Saturday, February 11, 2023

Parking Structure Economics 101

Automobile parking structures are very expensive to build and operate, particularly near the beach. The 10 January 2023 Agenda Report prepared by the LB Parking Master Plan Subcommittee calls for embellishing eighteen parking lots and constructing eleven new parking structures with no amortized cost information given. An analysis shows what happens when a typical structure is erected near the beach, paid for by debt financing, operated for 40-years and demolished for salvage value after its useful life in the year 2065. When all the costs for such a structure are accounted for the true cost of these structures becomes clear. 

The cost to build parking structures is subsidized in city finances that the motorist does not pay for. The chart shows the cost of a hourly parking fee for a single parking stall if the parking fees alone paid for the structure. This is the amount just to break-even on cost with no revenue left-over for other purposes. From the chart at 4% interest the parking fee is over $10 per hour. When the parking rate is $5/hour, who pays for the remaining $5?  The answer is everybody but the motorist. 

This study considered a parking structure to support 95 cars, construction costs of $20-million, 30-year financing, 40-year lifespan, operation and maintenance costs. Not included: parking enforcement,  opportunity costs, environment factors (quakes, floods), depreciation and inflation.

Two approaches were taken, the first determines the cost per parking space added to the existing land footprint, it considers construction costs without consideration for land values. The second approach considers all parking spaces developed including land value and in-lieu parking fees.

This study shows the structure costs are most sensitive to the type of construction; above ground or below and the number of parking spaces delivered to the project. Given the cost of these structures and the subsidy borne by the city and residents, the Master Plan Subcommittee is urged to check their Math. 


No comments:

Post a Comment