Employers play a major role in shaping commuting behavior

miami rush hour traffic
miami rush hour traffic

Rush hour traffic along I-95 in Miami (courtesy of Wikimedia Commons).

For sustainable transportation advocates, changing people’s commuting behaviors can seem like our white whale.

While commutes account for just 19% of total personal trips in the US, they play an outsized role in our transportation system, accounting for 27.8% of total vehicle miles traveled (VMT).

Their timing is also critical. The concept of rush hour revolves around our commute patterns. In cities like Washington, DC and Los Angeles, rush hour congestion can make life hell commuters, costing them time, money, and sanity. But in cities that are not growing and have no real congestion issues normally, these rush hour periods are particularly important.

For a city like Cleveland, commuting patterns directly influence the transportation infrastructure we end up with. The influx of drivers heading to and from work each day provides justification to expand our already overbuilt road system, which has serious impacts on development patterns, travel choices, and mobile emissions. If we could smooth these demand spikes by reducing the number of single-occupant vehicles (SOVs) on the road, we could potentially upend this vicious cycle, which justifies the continued addition of freeway lane miles to the system.

Unfortunately, the evidence suggests that we’ve made little, if any ground in this area. In 1960, the Census Bureau reported that 64% of Americans drove to work; they did not differentiate between driving alone and carpooling at the time. Another 12.1% of commuters used public transit, while just under 10% walked. By 1980, thanks to OPEC oil embargo, 19.7% of Americans carpooled, and the drive alone number stayed at 64.4%, even as public transit use fell.

But by 2014, these trends had reversed; 76.3% of Americans drive alone to work, while just 5% take transit, and 3.4% walk or bike. To date, our efforts to get people to stop driving alone to work have failed spectacularly.

Commuting: What is the role of employers?

Part of the problem with these efforts is that we have focused far too much on the individual. Commute mode decisions are a two-way street (pun intended). They depend not only on the whims of the individual, but also on employers’ decisions. People don’t just decide to drive to work in a vacuum. Their universe of choices are shaped by a number of endogenous and exogenous factors, including things entirely in the control of their employers.

This thought really crossed my mind recently while I was reading an article on electric vehicles (EVs) by Christopher Mims in the Wall Street Journal. Mims noted the vital role that employers can play in normalizing EVs for their employees:

Placing charging stations at workplaces, where cars spend much of their time, will be uniquely powerful. When a workplace installs a charging station, employees are 20 times as likely to buy a vehicle with a plug, according to a survey from the U.S. Department of Energy.

In light of this fact, it’s important to consider what, precisely, employers can do to influence the commute patterns of their employees.

Earlier this year, the City of Cleveland Office of Sustainability and NOACA partnered together to launch what they called the Commuter Choice Challenge. The goal of the program is “encouraging Northeast Ohio organizations of all shapes and sizes to take action in sustainable transportation.”

While some people may scoff at the idea that we should reward organizations that provide pre-tax transit passes to their employees, there really are a number of steps employers can take to foster mode shift. Collectively, this effort to provide alternatives and enhance the efficiency of our transportation system is known as transportation demand management (TDM).

Changing jobs and the importance of signalling

One of the simplest things that an employer can do is to act as a knowledge broker and paragon for their employees. For most people, commuting is a habit – once people start driving to work everyday, it becomes very difficult to shake them out of it.

Because commuting is a habit, there are only so many potential points at which an intervention is likely to succeed. But habits become weaker when your personal circumstances change. This context tends to shift most abruptly after major life events, such as moving or changing jobs.

In a study published earlier this year, Ben Clark, Kiron Chatterjee, and Steve Melia from the University of the West of England explored how these life events affect people’s commutes. They found that, while one-fifth of all British commuters change their mode from one year to the next, car commuting is far stickier. Just 8.6% of car commuters changed away from driving, and the mean duration of their commute mode was 6.3 years, twice as long as those for public transit (3.0 years) or active transportation (3.2 years).

Targeting new hires can be a highly effective way to disrupt the stability of car commuting. The odds that a person will switch from driving to alternative modes increases 2.5-fold when people change jobs. This highlights the importance of providing new hires with comprehensive TDM options and information, not just a parking pass. Demonstrating from day one that your workplace acknowledges and supports non-SOV modes helps to normalize them for employees. Signalling is an important part of behavioral change.

Pull factors matter…

If employers wish to reduce their SOV share, they need to provide a suite of incentives to get them out of their cars. These pull factors can come in a variety of forms, from reduced health insurance premiums for people who use active transportation to subsidized transit passes.

Considerable evidence suggests that these sorts of TDM packages can go a long way. In a 2005 study, researchers from the U.S. EPA examined the impact of the Agency’s Best Workplaces for Commuters (BWC) program, which recognizes employers that encourage, educate, and incentivize their employees to try alternative commute modes.

The researchers compared the commute patterns among employees using the BWC programs to the average commuter in these same Census blocks. They then modeled the impacts of these commute patterns to see the associated reductions in gasoline use and mobile emissions. According to the authors:

The results of this survey indicate that where employers provide employees with incentives to commute by means other than driving alone, significant percentages of them take advantage of these benefits. Comprehensive benefits packages such as those enjoyed by commuters in the BWC group, with financial incentives, services (such as guaranteed ride home, carpool matching, etc.) and informational campaigns, appear to produce reductions of trips, VMT, pollutants, and fuel consumption of around 15 percent even under conservative assumptions.

Another 2012 paper from Virginia Tech professor Ralph Buehler found that providing bike parking, showers, and locker rooms increases the odds that employees will bike to work nearly 5-fold. Clearly pull factors, such as financial incentives and facilities investments, play a central role in this equation.

But push factors – especially parking – matter more

But, as with anything else, changing commute behaviors requires both push and pull factors. And the latter are particularly key, as the single most effective strategy that an employer can use to reduce SOV share is to remove parking subsidies.

