by Alex Pemberton
In the first part of this mini-series, we discussed how the common belief that parking is scarce in downtown Wichita is false -- in fact, it's the opposite. Downtown Wichita has too much parking. This post details some of the hidden subsidies and incentives that keep our downtown unwalkable, as well as solutions to break from the path of car-dependency.
We briefly touched upon the built environment conditions that compel Wichitans to drive and park downtown, rather than use transit or active transportation, but what is little-seen and rarely understood is the web of policies that enforce and incentivize an auto-oriented development pattern.
These policies induce workers to drive alone and help to ensure that building car-focused development in our downtown is more economically viable. Just as our ideas of parking scarcity in downtown are inverse of reality, our common understanding of the economics and subsidy for transportation modes is backwards.
Transportation is a Cost of Doing Business
It is important to understand that transportation and its attendant infrastructure has never truly paid for itself. Transportation is a cost of doing business -- a necessary expense, both in time and money, required to connect people to economic exchange and broader society.
Transportation systems throughout history have been built by two primary methods: general taxation and real estate value capture.
General taxation is easy to understand -- it's the public works budget that comes from your property taxes and, in many cities including Wichita, sales taxes. By nature of general taxes, citizens pay for some services that they don't use -- drivers pay for transit just as car-free families pay for highways just as childless singles pay for public schools. This cross-subsidization is generally understood and accepted as part of the social contract; however, as we explained in A New Vision for our Streets - Part III: From Profligacy to Productivity, this method often fails basic tests of productivity.
Because transport is a cost of doing business, it is dependent upon productivity to pay for itself -- whether from taxes on property and spending, or private value generation and capture.
What is less apparent is the degree to which hidden economics drives transportation systems. For much of human history, transportation systems were constructed and financed by private ventures. In fact, for the first half-century of our democracy, presidents and the Supreme Court held that the federal government was barred by the enumeration of powers to finance "internal improvements" -- the term of the day for roads, bridges, canals, and other transportation infrastructure.
As a result, the burden of infrastructure investment -- particularly inter-state -- fell largely on the private sector. Many of our nation's most storied infrastructure projects were privately-built and -financed, primarily by leveraging the economic value that the transportation systems unlocked.
The railroad tycoons of the Gilded Age -- the Cornelius Vanderbilts and Jay Goulds of turn-of-the-century America -- were just as much, if not more so, real estate moguls. Our then-world class railroad network was funded largely by developing towns along the lines. Railroad companies used the money earned from subdividing and selling off the land around their stations to fund the extension of more lines of railroad. Minus, of course, a hefty profit margin -- you don't earn the title "tycoon" for nothing.
This model was later employed within cities by streetcar operators, which helped to develop neighborhoods like College Hill in Wichita and, perhaps most famously, the Country Club District in Kansas City.
As the cost of infrastructure increased with the advent of strong unions and labor laws, the private sector was less able to unilaterally employ value capture to fund infrastructure. Cities, states, and the federal government in the 20th Century began to play an active role in value capture -- though by leveraging the marginal value of taxes generated by new development, rather than the direct value of the real estate. This is a hybridized system of the two methods for funding infrastructure, best reflected today by Tax-Increment Financing districts.
Battling Hidden Subsidies
In Wichita, TIF districts have been widely used to spur downtown development. Projects like Spaghetti Works, River Vista, and the soon-to-break-ground EPC Delano Catalyst development have used TIF to fund public improvements such as parks and landscaping -- but mostly, TIF has been used to fund parking. This is not necessarily bad for downtown Wichita's urban form, in itself, but the unbalanced application of TIF directs investment toward auto-oriented designs.
Each TIF district has its own District Plan, which enumerates the types of public improvements that can be financed with TIF. The City of Wichita's tax-increment financing policy allows TIF districts to fund public improvements such as street upgrades, lighting, parking, and was recently expanded in the Center City South district for the Spaghetti Works project to include improvements to parks.
One item of importance for a downtown district that is not authorized for financing via TIF is public transit. The result of this is that transit plays with only one tool for financing transportation, while cars play with both. Simply put, the scales are tilted in favor of driving. Developers will only build a project they can finance, so they end up building parking-heavy projects while additional transit investment -- such as the successful Q Line expansion -- depends on the private sector's generosity.
This is the definition of a market distortion.
Similar market distortions exist at the local government level as a result of the imbalance of capital project funding and other policies, but also in the private sector.
If you work downtown, it is likely that your employer provides parking free to you -- they pay the garage or lot owner for the space, or pay for the parking with their taxes, but provide it free to you as a benefit of employment.
But what if you don't use a parking space? What if you walk, bike, or ride the bus to work?
You simply lose out on that fringe benefit. You save your employer the $30-$50 per month for a downtown Wichita parking space, but they keep that money.
Consider instead if that $30-$50 were given to you. That's nearly the cost of an unlimited monthly Wichita Transit pass.
Because of hidden subsidies like this, employees are incentivized to drive alone to work, increasing the need for parking -- often privately-owned parking, which is inefficient -- at peak hours. That massive allocation of space to parking goes largely unused after five o'clock, and our downtown is left with vacuums of activity and interest that limit its potential to be a thriving, vibrant urban center.
