13 ms·

How Much Money Do Parking Lots Make?

135 points by dpflan 7y ago

onlyrealcuzzo 7y ago
At least in California, especially in Los Angeles, it's really important to factor in that parking lots -- even on land worth $10M+ -- often pay property taxes as little as $100-$1000 a year (thanks to Prop 13). You buy a parking lot, sit on it as the value of land increases (paying effectively 0% in taxes), then you eventually sell, paying only a capital gains tax (much lower than income). I only bring up California, because I know it. I'm sure there's similar dodgy tax advantages in other states. Point being -- taxing land the way we do (especially in California) seems to be problematic. This is also the reason you see single family homes with front and back yards like 1000 meters away from sky scrapers in Los Angeles and San Jose. Those homes are paying property taxes of like $400 a year, and most of them are being rented out. It's not poor old ladies living in them that don't want to leave the neighborhood they lived their whole lives in, but gentrified under their feet into some urban monster. It's business people arbitraging tax laws.
- addajones 7y ago
  Thanks for this knowledge. Where can I find more info regarding Prop 13 and the parking lot property taxes? Thank you!
  - stefan_ 7y ago
    There is nothing much to know except that Prop 13 also applies to commercial property, not just the American homeowner with a mortgage and truck. I'm not quite sure why, but asking the people who voted in the 70s to give themselves a massive tax cut is probably not going to yield anything useful (ask your parents some time!).
  - ladberg 7y ago
    https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13 I feel like the intuition behind prop 13 is similar to rent control but for land owners. Basically it freezes the price owners have to pay in taxes, so if the price of land goes up dramatically, people who have owned the land for longer pay far less in taxes. For example, person A bought a house in SF 25 years ago for 300k. Person B buys an identical house today for 1.5M, therefore paying 5x as much in taxes every year even though both houses are worth the same value. This stifles development because any time land changes hands, the taxes dramatically increase. Even though you could make more money turning a parking lot into housing, people often don't because the taxes would increase to a point where it wouldn't be worth it. The simplified end result for prop 13 (and rent control) is that young people are basically subsidizing old people through their taxes (and rents), keeping prices artificially high. It is incredibly hard to repeal these laws because most of the voters are unfairly benefiting from them or don't comprehend that rent control hurts them.
    - fortran77 7y ago
      Under Prop 13, property taxes can go up 2%/year. So he's not paying 5x because the 300,000 house's property tax has been increasing every year by 2%. It's hard to me to imagine why you would be so evil as to want to force a person out of a home because some dot-com-specuvestor bought a 300,000 home next door to some little old lady for 3,000,000 dollars and caused her property tax to go up 10x. Prop 13 is necessary. What we need to do is BUILD MORE HOUSES.
    - greggman2 7y ago
      It sounds like most of the people here want prop 13 repealed but from your suggestion that would just make every pay the high tax so the "people often don't because the taxes would increase to a point where it wouldn't be worth it." would be true for everyone always right?
      - ericd 7y ago
        At least in SV, the older people are much, much more active in local politics, probably because they're not busy with a job/kids. When I was on a sabbatical/funemployed, I used to go to city council meetings pretty frequently, especially for meetings discussing one of these anti-development laws that are currently on the books, and it would be like 3-6 of us on the pro-development side, typically skewing on the younger side (though there were some exceptional older homeowners who would argue for our side), and then 50+ retirees on the anti-development side. In the example I'm thinking of, it was a meeting about a law that was due to expire that limited new development to 5 stories, and effectively limited average height to 3-4 stories due to floor area ratios, and simultaneously put strict limits on the number of housing units you could build per acre. Mind you, this expiration would affect just the dense downtown core around the train station, not the vast majority of the city, which is zoned single family. They still hated the idea, it'd cause too much traffic. One lady gave an impassioned speech about how the drive to their second home in Tahoe, which used to take 4 hours now took 6-8 on Friday due to traffic. This came right after a speech from someone who was about to lose their primary residence due to rent spiking. I don't know how she was able bring herself to follow that, but she certainly tried.
      - 7y ago
- asokoloski 7y ago
  Exactly. Taxing property encourages speculation and under-development. Showing an alternative, Pennsylvania has several towns and cities with a split-rate tax, which means that there's a higher tax on the assessed land value than on the assessed value of the property. Taking this to an extreme, you can tax only the land value, not the property, providing a very strong incentive to make the best use of desirable land. A split rate tax just lets you turn the dial between typical property taxes and a land tax. Many arguments in favor of the land value tax are based in concepts of economic rent and fairness. While I'm sympathetic to these arguments, I think the best argument is that it seems to work, both in theory and practice. Places that implement a split rate or land value tax tend to have fewer empty lots, parking lots, single-family homes in the middle of downtown, etc. And not just that, but typical property taxes provide a disincentive to even improve your own property, since you'll pay more tax. They encourage blight. It's not just California, it's everywhere. Tax policy isn't the only thing stopping us from avoiding sprawl by "thickening up" valuable areas of towns and cities, but it's a big one. Parking minimums are another, and of course zoning is yet another. All of them are important in terms of making our cities walkable, amenable to public transit, and sustainable environmentally. *edit -- I should clarify that Prop-13 makes this effect worse in California than many places, though.
  - thaumasiotes 7y ago
