For comparison’s sake, the median US household has a net worth of about $97,000. That’s right, the value of parking per household in Seattle exceeds the wealth of the typical US family.
When we at Sightline talk about the opportunity to end hidden subsidies for parking that drive up the cost of everything else in our economy, it can be hard to know how much it all matters.
It’s a parking space, Michael. What could it cost?
A new report published last week by the Research Institute for Housing America offers a new way to think about the answer—In Seattle, parking accounts for $35.8 billion, or $117,677 of local wealth for each household in the city.
That’s the total replacement cost of the city’s 5.2 parking spaces per Seattle household—3.7 spaces per car in the city. (RIHA’s estimate of 1.6 million parking spaces citywide adds new support to the lowball estimate we made in 2013: 1 million parking spaces.) The replacement cost is what it would take to buy as much land and build as many garages, ramps, curb cuts, lots, and curb spaces as the city already has.
For comparison’s sake, the median US household has a net worth of about $97,000. That’s right, the value of parking per household in Seattle exceeds the wealth of the typical US family.
What would your household choose to do with $117,677?
What amazing things could our society do together if we had $117,677 per household to invest in our shared future?
The good news is that Seattle households are actually less burdened by parking costs than many North Americans. Along a Snake River tributary near the remotest corners of Cascadia, in Jackson, Wyo., RIHA estimates that parking sucks up an estimated $192,138 of wealth for each of that town’s 3,700 households. That’s because 37 percent of Jackson’s land is dedicated to the town’s 100,119 parking spaces.
Of course, most people in a small town like Jackson couldn’t comfortably make do without cars. But even if they couldn’t reduce driving one bit, they could still build less parking. A recent study there, mentioned in the RIHA report, found that more than half of Jackson’s parking spaces were empty even during peak tourist season.
Then there’s the other extreme: New York City. RIHA estimates that New York’s economy dedicates just $6,570 per household to parking.
That’s not because each individual parking space in New York is anything other than extremely valuable. Mostly, it’s because most of New York had already been built before anyone started setting arbitrary minimums for on-site car storage in new buildings.
As a result, New York has far fewer parking spaces per household: just 0.6, compared with Seattle’s 5.2. That’s left the Big Apple’s local economy far more money to invest in other things, like the nation’s best public transit system.
Fortunately for Seattle’s current and future prosperity, and thanks to the work of wise residents and leaders over the last 20 years, the city has been cutting away at the net of parking requirements that hold so much of the local economy’s wealth in the form of car-storage sites. The Seattleites of the future, like all Cascadians in communities that stop subsidizing and mandating lavish amounts of parking, will have reason to be grateful.
Hadleyro
What is the formula used to calculate value?
Michael Andersen
Specifically, this study looked at the replacement cost — what it’d take to recreate the whole inventory from scratch today, including data on land values. This has the advantage of including some sense of the current opportunity costs, but the disadvantage of not attempting to estimate what a parking structure actually cost to build whenever it was built. You should be able to download the full study here, and the detailed methodology begins on page 36:
https://www.mba.org/news-research-and-resources/research-and-economics/research-institute-for-housing-america
John Liu
I think this comparison is contrived and meaningless. US cities are huge investments made over over a hundred-plus years, many of which would be unaffordable to replicate at today’s inflated costs. Replacing many elements of today’s cities would cost tens of billions of dollars in construction and land and soft costs. Just one highway tunnel project in Boston cost $24 billion in 1991-2007 and today might cost double that. So why is it meaningful to divide the current replacement cost of all parking ever built in Seattle’s 100+ year history by the city’s population today? Why not divide by the total number of people who ever lived in Seattle over that 100+ years?
After typing the above reply, I got interested in the question: how many people have ever lived in Seattle, anyway? Not surprisingly, the answer isn’t found by a brief Googling. But I did find this fun factoid (estimatoid): the total number of people who have ever *died* in the history of the world is about 100 billion.https://fivethirtyeight.com/…/what-are-the…/
Inspired by that approach, I found Seattle’s population count for every decade since 1870, from which you can estimate that about 4 to 5 million people have *died* in Seattle since 1870. Which means, obviously, that some number greater than 4 to 5 million people have *lived* in Seattle since 1870. Divide $35 billion by 4.5 million and you get about $7,800.
Anyway, I think the $117,667 figure in the article is an airy hand-waving sort of number that means nothing, besides proving that if all of Seattle’s parking and the land under it were somehow destroyed, the city couldn’t possibly afford to replace it.
Michael
Thanks, John. It seems to me that all those billions of invested capital that make up the city are, like all capital in use, constantly kicking off economic returns for those of us now living, in the form of everything the city enables us to do that we couldn’t do as efficiently elsewhere.
Some of the capital is private, kicking off private returns, and some is public, with public returns. Some of the returns are cash and some are less tangible. So one relevant question is: which capital investments deliver the highest returns? Another is: how should we distribute those returns?