This is hardly an exhaustive list of the private and public subsidies that tilt our built environment in favor of the car and drivers -- that takes a 733-page book to even scratch the surface -- but demonstrates how the scales have been tilted away from urbanism.
Balancing the Scales
The City of Wichita should follow the lead of progressive cities and work to eliminate or ameliorate such public and private market distortions that favor the car over other transportation modes.
But in the meantime, we should also work to make the most efficient use of the subsidies we provide and ensure that they are employed in a way that promotes financial productivity and good urban form. Our lack of proper policy for structured parking investments ensures that we ignore both.
Much has been made in urbanism circles and the popular press about the impending rise of autonomous vehicles and their potential impact on cities -- including a vast reduction in the need for parking. Predictions range from five years off, to a decade, to never. Even if the techno-dream of self-driving cars fails to come to fruition, market forces often shift and purpose-built, single-use structures can be quickly rendered obsolete.
Ramp-style parking structures, in which the floors are slanted to combine circulation and storage of cars, with low ceiling heights are particularly susceptible to market shifts, as they have no alternative use. These are the least-expensive type of structured parking and, thus, the type that is built with TIF-funded projects in Wichita.
Flat-floored, high-ceiling convertible structures, however, can be repurposed into commercial or residential space -- such as in the recently-completed Broadway Autopark. These structures, on average, are around 20% more costly to construct than a single-use garage.
Given that the city often maintains ownership of TIF-funded parking structures, we should have a policy requiring convertible structures for all parking garages making use of public subsidies to ensure that these public, taxpayer-supported assets remain valuable. The City of Wichita can blunt the increased upfront cost by altering the local sales tax ordinance to include parking structures -- parking, after all, is an important component of transportation infrastructure. They could even really get on board with the times and expand it to include transit investment.
Convertible structures, while making more prudent use of public investment, still have a problem -- large blocks of parking (in fact, any parking at all) spread destinations further apart and decrease the productivity of land use. Proximity and productivity are both vital to a successful urban district.
A solution for both is to build underground parking garages. Underground parking is typically found in larger cities, in which the high cost of land requires efficient use, thus justifying the 30-35% construction cost premium. It is often thought that, given low land values in Wichita, underground parking is simply not financially feasible. And it's true that it never is for the private sector -- but the public sector has a different set of considerations.
Take the new Cargill headquarters on the site of the former Wichita Eagle plant and offices. The $60 million project includes a 180,000 square foot, four-story office building and 800-space, five-story parking garage. The garage will be open to the public after work hours, an easement for which the City paid $6.5 million.
Though we don't have access to the site plans, given the size and configuration of the two structures we can assume that the office building has a floor plate of at least 45,000 square feet -- just over an acre -- and the parking garage consumes around 48,000 square feet of land. The parking garage alone likely consumes more land than the building it serves.
This is problematic for the development potential of the Old Town South area. An acre of land that could be put to productive use as a building instead simply serves as car storage. In this case, the City of Wichita may have benefited by paying more to construct an underground garage. Hold on for a bunch of numbers...
The City paid half of the cost of the garage as a $6.5 million easement, which means that the 800-space, $13 million garage is being constructed for $16,250 per space -- typical for an above-ground, single-use structure. An underground garage of a similar size, with a 35% construction cost premium, would have cost just under $22,000 per space for a total of $17.55 million -- four and a half million dollars extra. On a 15-year timeline (the duration of the public access easement) that is a $300,000 annual difference. But the underground garage would free up an acre of prime downtown land for development.
The City, then, would need development on the acre saved to generate at least $300,000 in taxes to the city. The City of Wichita receives 32.667 mills on every dollar of assessed value of real estate in the city limits, or 3.2667% of the property's total assessed value. That means, for the property to generate enough taxes, it would have to generate just under $9.3 million per year in assessed value -- equivalent to $37.2 million worth of commercial real estate. Given the space savings, that is the value that must be extracted by the one acre of land saved by going underground.
Is that reasonable? Certainly, but it wouldn't take just any building. That level of productivity is roughly equivalent to the Ambassador Hotel building. Or... less than the new Cargill headquarters will be assessed.
That's right. The city and its taxpayers would have saved money, when accounting for the opportunity cost of the land, by paying extra to put Cargill's parking garage underneath their building, and the Old Town South district would have been better positioned to develop with a productive, more proximate urban form.
Moving Beyond Parking
Downtown Wichita's parking problem has severe, negative impacts on the attractiveness, vitality, and productivity of the district. To move to a downtown that is a point of pride, attracting talent and quality employers and providing a true quality of life amenity for residents, we must move beyond parking.
To do that, we need to take a close look at our policies and unravel the web of hidden subsidies and incentives that nudge people to drive by economically favoring cars over transit and active transportation.
It will not be an easy transition. It might be more difficult to find a space and -- God forbid -- you might have to actually pay to park.
But it is a necessary transition. As downtown goes, so will the entire city of Wichita. The age of the car is over, and Wichita must join or die.