San Jose should mix abolition of parking minimums with other market solutions

Scott Beyer of the Market Urbanism Report takes a close look at SJ's parking policies and concludes that the city can solve multiple problems by reducing required parking—and embracing demand-based parking pricing and other deregulations.

Parking is so commonplace that most people don’t think about how it disrupts real estate pro formas. But in the realm of construction - namely residential - it’s a costly addition. And it’s often oversupplied. This is because most U.S. jurisdictions mandate a minimum number of spaces in residential or business projects. A growing number of cities are recognizing the negative tradeoffs of such regulations, San Jose among them. If the city does in fact end parking minimums, there are market-based solutions it can use to avoid the tragedy-of-the-commons results that critics fear.

In June, San Jose Spotlight reported that the Planning Commission held a vote “to receive a report on alternatives for reducing parking spaces.” This is being proposed in light of home affordability goals and emission reduction goals through cutting down on vehicle miles traveled (VMT). These discussions date back several years in San Jose. 

“At present, off-street minimum parking requirements are based on outdated transportation models aimed at satisfying peak parking demand,” states an FAQ page from the city’s website. The Spotlight notes that the city aims to cut single-occupant vehicle trips by 25% by 2040.

Presently, according to the Spotlight, city rules mandate “1.7 parking spaces for every two-bedroom housing unit in multi-dwelling residential buildings, while food, beverage or grocery stores must have one parking space per 200 square feet of area dedicated to retail sales.” 

This measure typically costs $30,000-$75,000 for each slot in San Jose. As a general rule nationally, if parking is in a garage, costs equal around $50,000 per space. Parking costs impact commercial development, too - one study of Los Angeles shopping centers by parking economist Donald Shoup found that structured parking can add between 67-93% in construction costs. 

The rationale for minimum parking requirements holds that private cars are the dominant means of mobility, and businesses should be made to accommodate them. Otherwise, if they don’t provide enough parking, there will be spillover traffic along curbsides or adjacent properties. 

Metro San Jose, in fact, has on average over two cars for every household, tied for 2nd-highest among the 50 largest metros. Planning commission members opposing the proposal cited the needs of families and commuters who must drive. 

“These are communities that aren’t driving as a luxury, but because they have to get to work,” Commissioner Rolando Bonilla said. A study of the parking minimum overhaul in Seattle concluded that when multifamily housing developers were allowed to choose how much parking could be built, fewer spaces got built. So Bonilla has a point. 

But this is more reflective of market demand than developers underbuilding parking; evidence shows that even in relatively auto-dependent cities, parking has been overbuilt and minimums are a culprit. Arizona State University researchers found an area in metro Phoenix with “between four to six off-street residential parking spaces per household vehicle,” noting that  “whether this imbalance is caused by economic reasons, the proximity of a high quality transit, or other reasons, it implies that minimum parking requirements have led to a local oversupply, potentially hindering redevelopment in the area.” An assessment of parking construction by the Mortgage Bankers Association found similar results in middle-American cities.

Furthermore, just as ending parking minimums is a fundamentally free-market concept, there are market-driven ways to prevent parking congestion, should that occur in San Jose. 

The best method is to reduce parking demand by pricing based on demand levels. This can occur in two contexts - busy commercial areas and residential streets. In the former, technology has made curb pricing simple through sensors and smart meters that more efficiently time and price curb use, even varying pricing based on real-time demand calculations. By contrast, most of San Jose’s current spaces charge a flat rate of $2 per hour, and at least some facilities are free. Charging a market rate across the board would prevent people from cruising in search of under-priced parking, or over-staying in spots.

In the latter case - residential streets - San Jose now has a permit program that allocates neighborhood curbside parking for free or at woefully discounted rates ($38 every 2 years). This likely causes residents to own an excess of cars beyond what they regularly use, and store them on San Jose’s valuable curbside. Charging market rates would lead to higher fees, as to prevent this stockpiling and free up curb space.  

Another market-based path for San Jose to curb parking demand is by liberalizing shared private transport options, as to reduce single-occupant trips (thus parking). Many businesses in America, including residential HOAs, already run shuttle services to satellite lots or mass transit stations (absent being mandated to provide a surplus of parking, yet more HOAs would find it economical to run such service). Then of course there’s the whole big nascent micro-mobility industry, driven by companies that want to provide shared bikes, scooters, cars, and “jitney” buses. This last shared ride option was in fact common in California cities in past decades, notes transportation researcher Robert Cervero, but local governments statewide have squashed them. 

But the best way to prevent any possible “parking shortage” is through land-use deregulation - namely ending the separation between commercial and residential uses. Like most U.S. cities, San Jose zones certain districts in ways that only allow low-density, car-dependent residential development - in its R-1 and R-2 zoning districts, multifamily and mixed-use construction are forbidden, while other neighborhoods have their own restrictions. Allowing dense, mixed-use development in these areas would put more people within walking distance of their daily needs, meaning less car trips, lower VMT, and the increase of people who don’t own cars, period. Moreover, zoning deregulation would let private actors address any potential parking shortage. If curb space in San Jose’s residential neighborhoods really is filling up due to all the new parking-free or parking-lite construction, developers could build private commercial lots in these areas to meet the shortage. But right now that’s legally-impossible in much of San Jose due to zoning.

The rules in San Jose that simultaneously mandate parking and outlaw dense development fail for the same reason - they are top-down attempts to impose a “perfect” equilibrium of uses. But this has led to higher costs, less walkability, and a distorted land-use paradigm that favors the automobile. It forces lower-income earners in particular to live further from the city’s core and drive, creating a vicious cycle where costly, VMT-increasing parking requirements gain a constituency. 

San Jose should end these parking minimums, but also couple the decision with further deregulation that prices parking, increases housing density, fosters shared mobility, and makes land in general more adaptive to changing needs. That way the city can avoid any parking shortage that results.  

This article featured additional reporting from Market Urbanism Report content staffer Ethan Finlan.

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