Whatever the case, every dollar we and our ancestors invested in parking is a dollar they didn’t invest in something else. The experience of NYC and lots of other old cities suggests to me that we could be enjoying higher returns today, with benefits more broadly distributed, if we’d invested in other things. They may suggest something else to you, though.
Phil Hayward
John Liu is right; it is an inappropriate use of data to claim X value of “wealth eaten up” per local household. How about running the same exercise for an entire city: everything in it?
Of course it will be hundreds of times the net worth of all the current-day households living in it. Your point is valid that there would be different rates of return on different investments in the past, but our ancestors evidently saw some value in investment in the total system for automobility.
I suggest one of the main justifications in their eyes is something we have forgotten about; automobility collapsed the “predatory pricing of urban land” that kept people trapped in crowded, squalid conditions as renters. I recommend you read my essays “The History of Urban Land Rent and Cyclical Volatility: the Elephant in the Macro-Economic Room”, and “The Power and Necessity of Consumer Surplus”. The first half of the 20th century was marked by public discussion of this point, which can be seen from published opinions from people as diverse as Frank Lloyd Wright (architect), Henry Ford (car manufacturer), and Charles Booth (social reformer), besides actual specialist economists like Grebler, Blank and Winnick whom I cite in my essays.
And there is a world of difference between “replacement cost” of assets like parking which includes high current CBD land values, and the aggregate over the same time, of “operating costs” and “rolling capital replacement costs” for something like Transit, where there is absolutely nothing today to show for it except a whole lot of travel in the past, representing a small minority of total travel. The vast majority of travel (automobile) has at least had its operating and rolling capital replacement costs paid for by its users.
The public subsidy cost per person-mile of travel, for the total system of automobility, including the roads and parking, would be only a tiny fraction of that for transit. It would be possible to express transit public subsidy costs in inventive statistical terms too, for example, the cost for a given household using it for their entire lives would easily be six figures. And this is a “sunk” expense, not an asset with a replacement cost! We are lucky that more people don’t use it, because of these self-evident fiscal realities. Policy “success” in achieving “mode shift” actually represents a fiscal budget-buster and inevitable cuts in other essential local services.
Your comment about”NYC and other old cities” falls into the conceptual mistake that these cities path-dependent urban-economic evolution can be simply taken for granted by all cities if only they would build the same “form” and infrastructure. An appropriate term for this assumption would be “cargo cultism”. Everywhere in the world as development occurs, we see a small minority of cities assuming the mantle of global finance centers, or having government bureaucracy, or media, or suchlike, as their primary economic income sources. By far the great majority of cities do not have these lucky primary income sources, and the sectors they are based on naturally consume more land, and adopt dispersed locations where land is cheaper.
I recommend Robert Fishman’s “Megalopolis Unbound”, Dieter Lapple’s “Cities Without Cities”, and Richard Mudge and Eric Beshers, “Business Location in the Modern Economy”.
I have also just had a policy brief published by Reason Foundation: “Transportation Advantages of Dispersed City Structures”.
Michael Andersen
I didn’t mention Philadelphia, but it’s another old city mentioned in the report that has spent far less on auto infrastructure. Do you consider it a world-significant finance, media or government center, an economic basket case compared to the more auto-intensive Seattle or Jackson, or some other category?
What about every major city in Europe or Asia that got rich enough to support multi-story development before the automobile (and wasn’t flattened by WWII)? I don’t have evidence on hand but I would be surprised if any have invested as much capital per capita in parking as Seattle. Feel free to prove me wrong on that, but on the face of it I have a hard time believing that Milan or Heidelberg or Taipei are deeply burdened by the economic constraints related to their overinvestment in fixed-route transit.
I agree that cities with more centralized transport systems are better suited to exporting information, and that’s worth worrying about. Lucky for them, information is a hugely important and lucrative export.
Phil Hayward
Thanks for the comment, Michael. I would argue that there are indeed “economic constraints related to overinvestment in fixed-route transit.”
What we actually have, is an attempt to make “two wrongs” into a “right”. Instead of properly pricing roads and parking (which I agree with) we subsidize mass transit. I agree with Mason Gaffney in his insightful 1964 essay “Containment Policies for Urban Sprawl”, that correctly pricing infrastructure use is all that is necessary; regulatory blunt-instrument prohibitions on sprawl have unintended consequences, and are redundant if price signals are directing efficient behavior. There are numerous mechanisms by which dispersion and low density living can be efficient; we need to let the myriad of actors in economies make their own decisions, just as long as they are paying the prices they should.