    Under Proposition 13, you are not taxed on the land value or the property value. Instead, you're taxed on the land+property value at the time you bought the property. If you make a "substantial change" to the property, the tax is reassessed. That's what generates the "empty lots, parking lots, single-family homes in the middle of downtown, etc." -- if you replace your empty lot with a useful building, your property taxes immediately spike. Extending Prop 13 to cover property redevelopment would do as much to solve the undeveloped-land problem as repealing Prop 13 would. (Obviously, those two policies would differ in other ways.) I think it's a mistake to focus too heavily on "should we tax land value" vs "should we tax property value". You're correct that taxing property value disincentivizes development, and that is bad. But we're talking here about cases like someone's small personal residence in the middle of downtown San Jose with $4,000,000 of land value and $200,000 of property value. (Numbers completely invented.) If they were taxed on assessed value, land+property, which is the default in most places, that immense land value would quickly make it prohibitive not to redevelop. The tiny property value is a rounding error.
- thaumasiotes 7y ago
  > This is also the reason you see single family homes with front and back yards like 1000 meters away from sky scrapers in Los Angeles and San Jose. Those homes are paying property taxes of like $400 a year, and most of them are being rented out. It's not poor old ladies living in them that don't want to leave the neighborhood they lived their whole lives in, but gentrified under their feet into some urban monster. It's business people arbitraging tax laws. Well, more specifically, if you redevelop the land (say, by putting in apartment building in where there used to be a single-story house), the property tax gets recalculated. So the tax code heavily penalizes redeveloping any property.
  - magashna 7y ago
    So it's even worse. They're charging as much as possible for slum lord services.
    - thaumasiotes 7y ago
      No? Doing maintenance is fine. Doing upgrades isn't.
    - rconti 7y ago
      To be fair, they're making a tidy profit so they can afford to do some remodeling. They just can't tear it down and make a huge new house, which would trigger a reassessment.
  - dawnerd 7y ago
    Oregon has a similar issue as well. You’ve got houses that are really old yet worth half a mil plus and they’re paying basically nothing. Except here the tax isn’t recalculated on sale so newer homes are not “worth” as much at resell time.
    - onlyrealcuzzo 7y ago
      Wait. Are you saying in Oregon, if you built a house in 1910 for $3k, and you sold it in 1940, 1970, 1990, 2007, and 2019 -- it's still being assessed at the 1910 value? That can be right, can it?! That would mean I could buy an old house for $800k, and pay like $30 in property tax a year? I don't believe it.
- rtkwe 7y ago
  For parking lots it's a catch-22 of the car centric city design, they're required for businesses to function but you can't charge them the true value of the land because making enough money to cover those property taxes would make parking prohibitively expensive. The real solution is proper public transit of course but that's hard and expensive so we get bandaids instead.
  - WorldMaker 7y ago
    Proper public transit wouldn't look as hard or expensive if the true value of the land was taxed on parking.
    - rtkwe 7y ago
      It's a phase change problem, on this side we're stable (ish) and on the other side we're stable but the transition period would take years and a lot of spending so we stay in the current state. Doing it slowly and safely requires patience from voters and a willingness to suffer the painful transition period where people in the city are paying more taxes without the problem being solved. Patience is a big issue with getting long term projects done in the US, there's always political hay to be made attacking any project with long term pay offs because of the delay between new laws/taxes/construction starting and it ending. Plus it's way more appealing to scrap and change the project to "put their stamp on it" so it's Mayor Bob's revitalization project not Mayor Alice's.
- jedberg 7y ago
  There's a partial repeal of Prop 13 on our 2020 ballot. [0] It would make commercial properties no longer subject to Prop 13. [0] https://ballotpedia.org/California_Tax_on_Commercial_and_Industrial_Properties_for_Education_and_Local_Government_Funding_Initiative_(2020) https://ballotpedia.org/California_Tax_on_Commercial_and_Ind...
  - ladberg 7y ago
    That's great! I'd image that could alleviate a ton of housing issues and government funding issues in California. Does anyone know the chances of it passing?
    - jedberg 7y ago
      There's no polling on it yet. I suspect it will be close because there are a lot of very rich people who will lose a lot of money if this passes. Property tax is basically a wealth tax. Most wealthy people don't want their wealth taxed. They'll pay millions to defeat this. I wouldn't be surprised if they made ads that straight up lie and tell people their property tax will go up and some BS about farms.
      - sokoloff 7y ago
        Though a lot of wealth is tied up in property, I see property taxes as more of a consumption tax. I see it as you are consuming the right to exclude others from that property for a year. A fully paid house and a 97% mortgaged house pay the same property tax in most locales. (I also think that tenants rather than landlords are paying “going rate” property taxes, even though landlords are the ones writing the check based on actual rates.)
    - nikanj 7y ago
      Zero. So many cases of "poor grandma would lose her house" cases are going to be paraded around, and most of the big money in real estate prefers the status quo too.
      - 7y ago
- yardie 7y ago
  > parking lots -- even on land worth $10M+ -- often pay property taxes as little as $100-$1000 a year (thanks to Prop 13). Commercial property is also exempt under Prop 13?! What a screwed up system. I kind of understand if it applies to primary residences. I think it's ridiculous it also applies to commercial property as well.
  - onlyrealcuzzo 7y ago