In the US, some 95% of US commuters receive free parking at work. The provision of this benefit can increase the SOV rate for commutes by up to 50%.

UCLA professor Donald Shoup, the godfather of parking research, has explored the effects of curbing this parking subsidy. In a 2005 report, he outlined the benefits of implementing a parking cash out program, by which employers provide commuters with the option of receiving a cash incentive equal to their parking subsidy if they don’t drive alone to work. Such programs allow employees who really want to drive to work to continue getting discounted parking, but it also incentivizes alternatives for those who would rather try them.

Shoup’s research in California found that cash out programs can cut SOV share by 17%. A separate study from Daniel Hess, also of UCLA, concluded that by charging $6 per day for parking, Portland was able to cut its SOV share by 16%.

Getting parking right is even more important than these numbers show, however. The lure of free parking so strong that if an employer rolls out a TDM program but fails to price parking, the latter will simply crowd out the former. As Dr. Shoup put it, “Advocating ridesharing while offering free parking is like denouncing smoking while offering free cigarettes.”

A separate paper Buehler and his colleague Andrea Hamre explored this issue. Their research showed that providing free parking increases the share of commuters who drive alone, regardless of what other incentives the employer may provide. Without free parking, 75.9% of Washington, DC area commuters would drive alone. Free parking increases that share to an astounding 96.6%. Providing subsidized transit and incentives for active transportation, while also supplying free parking, only takes that SOV share down to 86.8%.

As the authors concluded, their research “suggests that benefit combinations that include free parking either overwhelm or render insignificant the positive effects of benefits for public transportation, walking, and cycling.”

Location, location, location

But even the most comprehensive TDM packages will struggle to overcome another factor that employers can control – their location.

Often times, sustainable transportation advocates focus on the negative effects of residential sprawl, but neglect workplace sprawl. Just as people in the US have spread farther and farther outward, so too have employers.

Consider Northeast Ohio. The region boasts five major employment hubs, like downtown Cleveland and University Circle. Yet, combined, these hubs only account for less than one-quarter of all jobs in the region. The rest are distributed broadly across the five counties.

This outcome poses a major challenge to TDM. Transit ceases to be viable when households and destinations are sprawled out. The same holds true for active transportation. No one is going to choose to walk 10 miles to work in an exurb without sidewalks.

The Clark, Chatterjee, and Melia study illustrates this clearly. If a worker’s commute increases from less than to more than two miles, the odds that s/he will switch from active commuting to driving increases 30-fold. The research seems to indicate that two miles is a key threshold; most people simply will not bike to work if their commute is longer than that.

According to the National Center for Transit Research, location may be the most important variable in the commute equation. No matter how strong the TDM package or how much the organization supports alternative modes, locating your office in the middle of an exurban office park locks in your employees’ commute options.

Ultimately, I think we have focused our attention too narrowly on the individual commuter for too long. Research has shown time and time again that the most effective TDM strategies target the employer first, as that is the critical leverage point.

Large institutions that claim to support sustainability need to back up their words through their actions when it comes to commute options. It’s not enough to simply post an annual sustainability report or get your buildings LEED certified if you subsidize parking and locate your office in exurbia. The transportation sector is now the largest source of carbon pollution in the US. It’s time for employers to act like it.

Raising the sales tax is not the answer to GCRTA’s funding woes

joe calabrese town hall
joe calabrese town hall

GCRTA CEO Joe Calabrese prepares to speak at the Clevelands for Public Transit town hall meeting on June 23 at Antioch Baptist Church (courtesy of Clevelanders for Public Transit).

Pragmatists have long invoked the phrase “Don’t make the perfect the enemy of the good.” Generally speaking, that’s solid advice. And, as a card carrying incrementalist sellout™, it’s something I can get behind. Most of the time, that is.

Some issues are so substantial, so systemic in nature, that tinkering on the margins is unlikely to remedy the problem. And that’s one of our major pathologies here in Cleveland. We seem to try tackling these big, hairy problems with the same tired toolkit of solutions, despite the fact that they haven’t worked yet. There’s only so many times you can run headlong into a brick wall.

The problem isn’t that we make the perfect the enemy of the good. It’s that, in Cleveland, we tend to make the facile the enemy of the good.

In other words,  I mean that we almost always fall back on old ideas, regardless of whether or not they have worked or are the best tool for the job.

Our ongoing transit funding dilemma

Take public transportation. For years, transit boosters here have offered up exactly one solution for our system’s funding woes: make the State of Ohio pay its fair share. And, for the love of God, of course it should! But it’s not going to happen anytime soon.

Yet, even when we finally start talking about local funding options, we fall into familiar trap. At a town hall meeting last week, Newburgh Heights Mayor Trevor Elkins – the only member of the GCRTA Board of Trustees to vote against the new suite of fare hikes and service cuts – suggested that we raise the county sales tax to fund the agency.

Now, I’m not saying that there’s anything prima facie wrong with funding transit with sales tax revenues. Cuyahoga County voters approved a 1% sales tax to find GCRTA when it was established back in 1975, and this tax – still the most generous in Ohio – has been a resounding success. The fact that it continues to provide a majority of GCRTA’s revenue 41 years later, despite not being altered, is a testament to the fact that sales taxes can be useful policy tools.

The problem is that, while the transit tax itself hasn’t changed since 1975, the overarching conditions in the region have. Cuyahoga County’s ceaseless population loss has slashed the revenue generating potential of this tax by some $68 million.

Why is the answer always “raise the sales tax”?

Moreover, over the past two decades, Cuyahoga County leaders have turned consumption taxes into a veritable slush fund for bad ideas, many of which have degenerated into little more than thinly veiled corporate welfare. Want to build an oversized convention center and Medical Mart Global Center for Health Innovation? Let’s raise the sales tax! The Browns want a free, new scoreboard? Sin tax! The Republicans need hotel rooms? Bed tax!

