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Paved Over Surface Parking Lots or Opportunities for Tax-Generating, Sustainable Development?

This study compares the economic and social costs of surface parking lots near rail transit stations with the potential economic and social benefits if they were developed into mixed-use, pedestrian friendly, transit-oriented developments.

Executive Summary

The costs—economic and social—associated with large surface parking lots has been receiving more and more attention of late. Parking lots have been credited with impeding the establishment of a quality pedestrian environment, disrupting the urban fabric, encouraging greater auto use, and harming the environment.

In addition to these social and environmental costs, large surface parking lots also have an opportunity cost, which is the economic value of not putting the land on which these lots sit to some other use. Donald Shoup, a professor from UCLA, in his recent book, The High Cost of Free Parking, estimates the cost of free parking to the national economy is over $300 billion annually.

The development potential of parking lots is especially high when the lot is proximate to transit. Park-n-ride lots at rail transit stations, when developed consistent to Transit Oriented Development (TOD) principles, whether that be commercial, residential or mixed-use can support greater densities without the same increase in auto traffic that an auto-oriented development would require. They also have the potential to generate greater sales, property, and utility tax revenues per square foot. And demand for housing near transit is growing, making the development and investment community increasingly interested in building and capitalizing on transit oriented projects and communities. Nearly every region in the country would like to be able to take advantage of this growing market but only New York has a greater opportunity for TOD than Chicago.

By 2030, the Center for Transit Oriented Development estimates that the demand for housing near transit in the Chicago region will be 1.6 million households—more than double the number of households living near transit in 2000 (787,204). With 401 stations today and 426 expected by

2030, Chicago could meet a large share of the demand by increasing the supply of housing and mixed-use development near transit. But it will require new and targeted policies, additional and expanded funding mechanisms and sources, innovative planning tools and zoning, and creative and collaborative partnerships across government agencies and between the public and private sectors.

The purpose of this study is to highlight this regional opportunity by comparing the current economic and social costs of surface parking lots near rail transit stations with the potential economic and social bene.ts if they were developed into mixed-use, pedestrian friendly, transit-oriented developments. To do so, we create site-speci.c development scenarios for Metra Rail parking lots in nine Metra-served suburban communities in Cook County. These nine stations represent nearly 50 acres of potential developable area near transit and are only a fraction of the 230 Metra stations and 528 acres of surface lots.3 As scenarios, they should be viewed as long range alternatives to parking and not detailed development pro formas and plans since they do not incorporate total development costs or address all the barriers that are common to these types of developments. However, they are realistic scenarios and not unlike many TOD’s in Northeastern Illinois and throughout the country. Therefore, they should be used to provoke further examination and a dialogue in the respective communities about the kinds of development that might be most suitable.

The estimates in these nine scenarios show how the parking lots, if used more efficiently, could generate 1,188 new residential units and at least 167,000 square feet of new commercial space. While the potential tax revenues for each lot vary based on available and convertible parking spaces; comparable taxes for specific land uses in each municipality; and existing development patterns; the estimated property tax revenues for each of the nine case studies all range in the hundreds of thousands of dollars per year.

If these nine case studies are representative of all the potential development opportunities near transit, a regional policy to develop these lots to higher uses could help to meet the region’s growing demand for affordable, workforce, senior, and market rate housing near transit. These parking lot conversions could serve as a catalyst to spur development on other parking lots or underutilized sites near the stations, which would also help local government finances. Metra would also bene.t in the long run from an increase in the number of residents living within walking distance of their stations.

While there are many barriers to TOD that a number of developers and communities have successfully addressed, one of the primary barriers—and probably the most critical barrier—is the difficulty in assembling large contiguous parcels for development at or near transit stations.4 In the Chicago area, regional agencies working with Metra, local governments, the State, and the Federal Transit Administration have the opportunity to directly influence this barrier by evaluating and making available some of 23 million square feet of land5 that is currently banked as surface parking.


This study is limited to suburban Cook County and therefore does not specifically estimate the opportunity to the city of Chicago or the other five counties. While the general conclusions drawn from this study are likely to be applicable to other counties and other regions, Cook County data was used exclusively due to availability and to avoid complicated comparisons of tax and assessment rates across county boundaries. The study also only estimates the potential net annual property tax revenues and does not assign the property tax to each taxing entity, e.g. school districts, city, library, and so on. Other revenues from development, such as sales, utility, and other non-property taxes, business income or fees have not been estimated.

The study also does not address the number of barriers often associated with TOD projects, such as land assembly, multiple layers of . nancing, coordinating various government agencies, conducting meaningful public participation, longer timelines, maintiaing ridership levels, and higher pre-development costs. However, it does address the need to replace the parking spaces displaced by the proposed development. There are two reasons these spaces need to be replaced. First, parking replacement is necessary since a substantial share of Metra riders at most stations require park and ride capability. At park-n-ride lots that are fully utilized the development scenarios proposed in this study would more than likely decreases the number of transit riders at that particular station unless the park and ride commuters were still accommodated through new parking spaces; at least until the TOD fully matures and there were enough residents living within walking, biking or bus distance to replace the park and ride commuters. Second, Metra is required to follow a 100 percent parking replacement policy for spaces that have ever received federal funding. To address these two issues, in each of the potential build-out examples, Metra parking spaces are replaced through on-street parking, smaller scattered surface lots associated with the development, or structured parking.