News: August 2016 – Forming a private-public partnership with a commercial developer might be a way to create more public parking in downtown Menlo Park. But how likely is this to happen? Here is an example that illustrates the economics and issues that surround this approach.
(The Almanac – March 23, 2016)
Menlo Park is the home of Facebook and a large number of professionals who work in Silicon Valley firms, yet the widely admired innovation has not rubbed off on our city transportation planning. For example, a year ago the city said it would kick-off a study to evaluate building an initial parking structure downtown. Of course, this would take a millions of dollars that Menlo Park does not expect to have, and while a private partner and/or public funding from outside Menlo Park might be the answer, no vetted sources have been identified. If parking is to remain either free or affordable its hard to see how a parking structure could be an appealing investment.
So what is the City to do? It needs to seriously evaluate two viable and much less costly alternatives that could be implemented in 2016.
Existing Downtown Parking
- Most short term public parking is free in Menlo Park – as it is in nearby downtown Palo Alto, the Stanford Shopping Center and the Palo Alto Town & Country shopping plaza – and here it is limited to three hours per parking plaza per day. Drivers are allowed to re-park in a different parking plaza.
- According to the city Specific Plan there are now about 1600 short-term public parking spaces downtown including 1200 in parking plazas. Note: that the parking time limits have changed from what is shown.
- The current demand for parking downtown varies greatly by day and time of day. Midday parking Monday thru Friday can entail a long walk to one’s destination but on weekends it seems to vary by plaza. In the evening parking spaces are readily available all week in all parking plazas. Also, weekend parking generally does not appear to be a problem. The table below illustrated parking plaza occupancy rates during a deep recession in 2009. Current capacity utilization is likely higher but unknown.
- 685 fee-based, downtown daily parking permits are now sold each year so a large percentage of parking spaces are NOT available for short term parking during normal work hours. (Note: The permits are attractively priced at less than $500 a year = a daily cost of less than $2 assuming 250 usage days. This compares very favorably to the $5/day charged at the Caltrain parking lot.)
(1600-685)/1600 = 43% of total parking unavailable
(1200-685)/1200 = 57% of plaza parking unavailable
- The addition of just 100 short term parking places would significantly increase the availability of parking for non-permit users.
100/(1600-685) = 100/815 = 12% increase downtown parking
100/(1200-685) = 100/525 =19% increase in plaza parking
Economic Model for A Large Parking Structure (“Back of the Envelope”) – 428 Net New Spaces
- The Specific Plan recommends a 650-space parking structure for Plaza 3 which would add NET 428 spaces to the downtown parking inventory because 212 existing spaces would be replaced. This 5-level structure is described as having one level underground, a surface lot and three above ground parking areas.
- $60,000 is a reasonable estimate for the current cost of a parking space built underground and $35,000 for surface and above ground parking spaces. So the average cost is $40,000 = (1/5 x $60,000 + 4/5 X $35,000)
- The effective cost of a net new space is $60, 750 = $40,000 X 650/428 ) as all existing spaces must be replaced.
- The current construction cost for this parking structure is estimated to be $26 million (650 x $40,000). (note: this is more than three times the City’s 2015-2016 Capital Improvement Budget)
- Developers generally expect at least an 8% annual return on an investment so parking fees would need to generate at least $12.80/day for 250 days in order to attract funding.
- According to the City website there were 17,800 registered voters in Menlo Park in November 2014. If ALL voters were to bear the full cost of building the parking structure, each household would assume in some form a $2247 “obligation” ($26,000,000 /17800 = $1460) plus any interest payments per voter.
One-voter household = $2247
Two-voter household = $4494
Three-voter household = $6731
However, like school district bonds many registered voters might be exempted, e.g., seniors, students. This means that the remaining voters would have a higher obligation.
Also, the City might expect a lower return on investment.
Economic Model for A Small Above Ground Parking Structure – 155 Net New Spaces
- The Specific Plan recommends a 250-space parking structure for Plaza 2 which would add only 155 net new spaces to the downtown parking inventory because 95 existing spaces would simply be replaced.
- $35,000 is a reasonable estimate for the current cost of surface and above ground parking spaces so the total cost = 250 x $35,000 = $8.8 M.
- The effective cost of each new additional space = $8.8M/155 = $57,000
- PRIVATE Funding: Developers generally expect at least an 8% annual return on an investment so parking fees would need to generate at least $18.20/day for 250 days in order to attract private funding for the entire construction cost. Note: This excludes annual operating and maintenance costs.