Eventually, when you keep throwing tens of millions of good tax dollars after bad into these sorts of projects, people get wary. And, to be fair to Mayor Elkins, he said as much at the town hall meeting. But he still fell back on sales tax hike, perhaps because we lack the policymaking creativity to try something new. Cleveland’s leaders have no incentive to come up with good ideas when they can get away with the same old facile ones.

The problem is, just because something is easy to understand doesn’t make it an effective policy. Cuyahoga County already has the highest county sales tax rate (2.25%) and combined sales tax rate (8%) in the state. Franklin County is second at 7.5%. While we are no longer at the statutory sales tax cap (the state raised that to 8.75%), continually raising consumption taxes is not a long term recipe for success in a county that has been treading water, at best, for nearly 50 years.

Wait, you may say, didn’t you just say that sales taxes could be useful for funding transit? Yes, I did; but I don’t support this idea for a number of reasons, a few of which I will expound upon here.

The problem with raising the sales tax — again

First, as I already mentioned, Cuyahoga County residents already bear the single highest sales tax rate in the state. Raising it further will simply stress a shrinking tax base further.

Economists typically prefer consumption taxes to income taxes, because the latter tend to generate larger distortionary effects. But that’s not to say that consumption taxes don’t do this as well. By raising the relative costs of goods, sales taxes alter the equilibrium between supply and demand by decreasing the amount that people consume. This creates a market inefficiency, known as a “deadweight loss,” which reduces social welfare. It’s wonky as hell and seems weird, but it’s at the heart of economic theory.

Such deadweight losses have clear effects. According to a recent study by researchers at the Institute for the Study of Labor (IZA) in Germany, sales tax increases in the US harm localities. The study, which considers the effects of changes in combined sales tax rates on business activity from 2002-2011, found clear, negative effects.

Each 1% increase in the combined sales tax rate reduces total payrolls within a county, particularly among retail businesses and smaller firms. According to the authors, “These results show a clear negative and significant association between the combined state and county sales tax rate and total annual payroll.”

These deleterious effects are particularly apparent when a county’s sales tax rate is high in relation to neighboring counties. As the map below illustrates, the four counties bordering Cuyahoga have combined see taxes ranging from 6.5% to 7%.

ohio county sales tax rates

Combined sales tax rates in Ohio by county (courtesy of Ohio Department of Taxation).

Multiple studies have demonstrated that these types of cross-border differences can negatively affect the county with the higher rate. In a 2012 study (PDF), Jeffrey Thompson of the Federal Reserve and Shawn Rohlin of Kent State University examined how sales tax rate differences across state borders affected economic activity from 2004-2009. They found that when border counties raise their sales taxes by 1%, total employment falls by 3.8-5.8%. The bulk of this effect occurs in the retail industry, which sees a 7.6% decline in employment.

Second, it is a well-established fact that consumption taxes are regressive, as lower income residents end up paying a larger portion of their income than wealthier residents. This effect is concerning in Cuyahoga County, where we see extremely high rates of poverty and economic inequality in many areas. But this issue is even greater, in this case, as low-income residents are largely concentrated in impoverished neighborhoods within the City of Cleveland and inner-ring suburbs. Wealthier residents, in contrast, have moved out into the outer suburbs and exurbs.

Why does this matter? Because these suburbs are closer to the neighboring counties, making it easier for middle- and higher-income families to take advantage of lower sales tax rates. Consumers are far more likely to cross county borders to make purchases at lower sales tax rates if they live near those adjacent counties. According to Gary Cornia and colleagues (paywall), consumers are more likely to travel 5 kilometers (3.1 miles) a border to take advantage of lower sales tax rates, but that effect essentially disappears when you increase the distance to 30 kilometers (18.6 miles).

Moreover, the low-income residents residents living in Cleveland and the inner-ring suburbs are also far less likely to have ready access to a car. Compare Cleveland, where more than 10% of households lack a car, to Solon or Gates Mills, where that number is just 1.1% and 0.4%, respectively.

As Thompson and Rohlin demonstrate, “cross-border shopping is more prevalent when transportation costs are low.” This essentially guarantees that a sales tax hike will be uber regressive for low-income, transit-dependent Cuyahoga County residents, as they lack the means to avoid it readily. So they would bear an even more disproportionate burden of funding GCRTA, in addition to already shouldering the fare increases.

Third, raising the transit sales tax seems neither seems imprudent from a political perspective. Under Ohio law, county leaders can increase the sales tax by 0.25% to raise general fund revenues without triggering a vote. Our former County Commissioners took advantage of this back in 2007 for the convention center.

That option is not available for transit. Any effort to increase GCRTA’s sales tax rate would have to go before voters for approval. Now, it’s entirely possible that such a proposal would pass. Cuyahoga County voters have approved similar tax increases for far less beneficial purposes in the past. Yet, it’s not guaranteed. Summit County voters rejected this same sort of proposal in 2014 by a convincing 54-46 margin.

Are Cuyahoga County residents that much more inclined to support transit, particularly the type of voters who show up in off-year elections? Does it make sense for GCRTA and local officials to spend considerable political and financial capital trying to get approval for a proposal that does nothing to staunch the winds that have buffeted the transit system for decades?

Let’s choose good policy over simple policy

We know that GCRTA is a fighting a heroic, sisyphean battle against sprawl, population loss, and overbuilt vehicular infrastructure each day. So why don’t we pull policy levers that raise transit funds while simultaneously helping to remedy the underlying challenges?

There are two good options available that serve this dual purpose: a parking tax, which I have already proposed, and scaling up GCRTA into a real regional transit agency by incorporating the collar counties.

Both of these are possible under current law. They will require legislative action and voter approval at the local level, yes. But if we have to launch a campaign to gin up support for local transit funding, we might as well do it right.

Asking some lingering questions about cutting service on the Waterfront Line

GCRTA's Waterfront line (courtesy of htabor).

GCRTA’s Waterfront Line (courtesy of htabor).

