Tag Archives: Walkability

Silicon Valley Knows Technology, Not Land Use

Apple headquarters, Cupertino, Calif.

Apple headquarters, Cupertino, Calif. Impressive facade but poor public spaces.

by James A. Bacon

Apple, Google and other collosi of Silicon Valley are re-shaping the world with their technology but you could never imagine them as masters of innovation by viewing their corporate campuses. While the office interiors may be arrayed with java bars and collaborative workplaces to stimulate creativity, the building exteriors are for the most part bland steel-and-glass boxes of a type that can be found anywhere in the United States. Moreover, surrounded by parking lots and landscaping, the buildings are isolated — islands in a sea of mulch and asphalt. Creativity and interaction end at the front door. The streets, sidewalks and other pieces of the public realm are innovation dead zones.

That was the impression I gained from the Bacon family’s whirlwind tour of Silicon Valley earlier this week that took in the corporate headquarters not only of Apple and Google but Hewlett-Packard, Yahoo! and LinkedIn. Perhaps we arrived at the wrong time of year, the wrong time of the week or the wrong hour of the day but we saw almost nothing going on. Most of the street-level activity at Apple was generated by tourist traffic to the Apple store. The environs of the famed Googleplex were even more desolate.


Vaughn and Wilson in “The Internship.”

I was expecting bustling outdoor scenes like those shown in the movie, “The Internship,” in which Owen Wilson and Vince Vaughn finagled their way into summer jobs at Google and into movie goers’ hearts. We didn’t see bupkis. I sneaked around the back of one of the buildings in the Googleplex and did discover an inviting patio with bright umbrellas but didn’t see anyone except a couple of maintenance guys standing around and shooting the breeze. As we drove around the Google corporate campus with its dozens of buildings, we did espy one multi-colored Google bike leaning against a wall and we did spot one fellow riding down the road, but we saw hardly anyone walking outside. Undoubtedly, billions of neurons were burning brightly inside Google’s buildings — but there was no sign of the company’s massive brainpower on display outside. It turns out that, according to CNN, much of the movie wasn’t filmed at Google at all — but the Georgia Institute of Technology campus in Atlanta!

The Google H.Q. is so low-key in appearance, we wondered if we had the right place. According to the Google corporate address listed in Google maps, we did.

The Google H.Q. is so low-key in appearance, we wondered if we had the right place. This is where Google Maps led us.

Who cares whether the innovation occurs inside or outside? Why mess with a proven formula? More to the point, what does a techno-tard like me have useful to say to the likes of Apple and Google, two of the greatest wealth creation machines in human history?

I didn’t visit Silicon Valley with the idea of lecturing the region’s political, business and civic leaders how to improve, which would be incredibly presumptuous on my part. I visited to learn what lessons other communities might learn. Scores of regions around the United States yearn to re-create some of the valley’s technology magic, and I worry they could draw the wrong conclusions. The one dimension of Silicon Valley that others can most readily replicate is its “suburban sprawl” pattern of development — and that would be the worst possible lesson to take away.

Apple parking lot

The parking lots outside Apple’s headquarters are beautifully landscaped but they wall off pedestrian access to the world outside.

I would humbly suggest that Silicon Valley has been insanely successful in spite of its dysfunctional human settlement patterns. Combine world-class research universities, the largest venture capital community in the world and an unparalleled workforce, then shake and stir. You’ll get technological innovation. Silicon Valley’s corporations can create a built environment that discourages interaction outside the firm and it doesn’t matter — the advantages of a Silicon Valley location far outweigh the drawbacks. But no one else has Silicon Valley’s potent mix of research universities, venture capitalists and the smartest engineers drawn from around the world. Other communities need every competitive advantage they can muster — and smarter land use patterns is one of them.

