Yesterday we hit election silly season and transport was the first cab off the rank with plenty of infrastructure promises included. But along with the big ticket items, there’s often a lot of small things that could be done to improve transport. So, here’s a great little law change that could help ease traffic problems, boost public transport ridership, give most people a bit of extra money and potentially save employers a lot of money. It’s called a “Parking Cash Out Law” and exists in California. Here’s an explanation:

State law requires certain employers who provide subsidized parking for their employees to offer a cash allowance in lieu of a parking space. This law is called the parking cash-out program. The intent of the law is to reduce vehicle commute trips and emissions by offering employees the option of “cashing out” their subsidized parking space and taking transit, biking, walking or carpooling to work.

Basically, many employers provide parking for employees, either paying for it directly or using the space it is often a result of minimum parking requirements. The law requires large employers to give you the choice of subsidised parking or extra cash in hand of an equivalent value. This obviously removes a subsidy for those who choose to drive and offers a financial incentive for people to try other forms of transport.

A study of the law’s impacts was undertaken by Donald Shoup, with the following key findings:

In 1992, California enacted legislation that requires many employers to offer employees the option to choose cash in lieu of any parking subsidy offered.

This report presents eight case studies of employers who have complied with California’s cash out requirement. One employer is a government agency, and the other seven are private firms, including three law firms, one accounting firm, one bank, one managed care medical provider, and one video post production company. They range in size from 120 to 300 employees, with a combined total of 1,694 employees. The price of parking at the worksites ranged from $36 to $165 a month.

After cashing out, solo driving to work fell by 17 percent. Carpooling increased by 64 percent. Transit ridership increased by 50 percent. Walking and bicycling increased by 33 percent. Commuter parking demand fell by 11 percent. These mode shifts reduced total vehicle miles traveled for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. To put this reduction into perspective, reducing VMT for commuting by 12 percent is equivalent to removing from the road one of every eight automobiles used for driving to work. In total, cashing out reduced 1.1 million VMT per year. Cashing out reduced total vehicle emissions for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. To put this reduction into perspective, reducing vehicle emissions by 12 percent is equivalent to eliminating vehicle emissions for automobile commuting from January 1 to February 13 every year.

The eight employers I average commuting subsidy per employee increased from $72 a month before complying with the cash-out requirement to $74 a month after complying with the cash-out requirement. The employer’s commuting subsidy declined by $70 per employee per month at one firm, and increased by an average of $13 per employee per month at the other seven firms, with a range from $8 to $33 more per employee per month. Employers praised the cash option for its simplicity and fairness, and said that it helped to recruit and retain employees. In summary, these eight case studies show that cashing out employer-paid parking can benefit commuters, employers, taxpayers and the environment.

The impact on travel and emissions is pretty staggering when you think about it.

In Auckland I think you’d see such a law playing out in two ways, depending on whether the jobs was in the city centre, Newmarket, Takapuna or other places where paid parking is common – or in other places.

  1. In the city centre (and to a lesser extent Takapuna and Newmarket) parking is really really expensive to provide and therefore the cash out could end up being pretty significant. This could result in a fairly substantial modal shift to public transport (which is relatively good in linking the city centre with many parts of the city), reducing traffic on city centre streets and all the major motorways accessing the city.
  2. Outside the city centre and other major centres, parking is cheaper to provide and until recently was forced to be provided through parking minimums. While this means the cash out is likely to be quite a lot smaller and may be less likely to be taken up, for those who can walk, cycling or take public transport to work they will be able to at least receive some form of incentive to make this choice. The businesses in turn will be able (now that parking minimums have largely disappeared) to reuse all that asphalt for more productive uses so also win.

Making this law change seems like such a no brainer, with major benefits and seemingly no losers (aside from some administrative costs). It’s also a pretty non-partisan type of law change so could be picked up by any party.