After months of an extended and often contentious debate, the GCRTA Board of Trustees finally voted on a series of measures to help the agency balance its budget for the next year. Surprising no one, Board members approved a series of stepwise fare increases that will take effect on August 16, which should increase annual operating revenues by $3.5 million. Single-ride fares will increase to $2.50 from $2.25 currently and, ultimately, rise again to $2.75 in August 2018. All day passes will increase from $5 to $5.50 and ultimately $6, while monthly passes will jump from $85 to $95 and then $105.

For the sake of comparison, WMATA, the Washington, DC area transit operator, charges $1.75 for bus fares and off-peak rail fares; the base fare for on-peak rail users is $2.25. MTA, the transit operator in New York, in turn, charges $2.75 for a single trip and $116.50 for a monthly pass. In other words, Cleveland’s fares are now on par with, or even higher than, some of the most extensive transit systems in the country.

But, as we know, the fare increases alone were not enough to cover the $7 million hole in GCRTA’s budget. Staff also proposed a series of service reductions that would have cut bus service hours and miles by approximately 4%. Courageously, the Board decided to punt on this issue and make GCRTA’s management responsible for approving the service cuts. These cuts, which have been scaled back since the initial proposal, will save the agency less month ($3 million vs. $4 million) but affect fewer customers (1% vs. 1.8%).

One of the more hotly debated portions of this list of service reductions involves GCRTA’s Waterfront rail line, which ferries customers from the Tower City transit hub along the Cuyahoga River and lakefront to the South Harbor. The Waterfront Line, which opened to much fanfare during Cleveland’s 1996 bicentennial celebration, cost GCRTA roughly $50 million to construct. But ridership soon fell off a cliff, as the city continued to shrink and the Flats entered a prolonged period of decline.

The agency reduced service on the Waterfront Line in 2010, but it subsequently restored it in 2013 to account for new investments on the East Bank of the Flats. While ridership may have increased somewhat since that point – we don’t really know – the line has rightfully earned its name as the “Ghost Train.” Fewer than 400 people ride the train on weekdays, and nearly all of those people take it during rush hours. During off-peak times, GCRTA says 2 people ride each train, on average.

Personally, I have long questioned the utility of the line. I think I have used it maybe 2 or 3 times in my life. If I am traveling to the Flats or the lakefront, I would much rather walk or hop on a trolley, but I freely acknowledge I’m abnormal.

That said, I do know people who ride the train and see its utility. I also recognize that there is no other transit serving the Flats, and it can be pretty daunting to try and walk up the hill from West 10th to West 9th, particularly if you are of limited mobility.

Moreover, I might be pissed off if I was one of the people investing in the redevelopment of the Flats. Investors and developers thought they had reached an agreement with GCRTA to ensure the Waterfront Line would serve this area. Adam Fishman, the Board Chair of Flats Forward, offered an eloquent articulation of this viewpoint in an op-ed over the weekend. As he wrote,

In 2015, RTA increased services to the Waterfront Line and saw an uptick in riders after the opening of Flats East Bank.

Now, RTA’s proposal is to reduce weekday service, to end at approximately 7 p.m. — but limiting service to these new entertainment venues during evening hours when downtown residents are looking to explore dining options is a misstep. Limiting transit service to this area will greatly hurt the potential for growth and will prevent the Flats East Bank from becoming part of the uninterrupted fabric of downtown in the minds of those who live, work and play here.

To an extent, he’s right! But we also need to recognize the fact that GCRTA has to balance its budget, and, in the process, it needs to guarantee that the pain is spread evenly. If the agency tried to dump all of the service cuts on low-income communities of color on the East Side, it may have run afoul of federal environmental justice and Title VI guidelines and would almost certainly have facee a lawsuit.

Yes, fixed rail investments can – and should – promote development. But sometimes when you build it, they don’t come. GCRTA dumped millions of dollars into the Waterfront Line for 20 years, with little to show for it. Flats developers can’t simply demand cuts for thee but not for me.

With all of that in mind, I still have some lingering questions that I wish had been asked during this debate. I think getting this information would have given all of us a clearer picture of the real value of the Waterfront Line, relative to the various bus routes that faced service reductions.

  1. We should recognize that, while the Flats is turning into something of a playground for wealthy white people, there are a lot of service sector employees who need to work in these establishments. What percentage of these service industry workers in the Flats and along North Coast Harbor rely on/use public transit? How does it compare to other lines that were cut or faced cuts?
  2. Will reducing service frequency on the Waterfront Line (and the Green line) have any effect on the lifespan of the aging Breda LRV cars? Could it reduce wear and tear on these trains to any noticeable extent?
  3. If the employers in the Flats are so concerned about protecting rail service, are they willing to pitch in? I’ve seen various estimates on how much GCRTA would save from cutting Waterfront Line service, varying from $200,000-500,000. The Flats East Bank development represents some $750 million in investments. Some of the entities involved, including Ernst & Young, are worth billions. Could they not come together to help defray or cover the costs of retaining service? Consider the fact that the Cleveland Foundation gave GCRTA $100,000 to provide free trips back in January 2014. And University Hospitals just signed on as the sponsor of Cleveland’s bikeshare system. There is a precedent here.
  4. What steps have Flats employers taken in the past to promote public transit usage among their patrons and employees? What about to promote public transit funding and support among the general public? Do they participate in RTA’s Commuter Advantage program? Do they subsidize transit passes? Seeing them actually stick their necks out for transit would mean a lot more, particularly in light of the sea of surface parking lots that they’ve constructed in the area.

Answering these lingering questions would not have mollified both sides, but it may have given us the information we needed to make a more informed opinion.

[Insert obligatory line blaming the State of Ohio for not funding transit.]

Cincinnati is using parking revenue to fund transit. Why can’t Cleveland?

cincinnati streetcar
cincinnati streetcar

The Cincinnati Streetcar takes a test run in November 2015 (courtesy of Wikimedia Commons).