I also agree that there is such a thing as inefficient sprawl and over-investment in facilities for automobiles, due to an absence of proper market pricing. But the historical record is clear: as soon as urban populations are able to, they spread out in search of increased privacy, independence, and lower land rents; along with industries utilizing lower-cost land for efficiency reasons. It is purely a matter of degree. Expansion of the footprint 16-fold relative to population, within decades, is “average”. The USA’s cities have spread out excessively because of greater policy focus on automobility, but all cities have spread out as economies have “developed”. I recommend Shlomo Angel et al’s book “Making Room for a Planet Full of Cities”.
Prior to automobility, most cities have a small footprint and very high density, and this density relates to crowding, not to tall-building floor space. Dhaka and Lagos today are denser than Manhattan is. In fact Manhattan in 1900 was twice as dense as it was in 1950, with floor space having increased tenfold at the latter date. Most European cities in the 1800’s, were as dense, crowded and squalid as Lagos and Dhaka today. Building “up” is always a phase of economic development that is competing with going “out”; both are a matter of providing the increased floor space that is now being demanded. Building “up” has historically never been a means of “increasing density”.
If there is market freedom for cities to expand outwards, this provides a disciplinary effect to land prices, and building “up” becomes a route for competition in the provision of “choice” in types of floor space. Developers are able to acquire sites at largely static prices and make their money providing floor space. But without this price discipline in sites due to competition from sprawl, “site values are elastic to allowed density” and large gains are made by site owners, with actual developers merely having to pay a lot more for sites, increasing the risk to them. This is why building “up” under these conditions tends to be highly cyclical and marked by spectacular bankruptcies. Manhattan did most of its growing “up” simultaneous with NY urban area spreading out at low density for dozens of miles in several directions. The economic evolutionary forces driving the development were unhampered by speculative “holding” on the part of site owners, which phenomenon utterly sabotages the intentions of planners everywhere that sprawl is prohibited.
There are always two countervailing forces in the evolution of economic clusters. There are the attracting forces, the clustering efficiencies; and there are the rising rents and site costs in response to the demand, which “repel”. Clusters can form far more effectively if there is some force suppressing the inflation in site prices. Prohibitions on sprawl, and indeed a planning focus on “Transit-Oriented intensification”, intensify the “repelling” effect of site and rent inflation. It is common knowledge among urban economists in the UK, that their 1947 Planning system obstructs the evolution of anything like Silicon Valley anywhere in the UK. Absolutely nowhere is there the low-cost, spare land that marked the location of Silicon Valley at its start.
Philadelphia is an interesting case, which I suggest is explained by longer perpetuation of inner city ghettoes, with their crowding and low rents and value-suppressing effects. Of course Philadelphia also spread out at one of the lowest overall urban-area densities on the planet, which has had the beneficial site-price discipline effect I described. If a city has spread out, this is a norm; if it lacks building “up” in its central locations at the same time, this has two potential explanations. One: there has been no evolutionary forces to this end in the local economy; Two: there are height limits and other distortions (which I oppose).
Shlomo Angel et al’s latest work suggests that extra-legal “slum” development in developing countries where the authorities are not enabling sprawl, is ironically resulting in even greater sprawl, even faster than anything observed in the USA in the past. This is certainly because the “formal” urban land market is marked by such predatory pricing on the part of the favoured rentier classes; and now that motor scooters and motorbikes are affordable to most people, their slums can be on greenfields instead of crammed into urban brownfields locations. Angel et al logically suggest the same as Frank Lloyd Wright said in the 1930’s: “sprawl is going to happen anyway: we can either plan for it and make the best of it; or it can happen anyway and be highly dysfunctional” (my words).
One last note re the difference in evolution between European cities and US ones. European automobile based suburbs never suffered the perverse “exclusionary lot size mandates” that were an unintended consequence of Education policy in the USA. Nevertheless, at a remove of around 3 decades from the USA, and converging on a less extreme end point, they had similar sprawl and increases in automobile mode share. Over time, their petrol taxes have increased to such a level that drivers do pay the full costs of automobility – it is just a pity that this is in the form of petrol taxes, as congestion charges and road pricing would be a more efficient approach. Their transit remains heavily subsidized and the marginal or per-person-mile costs of these subsidies have steadily increased. So automobility is capable of sustaining the dominant mode share even with the playing field being tilted against it.
Europe does use more compulsory acquisition (eminent domain) under their urban plans, which counteracts the perverse site-owner incentives I describe above in Anglo nations. Japan is an interesting case, the only one in the world, where landlording and transit operation are combined, and there are multiple enterprises competing against each other for tenants and trip attractors, with ridership being a consequence. This has the opposite effect to the perverse mechanisms in the west where subsidies to transit capitalize into gains for private site owners, regardless of whether they even redevelop and provide increased floor space.
Phil Hayward
It is really quite delightful that this study was done by the “Mortgage Bankers Association”. I only noticed this after posting a long reply to another comment above. If you read my essays recommended in that post, you might guess what interest anyone associated with mortgage lending, might have in regulatory and policy sabotage of the “system” of “automobility”.