’t need to be mandatory

Part of the sickness of the discourse around this issue is that it often plays out as essentially a proxy fight over whether or not parking is good, with the proponents of mandates talking about how cars are useful and people like to have a place to store them.

That’s all true of course. By the same token, I have a washer/dryer and a dishwasher and a toaster and a microwave in my house. My last house had all those things, as did the four houses I resided in prior to that one. These are widely owned appliances in the United States because they are very useful. That being said, when I was a kid and lived in Manhattan, we did not have in-unit washer/dryers. They are useful appliances, but they also take up space, and in Manhattan, space is very valuable. We also didn’t have a microwave for a while because our kitchen was small and my mom didn’t think it was worth the counter space. Later she changed her mind.

At the moment, my dishwasher is broken. I am going to spend the money to get it fixed or replaced. But critically, if I decided for whatever reason that I didn’t want to spend the money to get it fixed or replaced, I have that option.

By the same token, while it would be eccentric of me to give up my washer/dryer in order to have more closet space, it’s a choice that I am allowed to make.

In general, we don’t require people to own something just because the thing is useful and we have reason to believe that most people would want it. If most people want something, they buy it. If people in weird edge cases don’t want it, then they don’t buy it. Free markets have a lot of flaws and shortcomings, but the precise thing that they are best at is coping with trade-offs like “a microwave is useful but will take up space on my counter” or “fixing the dishwasher will cost money.” Every family’s situation is different, and preferences vary, so we let people decide.

Parking externalities

Where unregulated markets are not so good is in dealing with externalities.

If your factory dumps pollution into the air or waste into the water, that harms lots of people who are not you. You could operate the factory in a cleaner way, but you would bear the cost of doing that, while the benefits would accrue to lots of people who are not you. So absent regulation, we will have too much pollution.

Off-street parking regulations sort of conceptualize parking in that way. If my neighbor replaces his parking pad with a small apartment, then he might park his car on the street. And the resident of the new apartment might get a car and he might park his car on the street. Your lack of off-street parking becomes my scarcity of on-street parking.

But a few points on this:

  • We don’t generally think regulations should halt pecuniary externalities. If I own a coffee shop and you open up a coffee shop down the street, that hurts my financial interests. But I don’t have a legitimate policy argument for stopping you.

  • Actual scarcity of on-street parking is a sign that parking is underpriced — probably that your city is under-charging for residential parking permits. In that sense, your neighbor scrapping his parking spot is really just a pecuniary externality — it’s raising the price of parking.

  • It’s also of course perfectly possible to have a private market in parking. Paid parking lots are a thing. And there are plenty of houses in my neighborhood that, thanks to parking mandates, have under-utilized parking spaces. Absent the mandate, some of those homeowners would turn the spaces into something other than parking spaces. But others would lease the spaces out and make money. In that case, the pecuniary externality is positive rather than negative, so it’s not clear why you’d want to halt it.

  • Last, we should avoid the “fixed lump of cars” fallacy. Some of my neighbors own cars that they rarely drive. But once you have the car and the parking space, you may as well keep it as long as you drive it sometimes. But if selling the car lets you earn money by converting the space to something else, more people would do it. Parking mandates are raising the ratio of cars to people in the neighborhood and exacerbating pollution.

To make a long story short, this is not an externalities issue. You are simply pushing the supply of housing down and the ratio of cars-per-person up relative to what an unregulated market would provide.

Mandates hobble innovation and change

If you don’t know why reducing housing supply is bad, then I have just totally failed in life and I’m not sure what else to say about it.

Rather than rehash my old points about this, I want to highlight something more specific about innovation in the transportation sector. Over the past 20 years or so, starting with Zipcar, we have had a big and exciting series of innovations in the transportation space. That includes Zipcar and Car2Go in the short-term car rental market. It includes Uber and Lyft in terms of making it easier to hire a taxi. But it also includes bicycle sharing systems (both docked and dockless) and electric scooter startups. The newest one to make waves is e-bikes.

This all should be a big deal for the significant minority of the population who lives in places that have at least some mass transit and walkability.

But it just really hasn’t been that big of a deal. And to the extent that it’s made a difference, it’s been Uber crowding out mass transit.