In my last post on using parking taxes to fund transit in Cleveland, I exclusively focused on private, off-street parking lots, largely due to space and for the sake of a coherent argument. Unfortunately, this meant that I left out the other side of the equation – how to properly manage public parking lots in response.

One of the potential consequences of increasing private parking fees is to increase the relative demand for public parking lots and on-street parking. While there is a long-standing tradition of having the public sector provide certain services at a lower cost than their private sector counterparts (e.g. electricity), the social costs of ubiquitous, cheap (or free) parking are so substantial as to overwhelm its potential benefits.

Accordingly, the first step towards instituting the parking tax policy I proposed is for the agencies that own and operate public parking lots and meters to raise their prices to market rates. Not only does this mitigate the risk that people will simply move from more expensive private lots to cheaper public lots, it may also increase the odds that commercial parking lot operators will go along with this tax proposal. As Todd Litman of the Victoria Transport Policy Institute wrote (PDF), “Commercial operators tend to be more accepting of a parking tax if governments are already maximizing income from other parking-related revenue sources, such as meters and enforcement of parking regulations.”

Coincidentally, Cincinnati has done just this. As part of a plan to modernize its parking system last year, Cincinnati officials raised rates in the Over-the-Rhine district, extended hours for metered parking (including weekends), and stepped up enforcement. While Cleveland also raised its rates last year, the maximum hourly rate for parking meters is still half of Cincinnati’s ($1 compared to $2), and we do not charge on weekends. (This is where I break from Councilman Zach Reed on transportation policy.)

The other essential component of correcting parking policy in order to justify tax increases is to eliminate mandatory parking minimums. Because the imposition of excise taxes on parking lot area can generate a new source of revenue for local governments, this could give them a perverse incentive to actually increase the minimum parking requirements for private developers in order to capture additional funds. In order to address this, legislators need to eliminate mandatory parking minimums within their jurisdiction.

While Cincinnati officials have failed to do the latter – in fact, their minimum parking requirements continue to undermine development in the city – their decision to raise public parking prices has paid off. Yesterday, city officials announced that parking revenues will make up the single largest share of the FY2017 operating budget of the new Cincinnati Streetcar. Funds generated from parking fees will make up $2.2 million of the $4.2 million total budget. Clearly, Cleveland leaders don’t need to look to Australia or the United Kingdom for examples of cities funding transit on the back of parking, given that it’s happening just 250 miles south on I-71.

This approach – taxing a public bad (excess parking) to fund a public good (reliable public transit) – is at the heart of good public policy. It’s no different than taxing cigarette sales to fund smoking cessation and public health programs (not professional sports stadiums) or taxing carbon emissions from coal-fired power plants to fund clean energy. Cleveland should take the baton from Cincinnati and run with it.

Ohio won’t save GCRTA, so let’s tax parking to fund transit instead

rta healthline buses
rta healthline buses

RTA HealthLine buses in downtown Cleveland (courtesy of Cleveland.com).

One of the biggest stories in Northeast Ohio right now is the Greater Cleveland RTA’s budget shortfall. It’s probably because of the company I keep, but my Facebook and Twitter feeds have been inundated with posts, comments, and tweets about every new update and public meeting for the past several weeks.

It’s a big story. GCRTA has reported that, in order to balance its books, it needs to cut expenses by $7 million this year. CEO Joe Calabrese and his staff have proposed a suite of route cuts and fare increases to plug this hole. Options include raising the base fare from to $2.50 per ride from $2.25 currently, increasing paratransit fares to $3.50 from $2.25, and curtailing or eliminating bus service along 18 routes. Alternatively, the agency could maintain existing service and increase the normal fare to $2.75 per trip.

Rather than just approving some combination of these options, the GCRTA Board of Directors tabled this discussion at its December 2015 meeting, opting to hold a series of 15 public meetings around the county. The last of these hearings occurred on Wednesday, and the ball is now back in the Board’s hands.

If I had to wager, I would guess they’ll raise fares by $0.50 to minimize the service cuts. Keep in mind that Cleveland has already cut annual bus revenue miles by nearly 40% since 2006, the single largest decrease in the country, according to Jake Anbinder of the Transit Center. Given the nearly overwhelming opposition to some of these service cuts, making it that much harder to get around town seems pretty untenable.

In addition to hosting this litany of hearings, Mr. Calabrese testified before the Cleveland City Council Transportation on Wednesday. He came to distill the agency’s challenges, justify its plans, and hear feedback from the Committee members. For the most part, the tenor from the Council members was pretty standard – they all agreed GCRTA is in a tight spot, they opposed service cuts in their wards, and they pilloried the State of Ohio for not doing its part.

Enough ink has been spilled – including by me – on the sad state of public transit funding in this state, so I won’t belabor the issue. Suffice it to say, as I once did, that I’m not sure it would be possible for Ohio’s elected officials to care less about public transit if they tried. Hell, even if Ohio devoted every one of the $7.3 million it kicks in for public transit to GCRTA, that would barely be enough to paper over its budget hole. The state needs to fund transit, full stop.

We can’t depend on Ohio to fund transit

But, while I don’t like cutting service on the 81 to the Lakeview Terraces or raising paratransit fares, I found myself agreeing most with Councilman Zach Reed. It was strange. I rarely see eye-to-eye with Councilman Reed on transportation issues, but his comments were dead on. He called on local officials to disabuse themselves of the notion that Ohio is suddenly going to find religion on transit funding.

Instead, Councilman Reed broached a subject that most local officials have sidestepped – we need to increase local funding for transit. Currently, GCRTA gets around 60% of its funding from a 1% county sales tax assessed in 1970. But this tax generates far less revenue today than it did in 1970; population loss costs the agency nearly $68 million in funding each year. That could close this budget hole nearly 10 times over.

gcrta sales tax revenue

Sales tax revenue by year (courtesy of GCRTA).

