Back to Part 1

Financing Shared Parking

To accommodate the parking demand generated by new businesses, the city constructed two public parking structures, and contributed to the construction of a private structure that is open to the public. Because the 1,567 public spaces are shared among all land uses, fewer spaces can meet the total parking demand, and the city issues 1.5 parking credits per space in the public garages. The parking credit program began in 1987, and by 2001 the city had allocated 2,350 credits. Businesses that buy credits to meet the city's parking requirements do not receive permits to park in the municipal structures. Their customers and employees still have to pay to park in the public structures at the same rate that other drivers pay. The parking credits do, however, link the public parking spaces with private development in Old Pasadena. This nexus allows businesses to satisfy the city's parking requirements without providing any additional on-site parking spaces.

Visitors to Old Pasadena receive 90 minutes of free parking in the public garages, and then pay $2 an hour, up to a maximum of $6 a day. In 2001, the garages' total capital and operating expenses amounted to $4.84 million, while the parking fees brought in $3.25 million (see Table 16-2). Because drivers pay two-thirds of the garages' total annual capital and operating costs, the city can charge businesses a modest fee for the parking credits. The total parking credit payments were $229,000, or only 5 percent of the total public parking expenses. The $1.59 million shortfall (annual expenses minus parking revenues) is made up by parking credits, investment earnings, tax increment revenues, and lease revenue for the ground floor retail space. The parking credit system thus shifts most of the burden of paying for parking from businesses to drivers. Businesses pay so little for parking credits because drivers pay to use the public spaces. Marsha Rood, former Development Administrator for Pasadena, says, "Without the parking structures, revitalization of Old Pasadena would not have happened-period."20

Table 16-2

OLD PASADENA PARKING STRUCTURE FUND FOR FY 2001

Source: Memorandum from Pasadena City Manager to City Council Finance Committee, May 21, 2001

Because the city reduces the off-street parking requirements in Old Pasadena by 25 percent, and issues 1.5 parking credits per public space, Old Pasadena has fewer parking spaces than the rest of the city does. Let's go back to the restaurant example where the city normally requires 20 parking spaces. The 25-percent parking reduction in Old Pasadena brings this down to 15 spaces. The restaurant can meet the requirement by buying 15 parking credits, and because the city issues 1.5 parking credits per space, 10 public spaces replace what would otherwise be 20 private spaces. Because the city effectively requires only 50 percent as many parking spaces in Old Pasadena as in the rest of the city, and because parking credits pay for only 5 percent of the total expenses for the public parking structures, the restaurant's annual cost of meeting its parking requirement is only 2.5 percent of what it would be if it provided 20 off-street parking spaces. The 25-percent reduction in parking requirements, the issuance of 1.5 parking credits per public parking space, and the low fees charged for the credits have effectively removed the barrier that parking requirements normally put in the way of opening a business, yet there are still enough parking spaces for everyone.

A Dynamic Pedestrian Downtown

Drivers who think that $1 an hour is too much to pay for curb parking can always park free off-street for 90 minutes. The shared public parking encourages visitors to park once and walk throughout Old Pasadena.21  The two public garages are one block from Colorado Boulevard, and have ground-floor retail stores and restaurants. The public parking avoids the usual haphazard distribution of small private parking lots attached to individual businesses without regard to the design of the neighborhood. If each separate business has its own parking lot for the exclusive use of its own customers, a compact, walkable, park-once business district is impossible. To avoid this problem, Pasadena prohibits parking lots or parking structures that face Colorado Boulevard, and this has ensured continuous shopfronts along the Boulevard.22 Pedestrians look at store windows rather than parking lots, and they don't have to look out for cars that are driving across the sidewalk to enter or exit off-street parking. Architect and urban designer Stefanos Polyzoides, a Pasadena consultant and a cofounder of the Congress of New Urbanism, attributes much of the success of Old Pasadena to the "rules that allowed development to go forward with less than the traditional parking requirements. This has encouraged pedestrian activity in Old Pasadena, giving it a dynamic pedestrian environment."23 Old Pasadena has a well planned system of public parking rather than a random collection of private parking.

