Comments by Washington Regional Network for Livable Communities regarding: DC USA Project HUD Section 108 Loan Guarantee Before the Government of the District of Columbia February 28, 2004 My name is Allen Greenberg and I am honored to testify before the District government today on behalf of the Washington Regional Network for Livable Communities - or WRN. WRN is a non-profit organization that advocates transportation investments, land use policies, and community designs that enhance existing communities and the environment of the Washington, D.C. region. We recognize that how we choose to develop our neighborhoods and retail corridors substantially influences the health of our communities and the environment. WRN is a strong proponent of retail development in Columbia Heights, in the context of smart growth, pedestrian-oriented planning, with particular attention toward promoting affordable housing. Specifically, retail should serve the over 12,000 households already residing within a one-half mile walk of the site, in addition to many new households that are expected to continue moving into the area. It is therefore hard to believe that the District's best economic development investment in Columbia Heights is to spend $42,235,129 (excluding an additional $6,508,021 related to securing the financing) for 1,364 parking spaces, or $30,964 per parking space ($35,735 per space if the $6.5 M is included). If the city offered to provide Target $42.2 M or $48.7 M in cash and allowed the developer to construct as few or as many parking spaces as it saw fit, far fewer than 1,364 spaces would likely be built, and many dollars would be pocketed. One would expect, at a minimum, cost saving strategies to be explored, such as the potential of building one level of parking on the roof instead of underground. WRN supports the project's stated objective of modeling itself (and even naming itself) after Harlem USA, including "in its commitment to urban design that focuses on the pedestrian." Harlem USA is a 275,000 square-foot, fully leased retail and entertainment project that, like with DC USA, is surrounded by many low and moderate income households. No government subsidy was provided to build car parking, since the project has none. The groundbreaking was in July 1998, and the project has already fully paid back its development corporation loan. A newer sister project, Harlem Center, opened at the end of 2002 with over 125,000 square feet of retail space. This project also contains no parking, and indeed was built in place of a previously operational parking lot, thereby resulting in the loss of parking. When it comes to parking, the proposal for DC USA could not be more different. We should subsidize what we want as a city (jobs and job training for welfare recipients, child care for employees, low-income housing near the worksite, Metro usage for employees and customers), and not what we don't want (lots of cars congesting already overburdened roadways, increasing air pollution, and adding to pedestrian safety perils). Why is the District trying to emulate our most sprawled out suburbs by building such a large parking structure? As renowned authors Newman and Kenworthy have noted in Sustainability and Cities: Overcoming Automobile Dependence about the effects of parking on urban vitality: "Detroit has one of the highest levels of parking provision in the world, yet supply of parking and vitality of city center seem almost inversely related." It is a bitter irony that the District is applying for a Housing and Urban Development (HUD) loan to build parking at the same time we have such a shortage of affordable housing. We should at least mimic California in its requirement that a minimum of 20% of the bond capacity generated by tax increment financing (TIFs) go toward providing low and moderate income housing. The Dec. 3, 2003 draft modification to the District plan suggests a certain judiciousness in using HUD resources for this application by asserting, "the District does not want to subsidize the Parking Facility and Complex more than is absolutely necessary." But the fact that the parking is being funded entirely from taxes generated, and not from parking revenues, shows that the District refuses to preserve its bond capacity by committing to parking revenue goals and by minimizing parking subsidies. Once a new garage is built, the city would have to spend money operating and maintaining the facility and even more money improving the nearby roads to accommodate the traffic generated as a result of the new parking and development. These costs should, but aren't, incorporated in the city's cost estimates. By contrast, investments in job training and other employment services save the city money in transfer payments, social services, etc., and such savings need to be incorporated in any cost/benefit comparisons of development investments. The city should not confuse objectives. Jobs, customers, and residents are assets; parking is not. Moderate quantities of parking can facilitate retail activities, but some of the most vibrant urban retail and other urban attractors come with little or no parking. DC's downtown Hecht's Department Store has no off-street parking. The MCI Arena has only about 500 total parking spaces on-site, very few of which are available to the public, and the Washington Convention Center offers only a tiny amount of parking which is unavailable to most visitors. In each case, proximity via nearby land uses and Metrorail provides excellent site access and substantially reduces the need for parking. Clearly, urban density and foot and transit accessibility reduce and in some instances have eliminated the need for parking. Even if parking is needed at this site, less will be required over time as surrounding development densities and neighborhood vitality increase. If the city believes it must build parking to attract retail, it should do so with the goal of paying for as much of such parking as possible through parking revenues, not lost taxes from TIFs. It should be noted that WRN does not oppose all project subsidies even if new parking is provided in order to make an important development project viable. But as a matter of principle, if the city builds the parking it should charge at least $2.40 to park so that tax subsidies aren't used to make it cheaper for one person to drive alone rather than to take Metro to the site. If the city wants to give a rebate on every purchase made at the new development for a period of time, or to validate up to $2.40 in Metro, parking, and home delivery costs for those making purchases, that would not be unreasonable. To only subsidize