    It's insane. And, yes, it does. Same narrative to justify it. We can't increase taxes on poor old grandpa's deli. He'll never be able to compete with all the other delis that also have to pay rising taxes. Think of poor grandpa! Meanwhile, you've got landlords owning those shitty 6-unit dingbat apartments they built in the 70s for $100k, paying taxes of $1k per year, charging rents or $3k/month for each unit. All the while, they're collecting another $1k or so in land value increases per month, that will be taxed at a lower capital gains rate -- of which the state will see almost nothing. AND it's the whole reason no one ever sells those buildings to be redeveloped. They make so much money, since they pay no taxes, that there's no better investment in the world. Why would anyone ever sell one? Even at $10M, you'd still be crazy to sell it. It'll be worth $11M next year, and you get all that tax-free profit. Totally legally, and totally cool.
    - zamfi 7y ago
      I agree with what you say completely, but this: > that will be taxed at a lower capital gains rate -- of which the state will see almost nothing ...is not quite correct; California does not have a special reduced cap gains tax rate like the Feds. But this does not make the whole setup any less ridiculous.
  - qiqitori 7y ago
    I don't get property taxes. Why make people pay taxes on land they already paid a bunch of money for?
    - patrickthebold 7y ago
      To pay for schools and things like that.
- yellowapple 7y ago
  > It's not poor old ladies living in them that don't want to leave the neighborhood they lived their whole lives in, but gentrified under their feet into some urban monster. It's business people arbitraging tax laws. And sometimes it's both: the poor old ladies who want to hang onto it for their descendants to inherit, ostensibly because it was the "family home" but more rationally/coldly because it could turn a tidy profit for said descendants.
- cannaceo 7y ago
  I have a friend in parking in LA. People tend to think these parking lot operators are dimwitted but they're extremely intelligent, shrewd businessmen. Its a cutthroat industry with deep mafia ties. You can effectively use control of parking lots to squeeze all the margins out of local businesses such as restaurants.
  - dba7dba 7y ago
    Frank McCourt was a really really hated owner of Dodgers for a few years until 2012. When Frank McCourt sold Dodgers to Magic Johnson led group in 2012, he held onto 50% of the Dodger Stadium parking lot. Yup, a guy sold Dodgers for a few billion bucks, but he still knew to hold onto the parkint log. https://bleacherreport.com/articles/1120695-dodgers-sale-details-mccourt-still-owns-the-parking-lots-fans-need-to-resist https://bleacherreport.com/articles/1120695-dodgers-sale-det...
riffic 7y ago
How much money does a parking lot impose in external costs upon society? https://www.streetfilms.org/parking-craters-a-scourge-of-american-downtowns/ https://www.streetfilms.org/parking-craters-a-scourge-of-ame...
oarabbus_ 7y ago
Self-driving cars will render these obsolete
- OrangeMango 7y ago
  > Self-driving cars will render these obsolete They already are [1]: > If you park your car on the lower level of the Millennium Lakeside Garage under Maggie Daley Park, you might feel like you've just pulled into a subterranean car dealership. > Rows of new and used Volkswagens and Hondas—nearly 400 in total—fill a lot of the space. You might spot a worker painting a Jetta with a spray gun. The level above has a more nautical feel, with dozens of empty boat trailers. > Yet the garage still isn't close to full, a problem for the international joint venture that paid $370 million in 2016 to lease it and three other city-owned garages under Millennium and Grant parks. With 9,176 spaces, the garages constitute the largest underground parking system in the country. At 3.8 million square feet, it's almost as big as Willis Tower. > It's actually too big, which is why Rick West, the executive who runs the garages, is exploring creative ways to fill excess space in Lakeside, the easternmost and largest garage, with 3,850 spaces. He'd like to convert part of it into warehouse space, even hiring a brokerage to market the property to logistics firms. But he hasn't landed any tenants yet. > "I'm really looking at anything and everything having to do with mobility—that could be mobility of people or mobility of things," says West, CEO of Millennium Garages. "How do I keep this asset relevant for the next many, many decades?" [1] https://www.chicagobusiness.com/commercial-real-estate/prime-lakefront-real-estate-seems-impossible-fill https://www.chicagobusiness.com/commercial-real-estate/prime...
  - cylinder 7y ago
    You'd think he'd try to ponder those questions before investing $370 million of other people's money.
    - lotsofpulp 7y ago
      I would think other people would ponder those questions before giving someone else their money.
icsllaf 7y ago
I'll never understand how articles like this always talk about Uber and never about public transportation. https://en.wikipedia.org/wiki/AirTrain_JFK#Ridership https://en.wikipedia.org/wiki/AirTrain_JFK#Ridership >The AirTrain's ridership has risen each year since then. In 2017, there were 7,655,901 passengers who paid to travel between JFK Airport and either Howard Beach or Jamaica. This represents a 292% increase over 2004, the first full year of operation, when 2,623,791 riders paid. >An additional 12.6 million people are estimated to have ridden the AirTrain for free in 2017. When such an answer already exists, there is no reason to even ruminate on self driving cars.
- choeger 7y ago
  Self driving cars are a form of individual travel. An airport train is prescheduled and prerouted. The former beats the latter under specific circumstances only (or we would not have these two categories of transportation). I would argue that traveling from and to a large airport is about as disadvantageous as it gets for individual travel: Your schedule is determined by someone else. Your route is already fixed. The only benefit of individual that I can think of in that case is the possibility to travel to/from somewhat remote locations directly from/to the airport.
  - icsllaf 7y ago
    >The former beats the latter under specific circumstances only. A large part of that circumstance being the nonexistance of the former and creation of our urban environments to specifically cater to the latter.
    - choeger 7y ago
      > A large part of that circumstance being the nonexistance of the former and creation of our urban environments to specifically cater to the latter. That's a nice talking points and might even apply to some (US) cities. But I live with an extensively (and expensively) built public transportation and still it loses vs. individual transport quite often.
- 7y ago
andys627 7y ago