Unburdened from parking requirements, Old Pasadena has done well compared with the rest of the city. Its sales tax revenue increased rapidly after parking meters were installed in 1993, and is now higher than in other retail districts in the city (Figure 16-3). In 1994, Old Pasadena's sales tax revenues surpassed those of Plaza Pasadena, the nearby shopping mall-complete with free parking-that the city had assisted with a $41 million subsidy in the 1970s. With great fanfare, Plaza Pasadena was demolished in 2001 to make way for a new redevelopment with storefronts that resemble Old Pasadena. In 1998, Old Pasadena's sales-tax revenues also surpassed those of South Lake Avenue, formerly the city's premier shopping district, which still has no parking meters.24

Figure 16-3

Parking Subsidies Have Opportunity Costs

Some cities restrict the use of parking meter revenues to fund off-street parking. The fallacy of this superficially appealing policy is clear when we recognize that alternative uses for the money may be far more valuable. Old Pasadena could have used its annual $1.2 million of meter revenue to subsidize the public garages, for example. The garages might then offer everyone three or four hours of free parking, rather than only 90 minutes. But parking subsidies have opportunity costs-the alternative possible uses of the money. Would Old Pasadena be better off today with free curb parking but dirty sidewalks, dilapidated alleys, no street trees or historic street lights, and less security?  No.  Old Pasadena is now a place where everyone wants to be, rather than merely another place where everyone can park free.

A Tale of Two Business Districts

Except for their parking policies, Westwood Village and Old Pasadena are similar. Both are about the same size, both are historic areas, both have design review boards, and both have BIDS. Westwood Village also has a few advantages that Old Pasadena lacks. It is surrounded by extremely high-incomee neighborhoods (Bel Air, Holmby Hills, and Westwood), and is located between UCLA and the high-rise corridor of Wilshire Boulevard, which are both sources of many potential customers. Old Pasadena, by contrast, is surrounded by moderate-income housing and low-rise office buildings. Tellingly, although Westwood Village has about the same number of parking spaces as Old Pasadena, merchants assume that a parking shortage explains the Village's decline, just as merchants everywhere do whenever a business district has difficulty attracting customers. In Old Pasadena, however, parking is no longer a big issue. The Los Angeles Times has published many articles about the changing fortunes of Westwood Village and Old Pasadena, and a selection of headlines suggests the different outcomes of their different parking policies (see box). Consider how the different curb and off-street parking policies explain the different outcomes.

Market-Priced Curb Parking Helps Businesses

First, consider the two cities' curb parking policies. A study in 2001 found that the average curb-space occupancy rate in Old Pasadena was 83 percent, which is about the ideal rate to assure available spaces for visitors .25 The meters thus reduce the congestion previously caused by drivers cruising for free parking (see Chapters 11-14). Because all the meter revenue stays in Old Pasadena, the merchants and property owners understand that market-priced curb parking helps business. The meter revenue has financed substantial public investment in sidewalk and alley improvements that attract visitors to the stores, restaurants, and movie theaters.

In contrast, Westwood's curb parking is underpriced and overcrowded. A parking study in 1994 found that the curb-space occupancy rate was 96 percent during the peak hours, making it necessary for visitors to drive around searching for a vacant space. Nevertheless, the city reduced meter rates from $1 to 50¢ an hour, in response to merchants' and property owners' plea that cheaper curb parking would stimulate business." Because off-street parking in any of the 18 private lots or garages in Westwood costs at least $2 for the first hour, drivers have an incentive to hunt for cheap curb parking rather than park off-street. The result is a chronic shortage of curb spaces, underuse of the off-street ones, and loud complaints about the parking shortage. The 1994 study found that only 68 percent of the Village's 3,900 off-street parking spaces were occupied at the peak daytime hour (2 p.m.). Nevertheless, the shortage of curb spaces (which are only 14 percent of the total parking supply) creates the impression of an overall parking shortage.27 Westwood's meter revenue disappears into the city's general fund, and its sidewalks and alleys are crumbling (see Figure 16-4).

