In Lieu of a Parking Policy, A Proposed Giveaway

A proposal to turn our city’s ‘in lieu’ parking fee policy into a lease-type arrangement for a Beverly Hills restaurant & club didn’t survive Council scrutiny this past Tuesday. But it did show in a nutshell the policy contortions involved when trying to accommodate too many cars in our compact business triangle. For one thing, it seems that we’re not clear on the problem that we need to address. It’s not a parking problem, it’s a motoring problem. We simply have too many visitors to Beverly Hills who choose to drive. But the Council discussion suggested another issue too: what is the appropriate role for parking minimums when a program designed to sidestep them might be further relaxed for an applicant seeking a one-off break from compliance?

The ‘in lieu’ parking program was established by law to respect our relatively high, required off-street parking minimums while giving permit applications the OK even  when an existing building lacks the on-site capacity to meet the zoning code for a specific commercial use. The answer is in lieu: create a pay-in program that allows property owners to pay a per-space fee to the city in lieu of creating or acquiring sufficient parking capacity to meet the law.

According to the Beverly Hills Municipal Code (Title X Planning & Zoning, Chapter 3 Zoning, Article 33 ‘In Lieu Parking’), the in lieu program is focused in application to restaurants, retail and equipment sales, convenience shops, museums and the re-use of National Register-listed buildings, and limited to properties in the business triangle only. The city then credits the project applicant with the required quantity of virtual parking spaces while collecting the in lieu fees on a schedule set by the law. Thus where parking can’t be physically provided, the program allows the substitution of existing spaces nearby should capacity exist.

Want to open a large restaurant in an older building in the business triangle without on-site parking? Calculate parking demand according to floor area (it’s a formula) and pay the in lieu fee. The fee that collected is substantial: a typical restaurant under the program would expect to pay about $30,000 or more for each required in lieu space and pay it off over a span of ten years. (These virtual spaces run with the property as long as the same use continues.) Read the staff report for how it applies in this real-world case.

Revenues offset expenditures by the city’s parking operations program that builds and operates the city garages that provide additional parking capacity. Because Beverly Hills constructs garages at upwards of $50,000 per space, the in lieu program helps recover that cost but doesn’t recover all of the cost. The loss is absorbed by the city in order to allow an incoming business to operate in a non-conforming ‘under-parked’ structure – of which there are many in our aged triangle.

In lieu is an intriguing means of pricing the benefit of providing parking for patrons on the public dime, but that’s not the problem that we need to solve. Rather we need to increase foot traffic without the accompanying vehicular traffic. The only way to do that is to support local businesses and encourage a shift to other modes of transportation (like mass transit or bicycles) to offset the parking demand.

The City of Santa Monica, for example, has decided as a matter of policy not to encourage the generation of any additional car trips in the city. To that end it has made street parking more expensive, has targeted development around the coming Expo Line, and generally encouraged non-motor transportation through an ambitious program of bike-friendly improvements to induce cycling. Beverly Hills has done none of that.

With the in lieu policy, on the other hand, City Hall appears to have its cake and eat it too:  we keep our elevated parking requirements for new and expanding establishments but relax them in exchange for an in lieu payment. It’s a kind of sleight-of-hand.

The Proposal Before City Council

The proposal before City Council would allow the backers of Spaghettini, a new restaurant, bar and club slated for North Canon drive, to take a big bite of the city’s cake by significantly relaxing the standard in lieu arrangement. In a clear departure from the in lieu policy, a change that requires an amended law under a ‘pilot’ program, the applicant would gain relief from the in lieu parking fees payable in full over a decade by spreading them out over approximately 30 years – making for a much smaller annual payment but payable only as long as the restaurant operates.

What kind of money are we talking about? The in lieu fees amount to $1.3 million – high because it’s a restaurant, bar, and associated live entertainment business proposed for a 5,000 sq. ft. space. That’s a lot of patrons and a lot of project parking demand. Here’s the math:

In Lieu fee matrix

The difference between the law as written and the proposed in lieu arrangement is clear when comparing fees at the 10-year and 30-year marks. At 30 years the applicant would have satisfied the current in lieu fee; but at 10 years only a fraction – less than a third. At the 10-year point, should the restaurant close, the difference between the current fee schedule and the proposed fee would amount to $1.3 million for all 59 spaces under the arrangement. That’s what critics call the ‘giveaway.’