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44 comments

  1. Or the government could impose a fringe benefit tax on parking, as they do on other fringe benefits. Peter Dunne tried doing this a few years back as Minister of Revenue, got hammered by the unions AND business groups, then kowtowed to these vested interests.

    1. Totally agree, A levy should be introduced on all commuter parking spaces in the CBD (& anywhere else with peak congestion) until such time as the government gets its act into gear and rolls out congestion tolls.

      1. Shouldn’t be limited to a location. Providing a car park (or any substantial perk) as part of employment is a fringe benefit, which needs to be taxed in line with other fringe benefits.

        1. It’s not a perk though. By providing a park, the employer imposes an expectation that you will buy and have available a vehicle for business use during the day… an asset the business doesn’t have to buy and can simply “rent” through mileage expenses. It’s an anti-perk.

    1. Yeah it doesn’t really work if there’s abundant free off street parking. But in areas of dense employment it’s a brilliant idea.

    2. If there’s other free parking available nearby, the cashout value will be essentially zero, so it’s a non-issue. Otherwise, people could take the cash and park further away (e.g. at a park-and-ride) — that would be the policy working as intended.

  2. As our own building owners and employers we were forced 20 years ago to provide 39 parking spaces and the premises were designed accordingly with the required parking at ground level. To redesign and utilize the space in a more beneficial way is probably impractical. In other words the die was cast a long time ago.

    While I agree with the sentiment, the practicality of using that tarmac in another manner is for us, very limited.
    And I don’t want to be penalized twice.

    1. It won’t suit the way every building/ parking arrangement is set up, but a Commercial building with surplus parking capacity could offer this for garaging for car share schemes etc. for the mushrooming city centre residential population, thus reducing the parking costs for new residential buildings. “Retiring” surplus parking effectively needs to be part of our future resilience planning. This could also support some of the existing parking-only buildings being fully replaced by more useful buildings.

    2. Is there anything else that you could do to generate income from your at-grade carparks? Retrofitting the space could allow a bike repair unit, a food stall or two with associated seating and greenery, a pop+up store, a Christmes tree business, a weekly plant and produce market, a lunctime activity for nearby workers like a skate ramp or climbing frame… The sort of thing that might make for a walkable neighbourhood… Or a tiny house? 🙂

          1. Agree, almost a role at Council for a co-ordinator of the small businesses who might be interested…

          2. Warren, I could do you a range of small tiny rental properties in lieu of your carparks, that you could rent out to people (either your employees, or others) so then you could make better use of your carparks, make better use of your employees time, make better use of your business investment money… etc. You know where to find me !

  3. The idea has potential and would have the benefit of freeing up parking for those that actually do have a need to use it.
    Outside of the city though it would have the unfortunate side-effect of having a lot of people try to park on the street (doing laps around the block trying to find a spot – thus increasing congestion and pollution).

    1. Then price the on-street parking if it is over capacity. Simple. This way the council also gets a return on the huge cost of providing parking.

  4. When I started my present job I was offered a car park or $3k cash out. I chose to walk to work and now 17 years later I am $51,000 ahead. Hidden subsidies for driving and parking are recipes for impoverishment.

    Imagine living in a city where our poorest households did not need to have 2-5 cars because they had access to good walking, cycling and transit facilities.

    1. I never had the option of parking, we simply don’t have any. But because the business doesn’t need to have any carparks, we have an awesome office on the best street in town for a very reasonable lease. An bike racks and bottomless booze on Friday because nobody is driving home…

    2. I had a “cheap” small car a few years ago that I only used to get to and from work. Every time it needed a wof or a service there was always something that needed fixing. The yearly maintenance bills added up to more than the car was worth. When I switched to catching the bus I sold it and haven’t looked back.

  5. awesome idea, I dont own a car but my colleagues who all drive get ‘free’ parking. All for removing hidden subsidies to the motorist. Id like to stop subsidising people who get ‘free’ parking at the supermarket too. My groceries should not pay for somebody elses carpark.

