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Parking subsidies, key public goals stand in opposition

When is free parking really free? The answer, of course, is never. The Minnesota Legislature has been busy illustrating that point this session with arguments about how to subsidize an expansion at the Mall of America in Bloomington. 

When is free parking really free? The answer, of course, is never.

The Minnesota Legislature has been busy illustrating that point this session with arguments about how to subsidize an expansion at the Mall of America in Bloomington. The main idea has been to ask taxpayers to build parking ramps to the tune of several hundred million dollars. In the end, the Legislature gave Bloomington the authority to raise sales taxes at the mall by up to 1 percent and to increase taxes on food and beverages at the mall by up to 3 percent. Bloomington can also raise hotel taxes to help pay for the expansion.

Supporters who wanted a broader tax subsidy cited the MOA’s economic benefit to the state and region. Fine. But when issues like this come up, deeper questions should be asked — like, why subsidize parking? Does it make sense, as a matter of public policy and at a time of rapidly rising gasoline prices, to encourage more “free” parking, more driving, more global warming, more foreign-oil dependence?

Wouldn’t it be more appropriate, when considering the broader public purpose required of a government subsidy, to charge for parking at the mall? Indeed, wouldn’t it be especially appropriate (if it were electronically possible) to charge more for parking gas guzzlers operated by single drivers than for fuel-efficient models carrying lots of people? Or to charge more for those who have driven the farthest to the mall?

The expectation question

Supporters of the parking subsidy have explained that suburban mall customers expect to park free — unlike urban customers, who generally have to pay to park in downtown shopping districts (most of which are struggling because, uh, they can’t offer free parking). But is the expectation of free parking at a suburban mall a good enough reason for a government subsidy?

One popular answer to this question is that the MOA is no ordinary mall. It’s a major tourist attraction, an Upper Midwestern asset that draws as many as 45 million visitors a year. Expanding the mall would create as many as 14,000 jobs. In other words, the subsidy would boost a struggling metro economy.

That’s a good argument, but it doesn’t explain the selection of parking as the subsidized component.

The aim here is not to condemn subsidies, nor to deconstruct the web of government subsidy that touches almost every American economic activity — from farming to banking to baseball. Rather, it is to wonder whether it’s smart government policy to encourage an activity — in this case excessive driving — that everyone knows is destructive to the nation’s long-term interest. Wouldn’t it be better to offer incentives for economic activities that solve rather than exacerbate global problems?

Different incentives, different outcomes

What would the Legislature say, for example, to a subsidy that would promote the concentration of jobs near transit stations?  Or retail, or housing near transit stations? Such an incentive would advance a national interest in energy conservation, environmental protection and avoidance of foreign entanglements over oil.

The MOA already has a major transit station. Good. So why subsidize free parking that works against the long-range transit alternative? Why give driving another leg up? If some form of development is to be subsidized for economic purposes, why not make it the kind of development that encourages walking, biking and transit riding?

There are, for example, two large surface parking lots that sit beside major transit stations at Nicollet Mall and Hennepin Avenue in downtown Minneapolis. Why are they not worthy of a development subsidy, one that would allow their transformation into concentrations of non-auto-dependent jobs and shopping?

The fact that those prime properties remain surface parking lots embarrasses the city and exposes the upside-down nature of Minnesota’s current taxation and land-use policies. Why are these key parcels still vacant a full four years after the startup of the popular Hiawatha line? And why haven’t there been any serious development proposals?

City officials explain that often it’s more financially attractive to operate a downtown surface lot than to develop it or sell it for development. Why? Because owners of surface lots pay very low taxes. Their operating expenses are minimal. They can put up cheap, unattractive fencing. Their landscaping requirements are close to zero. And a moratorium on new surface lots make older ones even more valuable.

‘Nothing more lucrative’
“As it now stands there’s nothing more lucrative than operating a surface lot in downtown Minneapolis,” said a project manager for a large Twin Cities development firm. “You have no expenses, you take little risk, and you make money hand over fist.”

The incentives aren’t geared toward productive use but toward low-risk profit. Owners can just sit for decades until some developer offers an outrageous sum for their land — and without the tax increment or condemnation tools once available, there’s little that a city can do about it.

Minneapolis Planning Director Barbara Sporlein said her staff has investigated a form of land-value taxation (LVT) similar to the system used in some Pennsylvania cities, notably Harrisburg and in Pittsburgh’s Improvement District.

The system taxes the value of land far higher than the value of the buildings on it. The effect is to encourage holders of vacant and underused property to develop it, or to sell it to those who will. The system deters speculative “land banking” (surface parking is a popular holding use). And proponents claim it would encourage the kind of efficient infill development that would save energy, discourage sprawl, reduce the need to drive and promote alternative transportation modes.

There’s no formal push to enact such a taxing reform, one that the Legislature would have to approve in any case. But the point in all of this is that the current political system encourages “free” parking at malls, discourages development of surface pay lots in core cities and works against long-term national interests — especially energy independence.