I like this billboard from the good old days https://upload.wikimedia.org/wikipedia/commons/thumb/a/aa/Everybody_works_but_the_vacant_lot_%28cropped%29.jpg/1024px-Everybody_works_but_the_vacant_lot_%28cropped%29.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/a/aa/Ev.... It says: "Everybody works but the vacant lot. I paid $3,600 for this lot and will hold till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it." These lots produce negative externalities to society and should be taxed accordingly.
- goobynight 7y ago
  Denver is littered with surface parking lots. This is due to the relatively recent spike in value. There is no way you could buy the property now and operate a parking lot, but they got in when it was cheap, so it's all profit now.
  - kbutler 7y ago
    If the land could make more profit with another use, that profit is a net loss (opportunity cost).
    - goobynight 7y ago
      Sure, but they believe the market isn't at the top. Opportunity cost could continue to increase until they cash out. That is, maybe they could sell for $10 million now vs making $200k per year on parking, but if they hold on for another 5 years, the offers could rise to $15 million.
- farisjarrah 7y ago
  Like the city of Chicago's parking tax that was cited in the article? https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/parking_tax.html https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/...
  - 7y ago
dpflan 7y ago
I found this article while doing cursory research on the economics of parking lots and booting. My assumption is that when booting companies could charge booted cars to remove the boot on the spot (i.e., on-site credit card reader), then booting became a more serious side-business for businesses that have parking lots (add in CV-monitored parking lot technology - automated delinquent detection). I have more research to do; if you any insights/knowledge, my curiosity compels me to ask that you share. ;^)
- amatecha 7y ago
  By "booting" do you mean "towing"? I'm from western Canada and have never heard the term "booting" before in relation to parking lots and what I assume must be towing.
  - mkmk 7y ago
    Booting refers to wheel clamping https://en.wikipedia.org/wiki/Wheel_clamp https://en.wikipedia.org/wiki/Wheel_clamp
    - amatecha 7y ago
      Aaah interesting -- thanks!
  - dpflan 7y ago
    Like @mkmk linked: by booting I mean "wheel clamping". Your car is immobilized in the lot instead of being towed from the lot, and you have to pay the fine.
TaylorGood 7y ago
I know a family that own a parking lot at LAX, as well as a parking lot across from Staples Center in LA. Safe to say it is their crown jewels of assets. The irony is that the father didn't want these, but they were thrown into a financing deal that he was on the other side of.
gumby 7y ago
This is sadly true: about 10 years ago when self driving cars were on the horizon* I looked into buying some parking lots in Manhattan and SF figuring that I could get a good price now and turn them into something valuable down the road. Turned out the people who owned them weren't dummies and had the same strategy. The prices I could get (and few were even willing to talk) were enormous multiples of likely revenue: basically the price of a buildable city lot where you didn't have to demolish an existing structure. * They seemed only a decade away. Now, 10 years later, they are only a couple of decades away. Like fusion power.
- cylinder 7y ago
  There's no logic to thinking of parking lots as different to any apartment or office tower. They are an asset that generates rental income. The value of the parking lot will be based on the rental income as well as the development potential of the land.
yellowapple 7y ago
> Bear in mind, though, an ideal lot wouldn’t be full of only office workers. They’re parked there all day! Ideally you get shoppers, who turn over their parking spot every hour or two. I wonder how much this actually matters? Money is money, whether it's coming from one person parked for 8 hours or four people each parked for 2 hours. Sure, most lots will charge a somewhat lower rate for a longer period of time (i.e. the per-hour is less than three per-20-minutes, the per-four-hours is less than four per-hours, etc.), but if lots really do prefer short-duration parkers over longer-duration parkers, then it'd make sense for them to just not incentivize that behavior and charge a flat rate (or even invert it), no?
- hnick 7y ago
  Guaranteed money is better than maybe-money too. Most operators will take a guaranteed 8 hours compared to maybe filling a spot later. Taking this to the extreme, many places here sell monthly packages for commuters. The variable hourly-rates is also a form of price anchoring and takes advantage of sunk costs. Look at Westfield's Sydney CBD rates here: https://www.westfield.com.au/sydney/parking https://www.westfield.com.au/sydney/parking Once you pay that first $35 it's not so bad to stick around and spend a bit more. Westfield has a vested interest in this since they run the shopping centre, but other local operators have to compete with this so can't be too much more expensive.
seansta 7y ago
If you in Sydney, Australia (in the CBD, which is downtown) your looking at $65 USD per day. Absolute rip-off.
- batiudrami 7y ago
  Demand better public transport, then. It's the solution for every other city in Australia. The CBD shouldn't be for cars.
  - 9nGQluzmnq3M 7y ago
    Sydney has pretty decent public transport, at least by Australian standards, and most certainly compared to any US city of comparable size. I never park my car in central Sydney on a weekday, and have never been particularly inconvenienced by that cost.
    - hnick 7y ago
      Yes after 5pm weekdays and on the weekend there are plenty of flat rate places for $15 or about $10 more towards the north end of town. I just wish they'd build more parking near some of the suburban train stations. It's usually OK far from the CBD, but a park and ride strategy would definitely help at places 15-20 minutes out. Mascot and Green Square have both gone through a lot of development, are expecting a lot of new people, and still have tiny roads with no dedicated parking near stations.
ensiferum 7y ago
How about just making it a private "no-parking" area and then towing the wrongly parked cars into a pound and asking a nice fee to have the car reclaimed at $500 apiece? Like here https://www.youtube.com/channel/UCPLjrMiMW2zSIMNZjjSRjQw https://www.youtube.com/channel/UCPLjrMiMW2zSIMNZjjSRjQw
TomGullen 7y ago
Some parking spaces in central London are more per hour than minimum wage

