Stacking The Deck For Tax-Generating Development

May 27, 2016

Stacking The Deck For Tax-Generating Development

Recently I had the opportunity to meet a friend for an early evening cocktail on the tenth floor of Traverse City’s Park Place Hotel. We soaked up the beautiful view of Grand Traverse Bay and enjoyed identifying landmark buildings along the skyline. As our gaze turned downward, we were surprised to see that our gorgeous downtown is covered by a patchwork of barren, gritty surface parking lots. To my eye, it appears that close to 30 percent of the land area in our Downtown Development Authority (DDA) district is covered by parking lots devoid of landscaping or greenery.

Is this the smartest use of land?

Paved surface parking areas are not only dull and colorless, they come at a serious cost to the environment. The large, impervious surfaces increase stormwater runoff, which in turn damages watersheds. The exposed pavement also increases the heat-island effect, by which downtown is made warmer than surrounding rural areas.

According to Eran Ben-Joseph, professor of urban planning at the Massachusetts Institute of Technology, there are three nonresidential parking spaces for every car in the United States. “Since cars are immobile 95 percent of the time, you could plausibly argue that a Prius and a Hummer have much the same environmental impact — both occupy the same 9-by-18 foot rectangle of paved space,” he contends.

Surface parking can also hurt a city government’s bottom line. A recent study shows that it earns only 15 to 40 percent of the tax revenues that other land uses do.

By contrast, structured parking dramatically improves land use and density, environmental quality, and the walkability of downtown districts. A deck can be placed under buildings or at several levels using a small fraction of the site — less than 15 percent in most cases. Special design and regulatory incentives can also help make structured parking more feasible and attractive.

The remaining land area can then be filled with mixed-use buildings. Space between buildings is no longer needed for parking, leaving room for enhancements like landscaping, sidewalks, plazas, and outdoor cafes.

Richard Voith, PhD, a nationally-renowned real estate and transportation economist, claims that cities that devote too much land to parking may actually become less attractive to developers, residents, businesses and visitors. It works against the very qualities that make downtown districts unique and attractive — namely, density and proximity.

Traverse City is lucky to have forward-thinking leadership and an effective development plan which has already reaped huge rewards. Tax Increment Financing plan (TIF) 97 helped complete the Larry C. Hardy parking deck near Park and State Streets, while TIF 2, which expires this year, was used to construct the Old Town deck off Eighth Street.

TIF 97 phases out in 2027, but there is still a plan to partner with private developers to complete a couple more decks, according to DDA Director Rob Bacigalupi. “The plan supports greater densities by providing public parking structures at Pine Street, the 100 block of East State Street, and a yet-to-be-determined convention center,” he says. The city will own the parking structures, but the surrounding buildings will be privately owned.

Downtown drivers often lament what they see as parking shortages or unfair prices. Yet over the past 50 years, much has been torn down to accommodate surface parking lots — taking up what is some of the most valuable land in the region. To reverse this trend, the TIF 97 plan supports re-development to emulate the historic downtown, while freeing up city-owned surface parking areas for property tax-generating private development.

The city currently owns over three-and-a-half acres of surface parking downtown. The cost of buying land, constructing, and maintaining parking, whether surface or deck, is roughly the same downtown given its high land values. When you consider how much land structured parking frees up for other, more interesting and higher tax-generating land uses, the cost of surface parking proves to be much higher.

For those who consider the automobile the major cause of the deterioration of cities, loss of community spaces, elimination of mixed uses, and devastation of street life, it may seem a contradiction to propose construction of parking structures as the cure. But they can actually reduce traffic and make downtown shopping and dining more rewarding for cyclists or pedestrians.

“Cruising for Parking,” a 2006 policy study by Donald C. Shoup, determined that underpriced and overcrowded on-street parking actually worsens traffic. Drivers are willing to spend around eight minutes, on average, cruising to find a free or low-priced on-street parking space, even when off-street parking is readily available for a nominal fee. These drivers account for around 30 percent of traffic at any given time in a typical city. Setting the right price and encouraging drivers to use nearby parking decks can get them off the street quickly and free up prime storefront spaces for those willing to pay.

I look forward to seeing what the next eleven years bring with TIF 97. Public-private development partnerships will not only create needed density and parking, but they will help improve the environment and build Traverse City’s tax base at the same time. Cheers to that!

Christie Minervini owns Gallery Fifty at The Village at Grand Traverse Commons, and is active in causes of education and homelessness in the Grand Traverse region.