Figure 16-4

Westwood Village	Old Pasadena
Westwood Village	Old Pasadena

Off-Street Parking Requirements Hinder Reinvestment

Next consider the two cities' off-street parking policies. Old Pasadena's parking credits make it easy to open a new business in an old building, or to construct a new building on a vacant lot that had been used for surface parking. In contrast, Westwood Village's parking requirements prevent many potential businesses from reusing old buildings. If a new use would require more parking spaces than the existing use, businesses must provide more parking spaces, a difficult task. Buildings that have been vacant for more than a year must provide all the parking spaces required for any new use, and this stringent policy can make adaptive reuse prohibitively expensive.

Westwood Village also has a "replacement parking" requirement that freezes land used for surface parking. Anyone who wants to build anything on an existing parking lot must provide all the parking spaces required for the new use and replace 50 percent of the surface parking spaces already on the land.28 With this replacement requirement, landowners "owe" the city half the parking spaces that they have previously supplied voluntarily. The heavy burden of meeting the replacement requirement discourages the redevelopment of parking lots.29

Although the 1994 parking study found that 1,200 off-street spaces were vacant during the peak hour, the visible shortage of curb parking persuaded Los Angeles to build a 380-space municipal parking garage in the Village in 1998, at a cost of $29,800 a space.30 Because the curb spaces directly in front of the garage are unmetered, the perception of a parking shortage persists; everyone can see that the most visible spaces are always fully occupied. An expensive new parking structure cannot solve a shortage of underpriced curb spaces, because mispricing, and not a raw shortage of parking, is the real problem.

Twenty years ago, people from Pasadena would drive 20 miles to Westwood Village to shop, have dinner, go to a movie, and walk around. Now, people from Westwood drive 20 miles to Old Pasadena to shop, have dinner, go to a movie, and walk around. In an interview with the Los Angeles Times in 2004, a longtime property owner and chair of the Old Pasadena PMZ, Marilyn Buchanan, explained how parking meters helped turn Old Pasadena around:

We've come a long way. This might seem silly to some people, but if not for our parking meters, its hard to imagine that we'd have the kind of success we're enjoying. They've made a huge difference. At first it was a struggle to get people to agree with the meters. But when we figured out that the money would stay here, that the money would be used to improve the amenities, it was an easy sell.31

In the same article, interviews with shoppers confirmed Buchanan's view. Consider this response:

This place, it's perfect, really. They've kept the buildings and the streets well. That makes it so attractive. People are walking around because they like the way it looks and feels. It's something you just don't see in Los Angeles. As a driver, I don't mind paying more for what you have here. I tell you what: For this, I will pay.32

The Old Pasadena Westwood Village comparison suggests that parking policies can help some areas rebound, and leave others trapped in a slump. Old Pasadena would still be struggling if it had kept curb parking free, had increased its off-street parking requirements, had not built public parking structures, and had not established the parking credits program. Westwood Village would probably have retained its original luster rather than fallen into a long economic decline if it had always charged market prices for curb parking, had spent the revenue on public services, and had relaxed the off-street parking requirements. The economic development slogans "Parking is Power" and "Parking is Destiny" have some meaning, but they do not mean that more free parking is always better. Market-priced curb parking that finances public investment helps an area to thrive, but underpriced curb parking can hurt it. Off-street parking that is well-located and well-designed also helps an area, while poorly-designed, ubiquitous off-street parking can hurt it. The exactly opposite parking policies in Old Pasadena and Westwood Village have surely helped determine their different fates. As the signs on Old Pasadena's parking meters say, "Your meter money makes a difference." Old Pasadena has literally pulled itself up by its parking meters.

To Part 3 of 3