This is too bad, because when Uber first launched, I was optimistic that it and Zipcar would be complements to mass transit rather than substitutes for it. The basic logic is that while cars are expensive, once you own a car, it’s cheap to drive it. So once you decide that you want to own a car, it becomes very compelling to drive the car a lot. But suppose you don’t need a car for your daily commute or your most frequent errands. Well, then you still probably need a car just to get to people’s houses and to do some less frequent errands. But if an e-bike or an electric scooter expands your range of carelessness, and Uber and Car2Go mean a vehicle is available whenever you really need one, then maybe don’t need to buy a car.

The problem with this logic is that even though cars are expensive, they’re not that expensive relative to most people’s incomes in what is, after all, a pretty rich country. In at least some cases, what’s actually very expensive is the opportunity cost of using scarce land for car storage. I could save a bit of money by ditching my car. But the real upside would be reclaiming my parking space, either to make my house bigger or else to create a rental accommodation that would bring in a lot of income. And from the other perspective, for potential renters, the main saving of non-ownership of a car would be from the cheaper rent. That’s the kind of dynamic that would set off a flywheel of more people living in dense, transit-accessible neighborhoods and a smaller share of those people owning cars.

The technological innovations would be helping to solve big problems of urban geometry and housing scarcity, instead of being what they are today, which are basically curiosities and potential threats to the financial stability of big city bus systems.

Opponents’ arguments don’t make sense

The parking deregulation bill passed the California assembly 51-17, and most of the no votes were from Republicans, though a large share of the GOP caucus voted for it. And if you think about it rationally from a conservative viewpoint, the argument that overregulation of private business activity can be economically damaging is really not something that should be a huge stretch.

To the extent that there was interest group opposition, it largely came from a motley group of progressive nonprofits whose arguments are pretty hard to parse. Beyond vague rhetoric about the need for “intersectional solutions,” these groups are mostly making the perfect the enemy of the good. Their argument is that as long as you’re doling out some regulatory relief to homebuilders, you should pair it with some new regulations — like maybe you only get the regulatory relief if you have affordable housing set-asides.

D.C. has a version of that policy, in which you need one parking space for every three units for a market-rate apartment, whereas you only need one for every six units for a subsidized apartment.

For starters, I just think tactically the ACT-LA approach to this is a recipe for making sure bills never pass.

But it’s also just fallacious to act like creating specially designated “affordable” units is the only way to improve housing affordability. Study after study shows that increasing the supply of market rate units helps with affordability. And note that even in a metro area like Greater Los Angeles where “everyone” has a car, about 7.5% of households don’t own a car. Millions of people in California — generally low-income — are carless, and building new parking-free units would both be directly cheaper (because they lack the parking amenity) and improve overall affordability by increasing housing supply.

NIMBYism is about institutional design

Kevin Drum finds YIMBYs annoying, and helpfully finds us annoying in a normie kind of way rather than a nutty progressive nonprofit way. And when I was tweeting about parking a few days ago, he said he wished people would stop calling NIMBYs racist (I agree) and also acknowledge that people have a legitimate desire to oppose new housing because it will create more traffic.

I think that actually gets to the core of why this California reform is good and should be a model for other states.

Like everyone else, I would prefer there to be less traffic on the street that I live on. If you left it up to me to make a rule, I would say “only the residents of this street are allowed to drive on it.” Not because we’re racist or we hate the poor or don’t understand economics, but simply because less traffic on our street would be desirable and so we make that rule.

But crucially, I am not allowed to make that rule and neither are my neighbors. Because in addition to the question “would you like to exclude non-resident drivers from your street?” we have a meta-question, which is “who should be allowed to make the rules about who is allowed to drive where?” We could absolutely have a rule which says each block gets together and decides whether or not to allow non-residents to drive on the street. But we don’t make that rule, because we fear that each block would say “not in my backyard!” and then nobody would be able to drive anywhere.

Parking deregulation can pass the state assembly because the assembly doesn’t ask the question about what happens in your backyard, — it asks the question about what best meets state goals. And you get a different answer. That’s ultimately the path forward on this and related issues — not shaming people for having parochial concerns but normalizing the idea that land use rules should be made by state governments with a view toward their statewide effects.