In a related request, staff recommended a discounted lease rate on parking spaces in city garages. That prices restaurant parking at about the same rate paid by volume buyers for long-term vehicle storage. (This issue is less a matter of policy change than terms negotiation.) The Planning Commission has already signed off on both proposals and staff had an ordinance in hand ready for Council to sign.

But it didn’t go the applicant’s way. Vice-Mayor Bosse closely questioned planning staff about the utility of the ‘public benefits’ included in the (ostensibly neutral) staff report and even raised concerns about how those benefits were valued. Here are a few of them:

  • One-time food, beverage and music for a 200-guest centennial celebration ($20,000)
  • Annual ice-skating rink opening-day event music for the first three years ($7,000 each)
  • Music for three ‘garden concerts’ per year ($5,000 each) and
  • Music, food and production costs for three Greystone charity events per year ($15,000).

She also noted that the latter two benefits terminate after ten years while the lease arrangement continues in perpetuity. Staff acknowledged that some of the figures included in the staff report were essentially pie-in-the-sky. Speakers to Council noted that past music events benefited from free or low-cost talent – not the thousands per event cited by the applicant.

But it was the loss of fee income that critics saw as a giveaway. What staff characterized as an incentive to attract nightlife businesses to North Canon (which already has its share) critics saw instead as an imprudent departure from our in lieu policy. They said that it lets the applicant off the hook for substantial payments in exchange for those hypothetical and overvalued ‘public benefits.’ And did so without a broader discussion of the city’s planning policy.

Keep in mind that our parking operations fund is fed by in lieu fees and has already been bailed out by the general fund at the cost of city services. If the loss of income weren’t enough, critics noted that the applicant’s business could close even before having made good on the benefits. That’s allows the Spaghettini backers to defray some risk and minimize their up-front investment. (If the restaurant/club did close and the pilot program terminated, the leased spaces would, however, revert to the city (instead of running with the property.)

Now, we’re not saying that the proposal before Council is a flat-out giveaway. There may be merit in restructuring the in lieu program as a lease arrangement. Maybe the in lieu arrangement could be improved. But the city hasn’t had that discussion yet. And when we’ve seen past departures from established zoning regulations in the triangle, we’ve seen unwelcome consequences like slow-to-lease white elephants (e.g., the William Morris building on Beverly). The cost is borne by the public in subsidies that don’t pay off and a lifetime with an oversized structure relative to our height limits.


Again, this entire discussion has taken place without a review of the parking policy and the larger purpose of the in lieu program. This is an opportunity to re-think of how mobility and land use fits together in Beverly Hills. Los Angeles has already had that discussion. Yet we cling here to an outmoded belief that we’re powerless to shift people from automobiles to other modes. Pricing parking according to our broader goals is an essential part of a comprehensive mobility and land use strategy. We look forward to that policy discussion.

We Need Better Parking & Land Use Policies, Not In Lieu Fees

We think back to Donald Shoup’s in-depth analysis of parking policies across the United States in The High Cost of Free Parking [our review]. He found that parking policy is often rooted in outmoded or incorrect assumptions and even faulty data and that cities dramatically under-price parking. (It’s worth a read for anyone interested in peeling back the curtain on how planning practice actually works. You might never look at a planning staff report the same again.) Here in Beverly Hills we under-price it. Heck, we give it away – two hours free in many garages. And curb parking is way too cheap too.

What we think is particularly salient about his argument here in Beverly Hills is that parking policy (like mandatory parking minimums) can dramatically distort how we use commercial land. When we require too much parking, for example, it puts an additional cost burden on the applicant. It also causes developers to devote valuable floor area to car storage instead of other more valuable commercial uses.

Shoup notes that parking minimums in particular limit opportunity. In some of our older business triangle structures, for example, property owners can lease to a coffee shop because the code-required parking isn’t available on premises. We want more coffee shops. They generate sales taxes and employ folks. But the structures available for them – historic structures that are ‘under-parked’ in the parlance can’t can’t accommodate them.

That’s not an academic point, however. It has real-world consequences. Our planners and policymakers have been trying to jump-start development of our western gateway, where former railroad land (now vacated) sits adjacent to the kind of low-rise small shops that have sparked a retain renaissance in many other cities. But to re-use those structure under our current parking codes, planning officials are proposing to allow a much larger new structure on the vacant land if it provides beyond-code parking capacity.