135 points by dpflan 7y ago

At least in California, especially in Los Angeles, it's really important to factor in that parking lots -- even on land worth $10M+ -- often pay property taxes as little as $100-$1000 a year (thanks to Prop 13). You buy a parking lot, sit on it as the value of land increases (paying effectively 0% in taxes), then you eventually sell, paying only a capital gains tax (much lower than income). I only bring up California, because I know it. I'm sure there's similar dodgy tax advantages in other states. Point being -- taxing land the way we do (especially in California) seems to be problematic. This is also the reason you see single family homes with front and back yards like 1000 meters away from sky scrapers in Los Angeles and San Jose. Those homes are paying property taxes of like $400 a year, and most of them are being rented out. It's not poor old ladies living in them that don't want to leave the neighborhood they lived their whole lives in, but gentrified under their feet into some urban monster. It's business people arbitraging tax laws.

addajones 7y ago
Thanks for this knowledge. Where can I find more info regarding Prop 13 and the parking lot property taxes? Thank you!
- stefan_ 7y ago
  There is nothing much to know except that Prop 13 also applies to commercial property, not just the American homeowner with a mortgage and truck. I'm not quite sure why, but asking the people who voted in the 70s to give themselves a massive tax cut is probably not going to yield anything useful (ask your parents some time!).
- ladberg 7y ago
  https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13 I feel like the intuition behind prop 13 is similar to rent control but for land owners. Basically it freezes the price owners have to pay in taxes, so if the price of land goes up dramatically, people who have owned the land for longer pay far less in taxes. For example, person A bought a house in SF 25 years ago for 300k. Person B buys an identical house today for 1.5M, therefore paying 5x as much in taxes every year even though both houses are worth the same value. This stifles development because any time land changes hands, the taxes dramatically increase. Even though you could make more money turning a parking lot into housing, people often don't because the taxes would increase to a point where it wouldn't be worth it. The simplified end result for prop 13 (and rent control) is that young people are basically subsidizing old people through their taxes (and rents), keeping prices artificially high. It is incredibly hard to repeal these laws because most of the voters are unfairly benefiting from them or don't comprehend that rent control hurts them.
  - fortran77 7y ago
    Under Prop 13, property taxes can go up 2%/year. So he's not paying 5x because the 300,000 house's property tax has been increasing every year by 2%. It's hard to me to imagine why you would be so evil as to want to force a person out of a home because some dot-com-specuvestor bought a 300,000 home next door to some little old lady for 3,000,000 dollars and caused her property tax to go up 10x. Prop 13 is necessary. What we need to do is BUILD MORE HOUSES.
  - greggman2 7y ago
    It sounds like most of the people here want prop 13 repealed but from your suggestion that would just make every pay the high tax so the "people often don't because the taxes would increase to a point where it wouldn't be worth it." would be true for everyone always right?
    - ericd 7y ago
      At least in SV, the older people are much, much more active in local politics, probably because they're not busy with a job/kids. When I was on a sabbatical/funemployed, I used to go to city council meetings pretty frequently, especially for meetings discussing one of these anti-development laws that are currently on the books, and it would be like 3-6 of us on the pro-development side, typically skewing on the younger side (though there were some exceptional older homeowners who would argue for our side), and then 50+ retirees on the anti-development side. In the example I'm thinking of, it was a meeting about a law that was due to expire that limited new development to 5 stories, and effectively limited average height to 3-4 stories due to floor area ratios, and simultaneously put strict limits on the number of housing units you could build per acre. Mind you, this expiration would affect just the dense downtown core around the train station, not the vast majority of the city, which is zoned single family. They still hated the idea, it'd cause too much traffic. One lady gave an impassioned speech about how the drive to their second home in Tahoe, which used to take 4 hours now took 6-8 on Friday due to traffic. This came right after a speech from someone who was about to lose their primary residence due to rent spiking. I don't know how she was able bring herself to follow that, but she certainly tried.
    - 7y ago
asokoloski 7y ago
Exactly. Taxing property encourages speculation and under-development. Showing an alternative, Pennsylvania has several towns and cities with a split-rate tax, which means that there's a higher tax on the assessed land value than on the assessed value of the property. Taking this to an extreme, you can tax only the land value, not the property, providing a very strong incentive to make the best use of desirable land. A split rate tax just lets you turn the dial between typical property taxes and a land tax. Many arguments in favor of the land value tax are based in concepts of economic rent and fairness. While I'm sympathetic to these arguments, I think the best argument is that it seems to work, both in theory and practice. Places that implement a split rate or land value tax tend to have fewer empty lots, parking lots, single-family homes in the middle of downtown, etc. And not just that, but typical property taxes provide a disincentive to even improve your own property, since you'll pay more tax. They encourage blight. It's not just California, it's everywhere. Tax policy isn't the only thing stopping us from avoiding sprawl by "thickening up" valuable areas of towns and cities, but it's a big one. Parking minimums are another, and of course zoning is yet another. All of them are important in terms of making our cities walkable, amenable to public transit, and sustainable environmentally. *edit -- I should clarify that Prop-13 makes this effect worse in California than many places, though.
- thaumasiotes 7y ago
  Under Proposition 13, you are not taxed on the land value or the property value. Instead, you're taxed on the land+property value at the time you bought the property. If you make a "substantial change" to the property, the tax is reassessed. That's what generates the "empty lots, parking lots, single-family homes in the middle of downtown, etc." -- if you replace your empty lot with a useful building, your property taxes immediately spike. Extending Prop 13 to cover property redevelopment would do as much to solve the undeveloped-land problem as repealing Prop 13 would. (Obviously, those two policies would differ in other ways.) I think it's a mistake to focus too heavily on "should we tax land value" vs "should we tax property value". You're correct that taxing property value disincentivizes development, and that is bad. But we're talking here about cases like someone's small personal residence in the middle of downtown San Jose with $4,000,000 of land value and $200,000 of property value. (Numbers completely invented.) If they were taxed on assessed value, land+property, which is the default in most places, that immense land value would quickly make it prohibitive not to redevelop. The tiny property value is a rounding error.
