WMATA’s Parking Concession

WMATA is facing a budget gap – not just for this year, but a systemic and growing fiscal deficit.

Last year. the agency tested the waters for a long-term concession contract for parking services.  In this concept, an outside partner would manage WMATA’s parking for a 50 year period, in exchange for either an up-front lump sum payment or recurring annual payments.

Despite the cancellation of the solicitation, the concept is worth digging into. I’ll have more on the concession concept (and other parking ideas) in a future post. First, some thoughts about park-and-rides generally:

In general, transit park and rides lose money.

The Transportation Research Board estimated the cost recovery of park and ride facilities for various transit agencies. Streetsblog’s summary shows most agencies lose money operating these facilities, and none come close to recovering the costs of building the facilities in the first place. TRB estimates that WMATA is among the best transit agencies in recovering costs, but still doesn’t break even. WMATA brings in about $45 million in annual parking revenue, enough to cover only 66% of the estimated parking costs for the agency.

Because the TRB did not have access to actual operating cost data, their cost recovery estimate is based on a series of assumptions about amortized capital costs (including construction) and ongoing operating costs. The author of Let’s Go LA did a similar exercise for park and ride economics, setting up a scenario to show  a revenue-positive park and ride requires a) charging parking fees, and b) filling the parking lot/garage every day with paid parkers (and fare-paying riders):

As one might expect, free parking loses money for the agency. Since the service cost is greater than the fare, the cost of building the parking is entirely a loss. If the agency can charge a modest amount for parking, in this example $3, the surface lot turns into a little bit of a money-maker. $298k/year is not a huge amount of money, but it’s something, and this option actually performs better financially than the single-family housing or townhouse options.

Due to high capital costs, a parking garage can be either a big winner or a big loser. If the agency can charge $5 for garage parking, the result is a loss of over $8m/year, but if it can charge $10, the result is almost $4m/year in profit, by far the best option. Note, however, that this is dependent on the ability to consistently fill a nearly 1100-space parking garage at $10/day. There are some locations where this will pencil out, towards the edges of the city and some commuter rail stops. (People might pay $10 to park downtown, but then they won’t even bother to ride transit, which is sort of self-defeating from a transportation and land use policy perspective.)

It’s worth noting that transit agencies have competing and conflicting priorities here. Often, the goals aren’t explicitly stated. If the goal is to maximize ridership, free parking could make sense. For a budget-constrained transit agency like WMATA, however, maximizing overall revenue means a different approach.

Parking isn’t the only option:

The main point of Let’s Go LA’s hypothetical is to tackle the opportunity cost of parking – what about the potential for other investments, such as housing? What potential does real estate development have for improving ridership and improving the transit operator’s bottom line? Let’s Go LA concludes (emphasis added):

[P]lease note that this is a very rudimentary analysis and does not account for benefits and impacts to other policy goals. For example, a 5445-space parking garage might be a winner for the agency, but if it’s not located close to a freeway, it may cause a lot of neighborhood congestion. Building housing creates the opportunity for more people to live in the city, while building parking only creates the opportunity to live somewhere else and drive. And of course, parking lots and garages create border vacuums and dead zones in the city fabric, which is undesirable.

Bottom line: park and ride lots may make sense in suburban and exurban areas if parking fees are enough to cover the cost of lot construction and help subsidize transit operations. Otherwise, build more housing.

While the specifics may vary depending on the variables, it’s hard to argue with the conclusion. One potential catch: the market must support building more housing at that particular location. Here, specific agency policies might discourage the redevelopment of surface parking lots. Requiring that any redevelopment replace the existing parking is

TRB’s survey of transit agencies found several (including WMATA) with a policy to replace all parking spaces lost to development on a 1-1 basis. While this may still be the official policy on the books, WMATA has been flexible recently and explicitly embraced the idea of additional real estate development at stations increasing overall revenue for the system.

For a large joint development project at the New Carrollton station, WMATA will waive their 1-1 replacement requirement, thanks to a large number of persistently vacant spaces. The staff report on the project contains analysis of the parking usage at the station. Of the 5,025 parking spaces, 18% are consistently vacant, and another 16% are used by non-transit users paying a higher daily rate.

WMATA’s parking payment uses the same SmarTrip card, and thus can tell if the same card was used for a transit trip at the station. Transit riders at New Carrollton pay $5.10 per day to park; non-riders pay $8.85 per day. It’s worth noting that even this scenario doesn’t hit the assumptions in Let’s Go LA’s garage scenario of a 100% full garage with riders paying $10/day to park.

WMATA’s current park-and-ride role: 

Across the system, approximately 26% of WMATA’s trips are park-and-rides. WMATA periodically conducts an extensive survey of riders. Thanks to the parking payment system, they can ground-proof the survey results to parking payment. This data is from the 2012 survey:

WMATA 2012 Ridership Survey; mode of station access for AM peak trips.

WMATA 2012 Ridership Survey; mode of station access for AM peak trips. Click to download a PDF.

That’s a significant part of Metro’s ridership. Overall, 75% of WMATA’s parking spaces are used on a daily basis.

Stations at the end of the line tend to be busier than parking garages at the penultimate station (indeed, one of the arguments for the New Carrollton joint development project is the plentiful parking available at Landover station). The end-of-line stations also tend to serve people driving from longer distances, while mid-line parking facilities tend to serve the local neighborhoods. Most terminal stations include large parking facilities.

The TRB paper includes a literature review of park-and-ride elasticity for price. Since so few transit agencies charge for parking, it’s hard to draw too many conclusions, but it does seem that many parkers are sensitive to price changes. A system-wide change in parking pricing might further reduce parking use at inner stations, making them more attractive for eventual redevelopment.

2 comments to WMATA’s Parking Concession

  • Ben Ross

    WMATA pays a large hidden cost for the 1-for-1 parking replacement policy. It’s not just the opportunity to build housing on the parking land, it’s the cost of the garage which the developer bears. If they didn’t ask for replacement parking, they would get paid more by the developer.

    Since the developer’s actual construction costs are not public, there won’t be any actual data, and you’d have to make a rough estimate of how much money this is.

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