- CITY Funding: According to the City website there were 17,800 registered voters in Menlo Park in November 2014. So if ALL were to bear the full cost of building the parking structure, each would assume in some form a $494 “obligation” ($8.8 million /17800 = $494). Note: This excludes annual operating and maintenance costs.
One-voter household = $494 Two-voter household = $988 Three-voter household = $1482
NOTE” The actual resident obligation could be significantly higher if specific groups of voters received exemptions.
Satellite Daily Permit Parking
Menlo Park should seriously consider building satellite permit parking AND reducing downtown permit parking. Together these two strategies could create hundreds of new short term parking spaces, and the flexibility them as needed.
Nealon Park Example
There are about 155 public parking spaces at Nealon Park and another 25 could easily be added at a small cost. Currently the existing parking spaces are used during weekdays by Little House participants and employees, residents of adjacent multi-unit apartments*, and park users.
* Note: There are 18 multi-unit apartment buildings adjacent to Nealon Park and another 10 on the north side of Roble, and they all have gate access to Nealon parking. At least HALF of the 155 existing spaces are routinely used by residents during weekdays.
A potential near term solution:
- Add about 25 new parking spaces
- Dedicate 50 of the 180 spaces for free daily permit-only parking
- Use a lottery to select these permits
- Run a regular free shuttle during commute times
- Monitor success and impacts; make adjustments as needed.
A potential medium term solution:
- Add more permit parking spaces by requiring Little House employees and volunteers to park on Roble and use the gate to walk short distance to the senior center. Seniors would not be effected.
- Reduce the number of downtown parking permits.
In both cases some apartment residents would likely be displaced from the Nealon parking lot during the day but could still be permitted to park at other times. Menlo Park is not obliged to provide them unlimited free daytime parking.
Avoid parking structure cost of 50 x $40,000 = $2 million.
(Earlier) economic benefits to downtown retailers: Unknown.
Implementation: TBD (50 x $2500 = $125,000???)
Cost of Shuttle: TBD
Cost of lost permit revenue: 50 x $500 = $25,000/year
Other Satellite Parking Possibilities
There are also estimated 150 to 200 parking spaces in privately owned parking lots within a half mile of downtown that are rarely used on weekdays between 8 am and 5 pm. Perhaps the owners would allow the City to use them for permit parking if the owners received a fair amount of revenue untaxed by the City.
- $500 x 100 spaces = $50,000/year for an under-utilized asset.
- Avoid parking structure cost of 100 x $64,500 = $6.5 million.
There are only a few ways Menlo Park could add more short term public parking capacity downtown.
- Reduce the number of annual downtown parking permits.
- Build a parking structure with its own and other sources of public funds.
- Partner with a developer who would build a parking structure on a downtown plaza that would serve the city and its own private parking needs.
A combination of satellite parking lots on public and private land is likely feasible.
The City has not revealed that it has identified promising non-City public funding sources.
Private development would likely require a major change to the Menlo Park Specific Plan.
Given the large uncertainty about future demand for parking, the broadly recognized need to incentivize more drivers to use alternative modes of transportation, the cost of parking structures and the availability of potential viable alternatives it is not clear that Menlo Park either needs or can actually afford one. It’s time the Menlo Park City Council adopted a pragmatic vision about the future and focus on how affordable solutions could better serve its residents and businesses for the next 10-20 years and beyond.
Re-Imagine Menlo Park
Private-Public Parking Partnership
In the summer of 2016 the Menlo Park City Council initiated a study of potential private-public partnerships which would require a developer to provide enough new parking to satisfy the City and its own needs for an economically viable downtown commercial development project. Is this promising? Likely not. But at least a study might demonstrate there is no simple, low cost way to build a public parking structure even if the City contributes land currently used for plaza parking.
First, the Specific Plan limits building heights to X feet, a restriction too severe to allow enough room for multiple parking structure levels, commercial space for retail, office and/or residential facilities and the infrastructure needed for motorists and pedestrians to move between them.
The builder would need to replace existing surface spaces, create additional spaces for the City, and create parking spaces for its own offices, retail, and residences. Per 1000 square feet, developers must provide the following parking spaces: residential: 1 to 1.5, office: 3 to 3.5, retail: TBD, movie theaters: 8 to 9.
Example: Build residential units and 512-space parking structure in Plaza 3
Current parking capacity: 212 spaces
Additional public parking: 150 (purely a guess)
100 residential units of 1000 square feet equals about 100 to 150 parking spaces.