Additionally, Councilman Reed was the only person to note another key detail – federal and state transit dollars come with strings attached, including the local match requirement. Local governments need to cough up 20% of the cost of a project in order to spend federal transit dollars. This issue has increasingly become a hurdle. According to ODOT’s transit needs study (see page 46 of PDF), the state is sitting on more than $21 million in transit funding that it cannot disperse due to a lack of local matching funds. We need more transit spending for Cuyahoga County from Cuyahoga County; there’s no way around it.

Granted, continually increasing taxes on a shrinking population to fill budget gaps is a recipe for disaster. But not all taxes are created equal. There are certain levers that officials can pull to help rectify social harms and raise funds at the same time. And since sprawl is among Cleveland’s most pressing issues, taxing land uses that promote it can be beneficial. So let’s tax parking to fund transit.

Cleveland already has a parking tax, but…

First, I’ll note that Cleveland already taxes parking.* In 1995, City Council approved an 8% sales tax on commercial parking transactions in the city. This tax raises roughly $10-11 million per year for the City’s coffers. Or it, would if Council hadn’t passed this tax as part of its plan to finance a new Browns stadium. Cleveland doesn’t actually see a dime of this money, as it just goes to pay off debt from bonds issued for FirstEnergy Stadium. Argle bargle.

The easy way to raise funds for transit would be to simply raise this existing tax. Compared to other cities with this sort of tax, Cleveland’s is relatively low. New York City, Miami, and Los Angeles impose taxes of 18.5%, 20%, and 25%, respectively. Pittsburgh, which has impressively progressive transportation policies, imposes a 50% tax. Cleveland could, say, double its tax to 16% – raising $10 million per year for transit – and remain on par with other cities.

Unfortunately, despite its ubiquity, this tax is flawed. Because it’s assessed on reported transactions, parking lot operators have an incentive to underreport their sales, something that has occurred in Cleveland. Additionally, it can have the unintended consequence of reducing the supply of paid parking and increasing the supply of free parking in city centers.

According to a study (PDF) from the Victoria Transport Policy Institute (VTPI), “it makes urban centers relatively less competitive compared with suburban locations where parking is unpriced. In this way, commercial parking taxes can increase total parking subsidies and sprawl.” Not only are we wasting the revenues from our parking tax to subsidize a football stadium, the tax itself may be contributing to urban sprawl. Argle bargle.

Taxing parking lots by surface area instead

What other options exist? A number of cities outside of the US – chiefly in Australia and Canada – take a different approach. They levy a tax on the total area of surface parking lots or on the total number of parking spaces. In this way, the tax generates a double dividend; it produces tax revenue while also driving down the demand for parking and reducing congestion.

Following the advice of a study from Eran Feitelson and Orit Rotem, I propose that we implement a tax on the surface area of private parking lots. But this tax would be imposed based on the square footage of each lot at ground level; this would ensure that a surface parking lot like those blighting the Warehouse District would have the same tax burden as a 4-level parking deck with a comparable surface area on each level. Not only would this create revenue and cut into parking demand, it would also push developers towards parking decks, as the effective tax per parking spot falls with each additional level added.

Moreover, the supply of free parking in the region would decrease, as developers would now have a greater motivation to recoup tax expenditures by charging. There is a legitimate risk that hiking up parking taxes could push people away from downtown or other districts within Cleveland. Accordingly, this policy should be implemented at the county level. Doing so would increase the cost of developing in suburban and exurban areas, relative to the city center, because the latter has an existing supply of parking decks and underground lots.

Because this would be applied countywide, it would be essentially a commuter tax imposed on both county residents and those people who live outside but enter the county to work, go to school, shop, see a sporting event, etc. This would help to address the types of equity concerns we face when dealing with similar taxes, like the Sin Tax.

Coincidentally, ODOT actually explored the idea of levying an annual tax on parking spaces to fund transit all the way back in 1993. The agency estimated (see page 20 of PDF) that this sort of tax could generate $187.3 million per year. If we adjust for inflation, that would be equal to $307 million in 2016 dollars. If we conservatively assume that a tax in Cuyahoga County could generate 10% of this revenue, that would still equal roughly $30 million per year.

Excess parking is a scourge for urban areas. It consumes valuable land, encourages driving and sprawl, contributes to air pollution and climate change, increases surface runoff, and harms water quality. On a good day, GCRTA struggles to compete and keep its budget balanced. Parking makes this challenge that much harder. So let’s try to remedy our incentives and tax parking to fund transit.

 

*Credit to Cleveland real estate lawyer and part-time blogger Christian Carson, whose 2014 post helped put me onto this idea.

Cleveland is finally raising its parking rates, but they’re still way too low

cleveland parking meters

Parking meters in downtown Cleveland (courtesy of Cleveland.com).

William F. Buckley, the legendary publisher of The National Review, famously wrote that “a conservative is someone who is standing athwart history, yelling Stop.” If that’s the case, I guess that makes Councilman Zack Reed a dyed in the wool conservative – at least when it comes to parking – as he continues his crusade to keep Cleveland’s parking policies trapped in the 1960s.

If you recall, Councilman Reed is the person who pushed through legislation in 2008 to make on-street parking free on Black Friday throughout Cleveland, depriving the city of thousands in forgone revenue, year in and year out. Well, he’s at it again.

At its weekly meeting last night, Cleveland City Council approved legislation to raise parking rates in the city, as Leila Atassi explains. The legislation will increase downtown parking meter rates to $1 per hour from $0.75 per hour and raise the daily and hourly fees at city-owned parking lots by $1. Additionally, the city now has the ability to charge up to $30 per day for special event parking, up from the current $20 rate.

Every member of the City Council voted in favor of the bill, save one. Yes, Councilman Reed played the role of self-appointed champion of the people by voting no, arguing that the rate hikes are just another way to “gouge” the “hardworking, middle class folks” of Cleveland. Councilman Reed’s one-man battle to stand athwart history might be noble, if it had any basis in reality.