As Hans Johannson has argued in his book, “The Medici Effect,” innovation comes at the intersection — the intersection of different industries, disciplines, cultures or ways of thinking — that allow people to make unlikely combinations of ideas. Some places lend themselves to that kind of interaction, others don’t. Based on her experience living in Greenwich Village a generation ago, renowned urbanist Jane Jacobs brilliantly argued that sidewalks, small parks and mixed uses lent themselves to the kind of meetings and encounters, often serendipitous, where different perspectives and ideas can collide. To spawn entrepreneurship from the ground up, those are the kinds of neighborhoods and communities that aspiring tech centers should be creating.

The built environment of Silicon Valley is Northern Virginia with palm trees — predominantly single-family houses, strip malls and office parks. Thanks to municipal codes and NIMBYs, the region can increase density only sparingly, so it cannot grow “up” by building taller buildings. But wedged between the bay to the north and mountains to the south, it cannot grow “out” through additional sprawl. As a consequence, real estate prices are incredibly high. The cost of housing across the Valley and throughout the entire Bay area is consistently cited as one of the greatest hindrances to living there. The number of homeless in the San Jose metro region, according to the Wall Street Journal, numbers roughly 7,600. To adopt similar land use policies would suicidal for any other region.

Municipal leaders recognize these shortcomings and are attempting belatedly and with mixed results to deal with them. I will discuss two such initiatives in Sunnyvale, as time permits.

Why San Franciscans Are Thinner than Other Americans

SONY DSCNo, it’s not the bean sprouts and tofu. It’s not even the great year-round climate that encourages people to do stuff outdoors. It’s the hills. The Bacon family has hiked and biked a lot of hills over the past three days and we’ve eaten a lot of food, but the hills won. I swear I have cinched in my belt buckle by a notch.

As I recall, one of the largest concentrations of superannuated (really old) people is in the Caucasus Mountains. The Georgians, Armenians and Azerbaijanis get lots of exercise walking up and down mountains. Living around hills is healthy! I don’t recall seeing a single fat person in San Francisco. (OK, maybe a couple of hefty people but no obese people). I’ve seen more little old Chinese ladies on walkers chugging up the hills in Chinatown than I’ve seen fat people.

Oh, maybe I should add that it’s not just the hills. It’s the hills in combination with the sidewalks. San Francisco is a walking town. The city has great streetscapes and no matter where you are there is an abundance of destinations within walking distance. People walk places, and when they walk, they walk on hills. It’s that simple.


The Walkability Premium


Americans pay a premium for housing in walkable neighborhoods — $850 per point on a 100-point Walkability Score scale.

The scholars over at New Geography just won’t give up trying to make the case that most Americans prefer to live in single-family detached houses in the suburbs. Citing data from the 2010 American Community Survey, Wendell Cox wrote that 79.2% of the new households in 51 major metro areas moved into precisely such housing over the past decade. He also cited data that the occupancy rate for detached housing is marginally higher than that for attached, multi-unit housing. He concluded: “The trend of the last decade is evidence of a continued preference of American households for detached housing. The results are remarkable.”

Back in September I made two key points to a similar argument advanced by Cox’s buddy, Joel Kotkin: (1) the concept of housing “preference” is meaningless in the absence of price; and (2) the movement of people into detached dwellings is as much a function of supply (what builders are allowed to build) as of demand (what people actually want at a given price point).

Now comes Emily Washington at Market Urbanism, making the same points and tying them to walkability. All other things being equal, she says, people place less value on neighborhoods with low walkability scores (typically with detached, single family dwellings), and greater value on neighborhoods with high scores (which are more likely to include multi-family dwellings). I can do no better than quote her blog post, ‘The Value of Walkability.”

While people may not cite walkabilty as an important consideration in choosing a house, choosing a home involves weighing many factors, from size, price, distance to work and other amenities, aesthetic, and countless others factors. Consumers rely on tacit knowledge to weigh many of these factors because they can’t consciously enumerate all of them in making a decision of where to live.