thaumasiotes 7y ago
> This is also the reason you see single family homes with front and back yards like 1000 meters away from sky scrapers in Los Angeles and San Jose. Those homes are paying property taxes of like $400 a year, and most of them are being rented out. It's not poor old ladies living in them that don't want to leave the neighborhood they lived their whole lives in, but gentrified under their feet into some urban monster. It's business people arbitraging tax laws. Well, more specifically, if you redevelop the land (say, by putting in apartment building in where there used to be a single-story house), the property tax gets recalculated. So the tax code heavily penalizes redeveloping any property.
- magashna 7y ago
  So it's even worse. They're charging as much as possible for slum lord services.
  - thaumasiotes 7y ago
    No? Doing maintenance is fine. Doing upgrades isn't.
  - rconti 7y ago
    To be fair, they're making a tidy profit so they can afford to do some remodeling. They just can't tear it down and make a huge new house, which would trigger a reassessment.
- dawnerd 7y ago
  Oregon has a similar issue as well. You’ve got houses that are really old yet worth half a mil plus and they’re paying basically nothing. Except here the tax isn’t recalculated on sale so newer homes are not “worth” as much at resell time.
  - onlyrealcuzzo 7y ago
    Wait. Are you saying in Oregon, if you built a house in 1910 for $3k, and you sold it in 1940, 1970, 1990, 2007, and 2019 -- it's still being assessed at the 1910 value? That can be right, can it?! That would mean I could buy an old house for $800k, and pay like $30 in property tax a year? I don't believe it.
rtkwe 7y ago
For parking lots it's a catch-22 of the car centric city design, they're required for businesses to function but you can't charge them the true value of the land because making enough money to cover those property taxes would make parking prohibitively expensive. The real solution is proper public transit of course but that's hard and expensive so we get bandaids instead.
- WorldMaker 7y ago
  Proper public transit wouldn't look as hard or expensive if the true value of the land was taxed on parking.
  - rtkwe 7y ago
    It's a phase change problem, on this side we're stable (ish) and on the other side we're stable but the transition period would take years and a lot of spending so we stay in the current state. Doing it slowly and safely requires patience from voters and a willingness to suffer the painful transition period where people in the city are paying more taxes without the problem being solved. Patience is a big issue with getting long term projects done in the US, there's always political hay to be made attacking any project with long term pay offs because of the delay between new laws/taxes/construction starting and it ending. Plus it's way more appealing to scrap and change the project to "put their stamp on it" so it's Mayor Bob's revitalization project not Mayor Alice's.
jedberg 7y ago
There's a partial repeal of Prop 13 on our 2020 ballot. [0] It would make commercial properties no longer subject to Prop 13. [0] https://ballotpedia.org/California_Tax_on_Commercial_and_Industrial_Properties_for_Education_and_Local_Government_Funding_Initiative_(2020) https://ballotpedia.org/California_Tax_on_Commercial_and_Ind...
- ladberg 7y ago
  That's great! I'd image that could alleviate a ton of housing issues and government funding issues in California. Does anyone know the chances of it passing?
  - jedberg 7y ago
    There's no polling on it yet. I suspect it will be close because there are a lot of very rich people who will lose a lot of money if this passes. Property tax is basically a wealth tax. Most wealthy people don't want their wealth taxed. They'll pay millions to defeat this. I wouldn't be surprised if they made ads that straight up lie and tell people their property tax will go up and some BS about farms.
    - sokoloff 7y ago
      Though a lot of wealth is tied up in property, I see property taxes as more of a consumption tax. I see it as you are consuming the right to exclude others from that property for a year. A fully paid house and a 97% mortgaged house pay the same property tax in most locales. (I also think that tenants rather than landlords are paying “going rate” property taxes, even though landlords are the ones writing the check based on actual rates.)
  - nikanj 7y ago
    Zero. So many cases of "poor grandma would lose her house" cases are going to be paraded around, and most of the big money in real estate prefers the status quo too.
    - 7y ago
yardie 7y ago
> parking lots -- even on land worth $10M+ -- often pay property taxes as little as $100-$1000 a year (thanks to Prop 13). Commercial property is also exempt under Prop 13?! What a screwed up system. I kind of understand if it applies to primary residences. I think it's ridiculous it also applies to commercial property as well.
- onlyrealcuzzo 7y ago
  It's insane. And, yes, it does. Same narrative to justify it. We can't increase taxes on poor old grandpa's deli. He'll never be able to compete with all the other delis that also have to pay rising taxes. Think of poor grandpa! Meanwhile, you've got landlords owning those shitty 6-unit dingbat apartments they built in the 70s for $100k, paying taxes of $1k per year, charging rents or $3k/month for each unit. All the while, they're collecting another $1k or so in land value increases per month, that will be taxed at a lower capital gains rate -- of which the state will see almost nothing. AND it's the whole reason no one ever sells those buildings to be redeveloped. They make so much money, since they pay no taxes, that there's no better investment in the world. Why would anyone ever sell one? Even at $10M, you'd still be crazy to sell it. It'll be worth $11M next year, and you get all that tax-free profit. Totally legally, and totally cool.
  - zamfi 7y ago
    I agree with what you say completely, but this: > that will be taxed at a lower capital gains rate -- of which the state will see almost nothing ...is not quite correct; California does not have a special reduced cap gains tax rate like the Feds. But this does not make the whole setup any less ridiculous.
- qiqitori 7y ago
  I don't get property taxes. Why make people pay taxes on land they already paid a bunch of money for?
  - patrickthebold 7y ago
    To pay for schools and things like that.
yellowapple 7y ago
> It's not poor old ladies living in them that don't want to leave the neighborhood they lived their whole lives in, but gentrified under their feet into some urban monster. It's business people arbitraging tax laws. And sometimes it's both: the poor old ladies who want to hang onto it for their descendants to inherit, ostensibly because it was the "family home" but more rationally/coldly because it could turn a tidy profit for said descendants.
cannaceo 7y ago
I have a friend in parking in LA. People tend to think these parking lot operators are dimwitted but they're extremely intelligent, shrewd businessmen. Its a cutthroat industry with deep mafia ties. You can effectively use control of parking lots to squeeze all the margins out of local businesses such as restaurants.
- dba7dba 7y ago
  Frank McCourt was a really really hated owner of Dodgers for a few years until 2012. When Frank McCourt sold Dodgers to Magic Johnson led group in 2012, he held onto 50% of the Dodger Stadium parking lot. Yup, a guy sold Dodgers for a few billion bucks, but he still knew to hold onto the parkint log. https://bleacherreport.com/articles/1120695-dodgers-sale-details-mccourt-still-owns-the-parking-lots-fans-need-to-resist https://bleacherreport.com/articles/1120695-dodgers-sale-det...

