Many communities have begun taking a harder look at minimum parking requirements and their effects on neighborhood design, transportation, and housing affordability. This article briefly explores the link between minimum parking requirements and housing affordability, and highlights three cities that have revised their parking codes in an attempt to promote compact, affordable, and transit-oriented communities.
Minimum Off-Street Parking Requirements
Minimum off-street parking requirements are an integral component of zoning codes that are adopted by communities to avoid traffic congestion and overcrowded on-street parking. They are typically based on parking generation rates published by the Institute of Transportation Engineers (ITE) and may result in surplus parking. A typical parking space, including aisle area required to maneuver, takes up 300 square feet. This translates to increased development costs, especially in areas where real estate prices are high. Though usually hidden, these development costs are nonetheless passed on to the homebuyer.
Some communities are reducing minimum off-street parking requirements as an incentive to promote the development of affordable housing. Studies show a strong correlation between household income and vehicle ownership. Since low- and middle-income residents may own fewer or no vehicles, reducing parking requirements for affordable housing developments will decrease the cost of housing and make additional space available to increase the number of units.
Strategies for parking management being adopted by some cities include the elimination or reduction of minimum parking requirements based on density, car ownership rates, and availability of public transit; adoption of maximum parking requirements; allowing shared parking; and unbundling the cost of parking from the price of housing.
San Francisco, California
San Francisco is a transit-friendly city that has retained its historic character and the scale of its walkable neighborhoods. According to the 2000 Census, 30 percent of all households in San Francisco do not own a car and more than 50 percent of households living within transit-rich areas are car-free. A 1997 University of California, Berkeley study found that single-family housing without off-street parking sold for an average of $46,391 less than housing with off-street parking — affordable to 24 percent more area households.
San Francisco adopted legislation revising its parking requirements in an effort to reduce traffic congestion and increase affordable housing in its Downtown Commercial (C-3) zoning districts. Revisions eliminated minimum parking requirements for downtown housing, and established by-right maximum parking of one space for every four units. Maximum parking limits restrict the number of spaces that can be provided by a developer. Other strategies include car-sharing programs and requiring developers to unbundle the cost of parking from the price of housing. Reduced parking requirements for Rich Sorro Commons, a mixed-use project in the city with 100 affordable units for low-income families, resulted in additional space for a childcare center and retail stores, generating about $132,000 in additional revenue. The childcare center is especially beneficial to low-income families, and the additional revenue makes housing units more affordable.
Half the households in Press Apartments on Capitol Hill’s Pine Street in Seattle, Washington do not own cars, leaving 60 percent of parking spots that were provided to meet the city’s minimum parking requirements sitting empty. In 2006, Seattle reduced parking required in mixed-use neighborhoods, and eliminated minimum parking requirements in downtown areas to increase housing opportunities and encourage pedestrian-friendly neighborhoods. Minimum parking required for affordable housing was reduced to 0.33 – 1.0 space per unit, depending on the location and size of the unit. In addition to adopting maximum parking requirements for downtown office spaces, the city allows reduced parking for elderly and disabled housing, and for multifamily developments with car-sharing programs.
Portland, Oregon has implemented various parking management strategies designed to increase housing density, promote transit-oriented neighborhoods, and support existing and new economic development. Portland eliminated minimum parking requirements in the central city district and for sites located within 500 feet of a high-capacity transit station. The city’s zoning ordinance specifies maximum parking requirements for areas outside the central city district, which vary depending on the use and the distance from a light rail station. Other parking measures include shared parking, and reduction from minimum requirements for car sharing, transit access, and availability of bicycle parking. Two mixed-use projects located outside Portland’s central city, Buckman Heights and Buckman Terrace, were able to keep development costs low and increase the number of affordable housing units by utilizing the city’s reduced parking requirements.
At a time when communities across the nation are struggling to meet demand for affordable housing, minimum parking requirements that do not reflect actual need decrease affordability by increasing housing costs and reducing the amount of land available for housing. Tailoring parking requirements to reflect car ownership rates and availability of transit options will promote compact, pedestrian-friendly, and affordable neighborhoods.
Indiana’s Efforts to Increase the Affordable Housing Supply
Although the state of Indiana enjoys a high rate of homeownership, housing affordability is an ongoing issue, and the focus of many state government efforts. This article discusses legislation adopted by Indiana to increase homeownership and promote housing affordability by protecting manufactured housing communities, increasing the availability of housing finances, and establishing property tax deductions.
Protecting Manufactured and Modular Housing
Senate Bills 0306 and 0334 became effective in 2005 and 2007, respectively, to allow flexibility within land use regulations to preserve manufactured housing communities and protect modular housing, both of which are significant sources of affordable housing. Senate Bill 0306 recognizes manufactured housing as suitable and necessary dwelling units in Indiana. Many local ordinances may not permit a nonconforming manufactured housing community to retain its existing status upon undergoing modifications. The bill allows manufactured housing communities to be expanded or modified without losing their status under the local ordinance, even when a community is categorized as nonconforming. Senate Bill 0334 expands protections for modular homes by stating that modular homes may not be restricted from being assembled or installed on a property, unless the restrictive covenants or deeds apply to all residential structures in a subdivision.