According to Michael Cox, the Director of Public Works, Cleveland has not raised parking fees in the city since 1989. Our parking policies are, quite literally, a relic of the Cold War era. The city’s parking rates are dramatically lower than those of comparable cities. Compare Cleveland’s rates to Pittsburgh, for instance. Effective January 1, Pittsburgh has charged $4 per hour for on-street meter parking in the downtown core; rates throughout the rest of the city vary from $1-3 per hour (with the exception of the Carrick neighborhood, where the hourly rate is $0.50).

Even with the new increase, Cleveland will only charge $0.75 per hour near hospitals and schools and $0.50 per hour in neighborhoods with meters. Pittsburgh has also had a residential permit parking system in place for 34 years, something that Cleveland has only recently even begun considering. Cincinnati, for its part, charges anywhere from $1.75-2.25 per hour in its central business district.

Cleveland’s failure to increase its rates in a quarter century has significantly decreased their real value. Due to inflation, the $0.75 a Clevelander paid to park in 1989 would be worth just $0.40 today. In fact, the new increase still fails to keep up with the rate of inflation. For the hourly rate to have the same value as $0.75 did in 1989, we would need to charge $1.42. It’s no wonder that the Division of Parking has been running in the red for years.

If Councilman Reed was really concerned about protecting the interests of working families in Cleveland, this should outrage him. The fact is that, because we have failed to raise parking rates, the City has had to prop up the Division of Parking by spending money out of its general fund. Every dollar that we spend to keep parking rates at below-market value is a dollar we cannot spend on our crumbling roads, improving our schools, or shoring up public safety services.

Moreover, approximately 75% of people attending Browns, Cavs, and Indians games hail from not just outside of Cleveland proper, but from outside of Cuyahoga County. This was a major issue in last year’s Sin Tax renewal campaign. Accordingly, by artificially suppressing parking rates, Cleveland residents are effectively being forced to subsidize the suburban sprawl that has hollowed out this region for decades. Cleveland simply cannot afford not to raise the cost of parking in our city.

This legislation is a step in the right direction, and I applaud the 16 Council members who voted in favor of it. But we still have a long, long way to go if we hope to rationalize parking policy in this city.

Cleveland’s parking policies are stuck in the 1960s

cleveland parking meters
cleveland parking meters

Parking meters in downtown Cleveland (courtesy of Cleveland.com).

I never realized that the best way to treat a junkie was to pay for his next score.

Northeast Ohio’s addiction to free parking and the toll it has taken upon the region have been well documented. But apparently Cleveland City Council didn’t get the memo. Back in 2008, Cleveland City Councilman Zack Reed introduced legislation that provides free meter parking for drivers in downtown Cleveland on Black Friday and the day after Christmas. Councilman Reed prominently displays the fact that he helped usher this legislation through Council on his website.

It’s worth noting that Garrett Hardin condemned this exact practice back in 1968 in “The Tragedy of the Commons”:

A simple incident that occurred a few years ago in Leominster, Massachusetts, shows how perishable the knowledge is. During the Christmas shopping season the parking meters downtown were covered with plastic bags that bore tags reading: “Do not open until after Christmas. Free parking courtesy of the mayor and city council.” In other words, facing the prospect of an increased demand for already scarce space, the city fathers reinstituted the system of the commons.

As if we needed further evidence that Cleveland’s transportation policies are stuck in reverse, our best parking strategies still haven’t caught up to the 1960s. So let’s explore why providing free street parking on Black Friday and December 26th is a terrible idea.

First, the economics of this idea make no sense. Depending on the location, parking meters charge roughly $1-1.50 per hour in downtown Cleveland. They generally carry a 2-hour maximum, meaning that shoppers will pay, at most, $2-3 to park. But people visiting Tower City Center, which houses nearly all of downtown’s retail businesses, can already park in the attached parking garage for $6.

tower city at christmas

Tower City Center, all lit up for Christmas (courtesy of All Things Cleveland Ohio).

But, smartly, Tower City ties the cost of parking to the amount that shoppers spend at its retailers. If a person spends $30, Tower City offers parking validation, which reduces the cost of parking to $2. And on Black Friday, if a person spends $100, Tower City will provide free parking and a $20 gift card. Effectively, rather than providing an incentive to people who have already spent money on retail, Councilman Reed and his colleagues are providing a parking incentive to people in the hope that they will spend money on retail. This is a terrible strategy.

I have no doubt that having to pay for parking keeps some people from coming downtown. But are people who base their shopping choices around whether or not they have to spend $2-3 to park their cars really likely to spend a lot of money on retail purchases? As Donald Shoup argued (PDF) when discussing parking fees for restaurants:

And who is likely to leave a bigger tip for the waiters in a restaurant? Drivers who are willing to pay for convenient curb parking if they can always find an open curb space? Or drivers who will come only if they can park free after circling the block a few times to find free parking?

Secondly, providing free on-street parking for retail businesses does not appear to increase actual retail purchases. When free parking is available, people who are not shopping may access it and those who are shopping will tend to remain parked for longer periods of time. Retail businesses depend upon customer turnover to increase their sales. Research from the Netherlands has demonstrated that higher prices for retail parking increases shopper turnover, which can lead to higher retail sales. Accordingly, Councilman Reed’s plan to increase retail sales may have the opposite effect.

Lastly, providing free parking creates an inequity issue for people who do not own a car. As I’ve noted before, more than one-quarter of Cleveland households lack access to a vehicle. Yet, because the cost of parking is already factored into the price of retail goods, these individuals will have to pay for the hidden cost of parking, despite the fact that they will not take advantage of it. Ohio’s transportation policies are already skewed heavily enough towards driving. The round-trip cost of taking public transportation to Tower City ($4.50 per person) is higher than the price for two hours of on-street parking. Requiring the City to pick up this tab only serves to widen the gap between drivers and non-drivers.