riffic 7y ago

How much money does a parking lot impose in external costs upon society? https://www.streetfilms.org/parking-craters-a-scourge-of-american-downtowns/ https://www.streetfilms.org/parking-craters-a-scourge-of-ame...

oarabbus_ 7y ago

Self-driving cars will render these obsolete

OrangeMango 7y ago
> Self-driving cars will render these obsolete They already are [1]: > If you park your car on the lower level of the Millennium Lakeside Garage under Maggie Daley Park, you might feel like you've just pulled into a subterranean car dealership. > Rows of new and used Volkswagens and Hondas—nearly 400 in total—fill a lot of the space. You might spot a worker painting a Jetta with a spray gun. The level above has a more nautical feel, with dozens of empty boat trailers. > Yet the garage still isn't close to full, a problem for the international joint venture that paid $370 million in 2016 to lease it and three other city-owned garages under Millennium and Grant parks. With 9,176 spaces, the garages constitute the largest underground parking system in the country. At 3.8 million square feet, it's almost as big as Willis Tower. > It's actually too big, which is why Rick West, the executive who runs the garages, is exploring creative ways to fill excess space in Lakeside, the easternmost and largest garage, with 3,850 spaces. He'd like to convert part of it into warehouse space, even hiring a brokerage to market the property to logistics firms. But he hasn't landed any tenants yet. > "I'm really looking at anything and everything having to do with mobility—that could be mobility of people or mobility of things," says West, CEO of Millennium Garages. "How do I keep this asset relevant for the next many, many decades?" [1] https://www.chicagobusiness.com/commercial-real-estate/prime-lakefront-real-estate-seems-impossible-fill https://www.chicagobusiness.com/commercial-real-estate/prime...
- cylinder 7y ago
  You'd think he'd try to ponder those questions before investing $370 million of other people's money.
  - lotsofpulp 7y ago
    I would think other people would ponder those questions before giving someone else their money.

icsllaf 7y ago

I'll never understand how articles like this always talk about Uber and never about public transportation. https://en.wikipedia.org/wiki/AirTrain_JFK#Ridership https://en.wikipedia.org/wiki/AirTrain_JFK#Ridership >The AirTrain's ridership has risen each year since then. In 2017, there were 7,655,901 passengers who paid to travel between JFK Airport and either Howard Beach or Jamaica. This represents a 292% increase over 2004, the first full year of operation, when 2,623,791 riders paid. >An additional 12.6 million people are estimated to have ridden the AirTrain for free in 2017. When such an answer already exists, there is no reason to even ruminate on self driving cars.

choeger 7y ago
Self driving cars are a form of individual travel. An airport train is prescheduled and prerouted. The former beats the latter under specific circumstances only (or we would not have these two categories of transportation). I would argue that traveling from and to a large airport is about as disadvantageous as it gets for individual travel: Your schedule is determined by someone else. Your route is already fixed. The only benefit of individual that I can think of in that case is the possibility to travel to/from somewhat remote locations directly from/to the airport.
- icsllaf 7y ago
  >The former beats the latter under specific circumstances only. A large part of that circumstance being the nonexistance of the former and creation of our urban environments to specifically cater to the latter.
  - choeger 7y ago
    > A large part of that circumstance being the nonexistance of the former and creation of our urban environments to specifically cater to the latter. That's a nice talking points and might even apply to some (US) cities. But I live with an extensively (and expensively) built public transportation and still it loses vs. individual transport quite often.
7y ago

andys627 7y ago

I like this billboard from the good old days https://upload.wikimedia.org/wikipedia/commons/thumb/a/aa/Everybody_works_but_the_vacant_lot_%28cropped%29.jpg/1024px-Everybody_works_but_the_vacant_lot_%28cropped%29.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/a/aa/Ev.... It says: "Everybody works but the vacant lot. I paid $3,600 for this lot and will hold till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it." These lots produce negative externalities to society and should be taxed accordingly.