the wealthiest shoppers-specifically those who drive their personal vehicles alone to shop-however, would be both inequitable and diametrically contrary to smart growth principles and the region's air quality and related public health objectives. Raising revenues from parking is not an anathema to good urban retail. Rather, it has been shown to be an important tool to providing balanced modal access to a retail location and ultimately to retail success. One study assessing the impacts of parking charges in two Los Angeles area retail locations with very similar demographics shows the enormously successful retail revitalization in Old Pasadena-with a parking revenue net of about $1.2 million in 2001 funding improvements to the outdoor and pedestrian environment, increased police presence, and marketing -versus the continued decline of Westwood Village where plentiful free parking (3,900 off-street spaces, versus 690 metered spaces in Old Pasadena) has failed to lure customers. Parking, including already existing on-street parking, can and should provide a source of revenue to maintain and improve its surroundings, rather than be a taxpayer burden. We understand that among the objectives cited for the construction of such a large number of parking spaces is commuter parking. This site is not located anywhere near a freeway or arterial roadway with capacity to spare and instead is located adjacent to already overly-congested roadways; additional single occupancy vehicle commuters should not be encouraged to drive into and park in Columbia Heights, slowing or possibly grinding to a halt already slow buses jammed with commuters heading into downtown. While no additional parking should be built for commuters, if some of the retail parking needed for weekend and evening peak shopping times does double-duty as commuter parking, benefiting commuters should be required to pay a premium and the revenues should be earmarked to help pay off the parking construction loans. The suggestion that some of the parking be sold for residential uses is equally problematic. First, fully 70% of households in the neighborhood do not own a car. This is a good thing and should be reinforced by allowing developers to build housing without parking, requiring households to pay market prices for off-street parking, subsidizing neighborhood car sharing, and enticing a major rental car company into to the neighborhood. Additional revenues from sales taxes should be used to subsidize nearby low-income housing, especially since housing prices are bound to rise at an even steeper rate as a result of the planned development. Finally, rather than requiring shoppers to use a car when returning after making a voluminous purchase, delivery services instead of car parking should be subsidized so as to provide equal shopping opportunities to all District residents-car owners and non-car owners alike. To maximize garage revenues and thus to minimize the need for construction related TIFs, the District should, prior to requesting HUD financing, solicit proposals from private firms to lease and operate the parking. Pre-conditions for all bids should be established, such as making available the necessary quantity of parking for retail use at a maximum charge of $2.40, or the minimum round-trip Metro fare, for two-hour retail-customer parking. In addition to this parking price and availability guarantee, bidders should be required to provide project revenue guarantees and to announce and be locked into a specific parking charging regime for other parking uses (including either specific prices or a method for determining prices such as one based on supply and demand) for the first five years of operation. Through a competitive bidding environment, the District could surely secure offers that would provide a substantial portion of needed revenues to finance construction, allowing tax revenues that are now earmarked for this purpose to serve other important related community needs, such as affordable housing. In addition to paying off project financing, the city may consider offering to rebate a portion of site-generated sales taxes to the stores that in turn may elect to use such rebates to subsidize their patrons' parking, Metro, and delivery charges. Currently, no justification is offered for the quantity of parking proposed to service the retail development and other related purposes. To facilitate the District in determining the appropriate quantity of parking to build at the site and TIF revenues needed to build it, and to provide a certain level of comfort to a suburban retailer that lacks confidence in an urban market where parking may be less plentiful than in the suburbs, each bidder should be asked to submit bids to operate three different quantities of parking spaces. For example, one bid should presume the full 1,364 spaces, a second should presume one fewer level of parking and perhaps a total of 900 spaces (which would yield a moderate 1.7 spaces per 1,000 square feet of retail-or slightly less than the 2.1 spaces at the Tenleytown Metro Best Buy where free parking even during the Christmas peak is underutilized according to the developer), and a third presuming only one level of parking, or 450 spaces, but perhaps adding the management of nearby on-street spaces as well. Costs would of course go down with reduced quantities, but revenues for construction loans-especially if adjacent retail and housing developers were allowed to sublease space in exchange for the District reducing their on-site, off-street parking requirements-would also go down. By instituting this process, the costs and benefits of different parking supplies and policies would be made transparent before the critical policy decision of how much parking be built and what subsidies be provided is actually made. Sometimes it is difficult for a government to decide whether or not to make a particular economic development investment, but this should not be such a case. It is hard to image a less judicious investment than this, not to mention anything that would do more harm to the pedestrian and physical environment than the monstrous scale of such a parking garage, coupled with additional required parking at adjacent development sites. It is doubly worse that so many other good neighborhood revitalization investment needs worthy of TIFs remain neglected. Thank you for this opportunity to testify and to address the challenges we face in making Columbia Heights a better place by attracting quality retail and ensuring good community design. I welcome any questions and speak for WRN in pledging our continued constructive involvement in this process.