We’ve been told time and time again that downtown Cleveland is experiencing something of renaissance with more than $12 billion being invested in capital improvements. Residential occupancy rates have been above 95% for at least two years. The city and other organizations have spent vast sums of public and private money to attract businesses and tourists to downtown.

But let’s face it. We can either be experiencing a renaissance and revival of downtown, or we can be so desperate for one that we’re willing to pay people to park. We can’t have it both ways.

Free parking is terrible public policy

warehouse district surface parking

I don’t normally make a point to reply to letters to the editor in the Plain Dealer. To do so would be to write myself a one-way ticket down a slippery slope into the Valley of Derp. That said, this letter from Nancy Kosmin was so wrong-headed that it called for a response.

shoppers at cleveland flea

Shoppers explore two of the dozens of vendors at the September Cleveland Flea (courtesy of Cleveland.com).

In the letter, Ms. Kosmin lamented about how difficult it was for her and others to find parking on the streets around Sterle’s Country House. Sterle’s is home to the Cleveland Flea, a new monthly flea market that features food, drinks, clothing, and wares from a variety of Northeast Ohio vendors. Ms. Kosmin could not believe that there was limited parking on the narrow side streets around Sterle’s or that Cleveland Police had the audacity to ticket people parking on East 55th Street – despite the fact that it is illegal to park on East 55th.

I’ve written in the past about Cleveland’s car culture, but I’ve only touched briefly on the issue of parking here. If you thought people were obsessed with driving here, you’ve never spoken to them about parking. From epic battles over charging for parking at the famed West Side Market to entire articles published on which suburban mall parking lot is safest for your car, Clevelanders seem to think that free parking is a God-given right.

Of course, this love of free parking ignores the various externalities associated with the practice. Donald Shoup, an expert on the economics of parking and the author of The High Cost of Free Parking, has documented these impacts at length over the decades. Although 99% of all car trips include free parking and 95% of all automobile commuters park for free in the US, there is no such thing as “free” parking. As Shoup has written (PDF):

When we shop in a store, eat in a restaurant, or see a movie, we pay for parking indirectly because its cost is included in the prices of merchandise, meals, and theater tickets. We unknowingly support our cars with almost every commercial transaction we make because a small share of the money changing hands pays for parking…Even people who don’t own a car have to pay for “free” parking.

All this “free” parking carries serious costs. First, parking represents a classic Tragedy of the Commons. Free parking is a common-pool resource, and everyone has an incentive to exploit it. However, as with all commons, when every user consumes too much of it, it quickly becomes depleted. Because the free parking commons are typically exhausted, drivers often cruise around cities, searching for open spots.

Sixteen different studies from 1927-2001 have shown that drivers cruise for 8.1 minutes (PDF), on average, when looking for a parking spot; as a result, up to 30% of all traffic in downtown areas can be attributed to drivers searching for parking. In just a 15-block area in Los Angeles, this search for free curb parking led to 950,000 additional vehicles miles traveled, equivalent to four trips to the moon, 47,000 wasted gallons of gas, and 730 tons of greenhouse gas emissions (more than the cumulative GHG emissions of 49 countries in 2010).

Secondly, free parking constitutes a massive subsidy for drivers, promoting both excessive driving and sprawl-based development. In 2002, off-street parking received roughly $135-386 billion in subsidies; that same year, the US Government spent $231 billion on Medicare.

In 1997, Shoup estimated (PDF) that if a parking space that cost $124 per month was provided for free, the parking subsidy provided per mile driven was $0.27 per mile. In contrast, AAA estimated that the total cost of operating a car per mile was just $0.092 per mile. Accordingly, the subsidy provided by free parking is roughly 2.9 times greater than the cost of driving to work. This driving subsidy is greatest for shorter trips, helping to skew transportation choices away from walking, biking, and public transportation. Accordingly, “parking requirements are a fertility drug for cars.”

warehouse district surface parking

The massive surface parking lot once known as Cleveland’s Warehouse District, as seen from the Terminal Tower Observation Deck.

Thirdly, free parking and parking requirements drive up the cost of living and stymie redevelopment of blighted neighborhoods. As Professor Michael Manville has noted (PDF), forcing developers to include the cost of parking when building new housing units drives up the cost of development and becomes a barrier to investment. This crowding out effect should be greatest in areas where the cost of parking is high, where there is a large stock of older buildings, and where there is a large number of vacant buildings – in other words, the inner city.

Research from Brian Bertha in 1964 (PDF) showed that, when Oakland instituted parking requirements in 1961, construction costs increased by 18%, housing unit density fell 30%, and land values dropped by one-third. As a result, developers built larger, more expensive housing units, which negatively affected low-income residents. Manville’s work in LA supports these findings. He noted that condos without parking spaces cost $31,000 less than those with parking spaces.

Sterle’s is located in the 44103 zip code, an impoverished area. From 2007-2011, 44103 had a poverty rate of 34.5%, nearly one-quarter higher than for Cleveland as a whole. Moreover, while 26.7% all households in Cleveland lacked access to a vehicle, this number was 36.9% for households in 44103. Increasing the availability of free parking in this neighborhood may help a few visitors to the Cleveland Flea, but it would come at a high cost for residents of this neighborhood, who would face higher housing prices and even less development.

Furthermore, parking requirements have a sordid and racialized history in Northeast Ohio. In United States v. City of Parma (1980), the US District Court found that the City of Parma’s parking requirements had “the purpose and effect of severely restricting low-income housing opportunities in the City,” which “have been taken with the purpose and the effect of perpetuating a segregated community.” Bending over backwards for people driving into the city once a month would further play into these dynamics.

Call me crazy, but I had a completely different takeaway from this letter than Ms. Kosmin. Rather than seeing this episode as evidence of the plight of the poor suburban driver simply trying to exercise his/her God-given right to free parking, I see the Cleveland Flea as emblematic of the complete opposite. The event shows how parking lots can be more than just a cheap motel for your car. If utilized properly, they can actually serve as worthwhile public space that provides social, cultural, and economic value.