Garage facade

A lovely addition to our civic architecture. And it parks cars!

Accommodating visitors who arrive by car directly affects the streetscape too. Consider the visual and economic impact of public parking garages like this one. Nobody’s idea of an award-winning design, the main problem is that we’ve devoted precious street frontage to simply warehouse cars.

At ground level, too, these garages kill street activity. They introduce in-out traffic across a busy sidewalk like on Beverly Drive, where the hazards of in-out cross-pedestrian traffic is palpable.

yet a second garage is proposed to cross those busy sidewalks.

Shoup’s key point is that mispriced parking sends a wrong signal to the marketplace. Making parking cheap only encourages motoring when instead we should be encouraging other modes of transportation – walking, cycling, and transit that are better suited to the urban context.

What we’d rather have is a set of policies that views land use and mobility as tightly integrated and that prioritizes investment in jobs and the kind of activities that we want in our business triangle rather than sinking investment into parking. Whether it’s funneling general fund monies into propping up our parking operations fund, or asking private investors to build more parking capacity, or requiring new enterprises to pay into an in lieu program, shouldn’t we ask what the problem is that we’re trying to solve?

Let’s focus on mobility and not parking. And that means all modes of mobility.  And before we move forward on this in lieu proposal or even tinker with our in lieu program arrangements, let’s give Shoup’s arguments a hearing in Council. He’s appeared before our Traffic and Parking Commission in the past, but it appears that his lessons have not been heeded. That is, our Traffic and Parking Commission has recommended no substantive changes to our parking policy.

Until we learn to encourage foot traffic without the vehicular traffic and craft our land use policies around multimodal mobility (as our own Sustainable City Plan says), we’ll be stuck in the same old parking limbo with too few spaces to accommodate the demand and ‘free’ parking that comes at too high a cost. That was a point lost on our recent Small Business Task Force – read their report to learn how we’re not solving our small business problems with outmoded parking policies.

Gateway Update: Still Under Council Consideration

City Council meeting July 26, 2012For those who have followed the progress of the proposed Gateway overlay zone for the western end of Beverly Hills, closure is still not at hand! We’ve covered this most significant rezoning policy change in many years for the past 18 months because it has clear transportation implications – and they’re not good. So we’re not disheartened that City Council held off on a final decision this past Tuesday. The slow progress of the policy change through the Hall pipeline indicates that we’re not the only concerned stakeholders! Continue reading

Beverly Hills Parking Authority is Losing $4 million/yr

Garage facade

A lovely addition to our civic architecture. And it parks cars!

Call us biased, but when your Parking Authority loses $4 million per year and faces a $40 million deficit only eight years down the road, maybe it’s time to re-think our commitment to providing free and highly-subsidized parking for anyone and everyone who chooses to drive. Make that ‘over-provide’: our city has constructed at great expense more than twenty public parking structures, many with excess capacity. Yet we’ve not installed a bike rack in a commercial area in many years. At $200 per, are they simply too cheap to bother? Continue reading

High Cost of ‘Free’ Parking (Part I)

High Cost of Free Parking coverDonald Shoup’s argument for rethinking the accommodation of automobiles in urban areas begins with a counter-intuitive claim: free parking is not at all free; in fact, it’s quite expensive. Whether or not we drive, he says, we do pay, but those costs are far steeper than a simple ledger would have you believe. From unrealized urban opportunities to misallocated resources that benefit primarily motorists, the true costs of parking are borne not by those who park but everybody including motorists who have to pick up the tab.

Continue reading

Reconsidering Level-of-Service (LOS)

Santa Monica & Wilshire

Definitely not included in traffic counts!

The Atlantic Media Group’s Atlantic Cities site features a look at the evolving relationship between urban sustainable transportation policies and the standards and practices put in place by local governments to assess and forecast vehicular traffic demand. There is a movement underway in popular and academic circles to revisit the use of multi-modal level of service indicators (or ‘LOS’ in transportation parlance) as an appropriate metric for evaluating projects and polices under California’s Environmental Quality Act (CEQA). Journalist Eric Jaffe’s piece looks at San Francisco’s initiative to  rethink the value of LOS in the changing context of urban mobility, where moving people rather than vehicles needs to be the focus of transportation policymaking. Continue reading