Total parking required: 212 + 150 + 150 = 512 => likely three levels
Residential unit space: 100,000 square feet
Residential infrastructure* space: 80,000 square feet
Total residential square footage: 180,000 square feet.
Total residential height: 3 to 4 levels
Total # of parking and residential levels: 6 to 7
Total parking cost (surface): 512 x $40,000 = $20.5M
Total developer subsidy of Menlo Park: 362 x $40,000 = $14.5M
Total parking cost (2 levels underground): 300 x $90,000 + 212 x $40,000
=> $27M + $8.5M = $35.5M
* Includes lobby, storage, hallways, stairways, elevators, recreational amenities
- Would the city approve a 4 to 5 story building with two levels of underground parking?
- Would the city accept a 6 to 7 story building with no underground parking?
- Would either option be economically attractive to a commercial developer
- A requirement to include retail or other types of space would increase developer construction costs and the height of a downtown building.
- Could the city and/or developer charge parking fees that would “meaningfully” offset construction costs?
- How many more short term public parking places does Menlo Park need?
The city does not have an official estimate for either the current or future demand for downtown parking spaces; however, a reasonable estimate might be a maximum of 100 to 150 more spaces over the net 15 to 20 years. Keep in mind that some parking spaces might be eliminated to accommodate new bike lanes and improvements in downtown infrastructure like outdoor dining and an area for events.
- Why is demand expected to grow albeit modestly?
The Specific Plan severely limits the amount of new office space that could be created downtown by restricting building height and there is no open space other than the parking plazas that could support new residential and retail construction. Demand will therefore be driven primarily by the of appeal that downtown has for consumers. While the local economy is currently booming demand for downtown parking appears not to have grown significantly during the past few years.
- Why are the cost estimates for parking structures ($40,000 to $60,000 per space) much higher than what is in the Specific Plan ($28,800 to $32,400)?
The Specific Plan numbers were estimates for 2012. Currently parking structure contractors estimate that surface and above ground construction costs range from $25,000 to $40,000 compared to $60,000 to 120, 000 for underground parking spaces. The costs vary depending on the total parking space capacity and, in the latter case, on underground environmental conditions. These costs do NOT include land.
- Won’t the loss of annual downtown parking permits hurt businesses?
This can easily be avoided by offering employees who need daytime parking reasonable alternatives in terms of cost AND convenience. This assumes that a small percentage of existing permit users would prefer to save money and usually do not need access to their vehicles during the day. As a buffer they might be offered the option of parking downtown a limited number of times when necessary, e.g., 10 days a year.
- How could Menlo Park make permit parking affordable and convenient if some downtown permit parking spaces were eliminated?
There are a number of ways. Here are some examples. Create satellite parking that is a short distance from downtown and provide users who sign-up for satellite parking free special permits for a few years. In return, they do not have permit privileges downtown. Expand the current free midday shuttle service to include commute times with pick-up every 15 to 20 minutes instead of the current 60 minutes.
- Wouldn’t satellite permit parking at Nealon significantly penalize other park users, especially seniors, volunteers and employees at Little House.
Not if done right. Here are some possible mitigation tactics:
Expand the number of parking spaces by about 25 to a total of 180.
Limit the initial permit parking to about 50 designated spaces along the main driveway off Middle.
Require that Little House employees to park on Roble and use the path that connects to the parking lot. There are at least 40 spaces within a convenient short walking distance. Employee permits might be used to minimize the impact on Roble residents.
Weekend and evening uses of the park would not be impacted by the satellite parking. In the event Little House holds a large event during a weekday, Satellite parkers would be notified and redirected to downtown with signage and not be penalized on these occasions.
Overnight resident, visitor and guest parking would not be impacted.
Does Menlo Park Really Need A Downtown Parking Structure? Likely Not.
There are only a few ways Menlo Park could add more short term public parking capacity downtown if it decides more are needed.
- Reduce the number of annual downtown parking permits. (Satellite parking lots might provide 50 to 200 spaces for daily permit users.)
- Build a parking structure with funding assistance from non-private sources. (None have yet been identified)
- Partner with a developer who builds a parking structure shared with the City. This would likely require a major change to the Menlo Park Specific Plan.
Given the large uncertainty about future demand for parking, the broadly recognized need to incentivize more drivers to use alternative modes of transportation, the cost of parking structures and the availability of potential viable alternatives it is not clear that Menlo Park either needs or can actually afford one.