goobynight 7y ago
Denver is littered with surface parking lots. This is due to the relatively recent spike in value. There is no way you could buy the property now and operate a parking lot, but they got in when it was cheap, so it's all profit now.
- kbutler 7y ago
  If the land could make more profit with another use, that profit is a net loss (opportunity cost).
  - goobynight 7y ago
    Sure, but they believe the market isn't at the top. Opportunity cost could continue to increase until they cash out. That is, maybe they could sell for $10 million now vs making $200k per year on parking, but if they hold on for another 5 years, the offers could rise to $15 million.
farisjarrah 7y ago
Like the city of Chicago's parking tax that was cited in the article? https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/parking_tax.html https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/...
- 7y ago

dpflan 7y ago

I found this article while doing cursory research on the economics of parking lots and booting. My assumption is that when booting companies could charge booted cars to remove the boot on the spot (i.e., on-site credit card reader), then booting became a more serious side-business for businesses that have parking lots (add in CV-monitored parking lot technology - automated delinquent detection). I have more research to do; if you any insights/knowledge, my curiosity compels me to ask that you share. ;^)

amatecha 7y ago
By "booting" do you mean "towing"? I'm from western Canada and have never heard the term "booting" before in relation to parking lots and what I assume must be towing.
- mkmk 7y ago
  Booting refers to wheel clamping https://en.wikipedia.org/wiki/Wheel_clamp https://en.wikipedia.org/wiki/Wheel_clamp
  - amatecha 7y ago
    Aaah interesting -- thanks!
- dpflan 7y ago
  Like @mkmk linked: by booting I mean "wheel clamping". Your car is immobilized in the lot instead of being towed from the lot, and you have to pay the fine.

TaylorGood 7y ago

I know a family that own a parking lot at LAX, as well as a parking lot across from Staples Center in LA. Safe to say it is their crown jewels of assets. The irony is that the father didn't want these, but they were thrown into a financing deal that he was on the other side of.

gumby 7y ago

This is sadly true: about 10 years ago when self driving cars were on the horizon* I looked into buying some parking lots in Manhattan and SF figuring that I could get a good price now and turn them into something valuable down the road. Turned out the people who owned them weren't dummies and had the same strategy. The prices I could get (and few were even willing to talk) were enormous multiples of likely revenue: basically the price of a buildable city lot where you didn't have to demolish an existing structure. * They seemed only a decade away. Now, 10 years later, they are only a couple of decades away. Like fusion power.

cylinder 7y ago
There's no logic to thinking of parking lots as different to any apartment or office tower. They are an asset that generates rental income. The value of the parking lot will be based on the rental income as well as the development potential of the land.

yellowapple 7y ago

> Bear in mind, though, an ideal lot wouldn’t be full of only office workers. They’re parked there all day! Ideally you get shoppers, who turn over their parking spot every hour or two. I wonder how much this actually matters? Money is money, whether it's coming from one person parked for 8 hours or four people each parked for 2 hours. Sure, most lots will charge a somewhat lower rate for a longer period of time (i.e. the per-hour is less than three per-20-minutes, the per-four-hours is less than four per-hours, etc.), but if lots really do prefer short-duration parkers over longer-duration parkers, then it'd make sense for them to just not incentivize that behavior and charge a flat rate (or even invert it), no?

hnick 7y ago
Guaranteed money is better than maybe-money too. Most operators will take a guaranteed 8 hours compared to maybe filling a spot later. Taking this to the extreme, many places here sell monthly packages for commuters. The variable hourly-rates is also a form of price anchoring and takes advantage of sunk costs. Look at Westfield's Sydney CBD rates here: https://www.westfield.com.au/sydney/parking https://www.westfield.com.au/sydney/parking Once you pay that first $35 it's not so bad to stick around and spend a bit more. Westfield has a vested interest in this since they run the shopping centre, but other local operators have to compete with this so can't be too much more expensive.

seansta 7y ago

If you in Sydney, Australia (in the CBD, which is downtown) your looking at $65 USD per day. Absolute rip-off.

batiudrami 7y ago
Demand better public transport, then. It's the solution for every other city in Australia. The CBD shouldn't be for cars.
- 9nGQluzmnq3M 7y ago
  Sydney has pretty decent public transport, at least by Australian standards, and most certainly compared to any US city of comparable size. I never park my car in central Sydney on a weekday, and have never been particularly inconvenienced by that cost.
  - hnick 7y ago
    Yes after 5pm weekdays and on the weekend there are plenty of flat rate places for $15 or about $10 more towards the north end of town. I just wish they'd build more parking near some of the suburban train stations. It's usually OK far from the CBD, but a park and ride strategy would definitely help at places 15-20 minutes out. Mascot and Green Square have both gone through a lot of development, are expecting a lot of new people, and still have tiny roads with no dedicated parking near stations.

ensiferum 7y ago

How about just making it a private "no-parking" area and then towing the wrongly parked cars into a pound and asking a nice fee to have the car reclaimed at $500 apiece? Like here https://www.youtube.com/channel/UCPLjrMiMW2zSIMNZjjSRjQw https://www.youtube.com/channel/UCPLjrMiMW2zSIMNZjjSRjQw

TomGullen 7y ago

Some parking spaces in central London are more per hour than minimum wage