Funding for Affordable Housing
Article 20, Title 5 of the Indiana Code includes provisions to lower the costs of financing homeownership, stimulate construction of new housing, improve existing housing, and promote economic integration. One such provision is the Indiana Housing and Community Development Authority (IHCDA), created by the Indiana General Assembly in 1978 to promote safe, sanitary, and affordable housing for low-income families. To accomplish its missions, the IHCDA issues state bonds, makes loans, acquires property, provides technical and advisory services, and contracts with other agencies that develop affordable housing. In addition, the IHCDA administers the Affordable Housing and Community Development Fund (AHCDF), which was established in 1989 to provide loans and grants for a broad range of programs that involve construction, preservation, and rehabilitation of affordable housing.
The programs funded by AHCDF must support housing for low-income families earning up to 80 percent of the area median income, with at least half of the beneficiaries living at or below 50 percent of the area median income. Rental housing must be available to low- and very low-income families for a minimum of 15 years. Since its inception, the housing fund has executed close to $20 million in loans and $1.5 million in grants, enabling the development of over 1,400 affordable housing units.
Property Tax Deductions
Title 6, Article 1.1, Chapter 12 of the Indiana Code includes provisions to reduce the property tax impact on homeowners. This legislation offers tax relief to homeowners for the rehabilitation of property in the form of deductions based on the increased value of a rehabilitated home or residential structure. Rehabilitation includes any remodeling, repair, enlargement, or extension of a property. Deductions can be taken annually for a maximum of five years and amount to 50 percent of the increased assessed value resulting from rehabilitation, provided the cost of the rehabilitation on a property is upwards of $10,000. Deductions are capped at $124,800 for single-family homes and at $300,000 for other housings types.
The state also provides tax deductions on rehabilitated properties located in designated residentially distressed areas. To be designated as a residentially distressed area, a region has to meet certain requirements as defined in Indiana Code 6-1.1-12.1. For a single-family dwelling, the amount of the deduction is equal to the assessed value of improvements made to the property after rehabilitation, capped at $74,880. These tax deductions are meant to renew interest in existing and older housing stock to help maintain the supply of affordable housing throughout the state.
To further the state’s goal of increasing housing affordability, Governor Mitchell E. Daniels, Jr. signed legislation on March 19, 2008 that will provide property tax relief and protection to homeowners. Homeowners will see an immediate property tax cut of more than 30 percent. Starting in 2010, property taxes will be capped at one percent of the assessed value for single-family homes and at two percent of the assessed value for apartments. Assessing different classes of property at different rates is expected to help maintain the affordability of different housing types. The tax cuts will be funded in part with a one percent increase in the state sales tax.
Indiana has adopted legislation designed to meet a wide spectrum of the state’s housing needs. By offering tax deductions on rehabilitated properties and allowing flexibility in regulations for manufactured housing communities, the state is ensuring the present and future affordability of the existing housing stock. Provisions within the state housing funds help low-income families find affordable homes and attain the goal of homeownership.
Zoning incentives first came into use during the late 1950s to allow more development flexibility during a time when zoning codes strictly separated land according to use. Concerned about the exclusionary practices that resulted from rigid forms of land planning (including large lot sizes, minimum floor areas, and limitations on housing types), public officials have instituted incentive programs to improve city infrastructure and include affordable housing without having to spend public funds. This article will further describe incentive zoning, and highlights King County, Washington’s successful implementation of incentive zoning principles to further affordable housing goals.
What is Incentive Zoning?
Incentive zoning is a voluntary program in which development incentives (such as density bonuses, reduced parking requirements, or fee waivers) are offered to private developers in exchange for providing a public benefit. Several types of public benefits can be called for in an incentive zoning ordinance, but usually include historic preservation, public infrastructure improvements, open space conservancy, the inclusion of public art, or an increase of affordable housing units. For the purposes of this article, we will focus on incentives that target increasing the affordable housing supply.
King County, Washington’s Incentive Program for Housing Developers
With over 1.8 million people, King County is the most populous county in the state of Washington. Located along Puget Sound, the scenic views and bustling metropolitan areas make this region a desirable place to live for many young professionals. However, in most recent years, King County experienced a significant increase in the cost of housing, pricing many median-income households out of the market. For this reason, the county established the following voluntary incentive-based programs to encourage the development of affordable housing:
Reduction of Parking Requirements: Benefit units, also referred to as affordable units, are allowed a 50 percent reduction of onsite parking requirements as compared to what would normally be required of a market rate unit. If 100 percent of the units are affordable, only one off-street parking space is required per benefit unit.
Impact Fee Waivers: School and road impact fees are waived for rental units that are affordable to households at or below 50 percent of the median income. The same fees are also waived for affordable homeownership units that serve households at or below 80 percent of the median income; these units must remain affordable for a period of 15 years.
Surplus Property for Affordable Housing: In 1996, the Metropolitan King County Council unanimously approved a county ordinance allowing surplus county property to be sold for affordable housing purposes. The land is available to both for-profit and nonprofit developers.
Density Bonus Program for Affordable Housing: King County’s Density Bonus Program for Affordable Housing encourages private developers to build affordable housing units by offering a calculated increase in the number of units, over and above what would normally be allowed in a specified zone. The bonus range is calculated based on the number of benefit units included in a project, the income level that the benefit units are intended to serve, and in the case of ownership benefit units, the number of years the benefit unit is to remain affordable. The program allows .75 to 1.5 bonus units per benefit unit; however, projects that are 100-percent affordable are allowed 2 bonus units.
King County continues to address inflated housing prices by offering incentives to affordable housing developers. In so doing, the density bonus program, impact fee waivers, and reduction of parking requirements have generated over 130 affordable units to date, while the surplus property incentive has produced over 400 affordable units. The county has proven that voluntary programs can be successful when a community implements planning techniques that best suit their individual needs.