  6. I’d be curious to know why some businesses provide free parking. My last employer had to provide about a dozen secured parks for late shift / night shift staff (safety reasons). I had a free (anytime) park for most of my tenure not because of any need, but due to negotiation before my time adding such to the standard contract.

    For some portion of my time there, we were based in a building where they couldn’t afford enough parks, so they gave me cash out (at a trifling rate I might add) until we relocated to a different building – At which time, the old contract conditions were reinstated.

    If at any time I elected not to use my car park, I wasn’t able to get a cash out. It would’ve been an opportunity lost. FWIW I did use the car park most days as I was also taking my partner in the same direction, or on crazy shifts where public transport simply did not work.

  7. Car parking is one of those perks that continues until someone has a clever idea like cash-out.

    I’m aware of a Newmarket based business that has a large car park, plus subsidises off-site car parking to staff that don’t have a park on site. Yet it’s a 6 minute walk to Grafton train station and all the buses on Park Road. No cash out on offer.

  8. Great idea, since employer already pay for carpark either though renting or property they own, release unwanted carpark would either means less cost, or release unneeded capital cost.

    There should be no bottomline changes to employers.

  9. You’re right about the silly season starting up. National proposing a NW Busway which should have been built as part of the NW widening project and Labour proposing Light Rail to the airport gtaking 43 minutes from town when the norm is a 25 minute trip via the motorway!!

    This is one of those ideas that sounds really good on paper but in Auckland would translate to very little. The employees who have parking spots in the city are those right at the top of organisations. These people are typically working long hours with little standardisation and are also required to have a car on hand for work purposes.

    Whilst I think this idea has merit I don’t see it translating to a meaningful adjustment in traffic levels.

    1. In my experience of CBD law firms, the people at the top have the carparks, as you say. They don’t work longer hours than the up and coming lawyers. And noone wants to borrow their car for their work outings because they are too expensive and scary to drive. The next layer down in the organisation also get car parks, and it is these cheap cars that get used for work purposes and that actually warrant having the parks at all.

        1. Google maps is saying 33 minutes right now, with virtually no traffic.

          Aucklanders habitually underestimate standard driving times, most often by only including time on the motorway or major arterials.

          Most importantly with regards to TRM’s comment, in order to achieve this, you would need to spend $85 on a cab instead of $4.85 on the LRT. I’m not willing to spend 17 times as much to save 24% of journey time.

          1. Google Maps shows 25-27 minutes for off-peak travel from the CBD to the airport via the Waterview tunnel.

            If you’re paying $85 you need to change taxi companies. Even including the airport surcharge thats excessive to say the least.

  10. As an alternative to cashing out, can’t AT make it easy for companies to bulk buy monthly ATHop passes for employees. In. A similar way to health insurance. That would directly encourage usage. It’d also probably be more cost effective for businesses than paying for employee parking.

  11. At a work place I was at a few years ago we shifted to a new building. At the time management was concerned that their wasn’t enough parking at the new site. So much so that they rented out space for around 20 car parks 10mins walk away. Initially it was used by around 10-12 cars a day. After a couple of months it dropped to half that. Within about 6 months it was no longer needed.
    We did have a couple of people leave whose positions weren’t refilled but mostly it was a result of people using other transport options, working from home etc.
    I switched from driving to catching the bus. The bus stop was 3 mins walk from work, so much closer than the overflow car park at 10mins walk.

  12. My old job was next to the Ellerslie railway station. I lived in Botany and often finished after trains/buses stopped running (aka 10pm).

    I hated driving. If PT was better I’d have been all over it.

  13. Also good would be to allow employers to pay for an employees monthly public transport pass and deduct that from their pre-tax income. That would encourage a lot more people to use PT.

    That happened in Prague (with annual passes, which AT should offer) and it was very popular.

    Even better would be a scheme whereby an employer buys the employee an electric bike and that cost is deducted from pre-tax income.

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