For this reason, revealed preference theory is a more reliable tool than survey data for observing how consumers value one attribute of a complex good like housing. Building on a past project, my colleague Eli Dourado and I are studying whether or not consumers do pay a premium for greater neighborhood walkability. Using a fixed-effects model, across all metropolitan and micropolitan statistical areas in the United States, our preliminary results indicate that, on average, Americans are willing to pay a premium of about $850 for a house with one additional point in Walk Score. Because of the many restrictions that limit walkable development, consumers have to pay this premium for the scarce supply of houses in walkable neighborhoods.

This finding also indicates that, in a world with fewer regulations limiting the supply of walkable development, the free market would provide a greater supply of walkable neighborhoods because developers have opportunities to profit from doing so that are currently prevented by regulations. In a freer market, more people would have the opportunity to live in neighborhoods where completing daily errands on foot is feasible. …

“Market suburbanists” often cite survey data finding that most people prefer detached, single family homes to living in multifamily housing. They also often say that revealed preferences back up these surveys because most Americans live in single family homes. Indeed, this is true, even in the largest cities. However, looking at the housing choices that Americans make while ignoring both regulations that limit the potential choice set and without considering the prices consumers pay is misleading, like saying Americans prefer Fords to BMWs because there are more of them on the road.

An understanding of consumers’ complex decision process in selecting a home cannot be accurately gleaned from either survey or Census data; rather, this information should be observed based on the price that emerges between buyers and sellers in the market. While, all else equal, most people might prefer a large detached house with a big yard, in weighing the many factors like proximity to amenities, price, and house size, we find that people are willing to pay a premium for walkability.


How to Squeeze 40,000 More People into Richmond

Mark Olinger. Photo credit: Style Weekly.

Mark Olinger. Photo credit: Style Weekly.

by James A. Bacon

According to growth projections cited by the Urban Land Institute, the population of the Richmond region is expected to grow by roughly 200,000 households (430,000 people) by 2035. Where will that growth go? How much of it can be absorbed by existing urban areas, and how much will end up, by default, as sprawl-like development in outlying jurisdictions?

Mark Olinger, planning director for the City of Richmond, says the city could grow to a population of 250,000 over the next two decades — an addition of roughly 40,000 residents. The resulting investment has the potential to transform the city, he says. “Richmond can be one of the great midsized cities in America.”

The city population peaked around 1970 at 250,000 residents. But households were larger then than they are today; more people packed into houses and apartments than they do now. Today’s population contains more singles, more empty nesters and more single-parent households. Therefore, a population of 250,000 today will require considerably more housing units. Where will those units go?

Some neighborhoods will see very little change, Olinger told me last week during lunch at Comfort, a downtown restaurant. The residents of Windsor Farms, a neighborhood of million-dollar homes, like things exactly the way they are. The same can be said of historic neighborhoods like the Fan, Church Hill and Ginter Park. But there’s plenty of under-utilized land in the old Manchester district, south of the James River from downtown, Scott’s Addition, an old industrial zone off Interstate 64, and along the old federal highway corridors like Broad Street, Midlothian Turnpike and U.S. 1.

Those areas can be re-developed with mixed-use buildings at much higher residential densities. Because those areas are zoned for commercial and industrial, they need not inpinge upon single-family dwellings where homeowners want to preserve the character of their neighborhoods. With greater density, such corridors also can be served by Bus Rapid Transit (see “Will Broad Street BRT Pay Its Own Way?“), which would ease traffic congestion.

Before coming to Richmond in 2011, Olinger served as planning director of Madison, Wisc., which, like Richmond, is a state capital with a large university downtown.  Many of the challenges are the same, including the fact that roughly half the real estate — owned by the state and local government, churches and universities — is tax exempt.

Olinger also shares Mayor Dwight Jones’ vision of re-developing Richmond’s crime-ridden housing projects as mixed-use communities that bring jobs into the city’s poorest neighborhoods and, as a bonus, bust up the concentrations of poverty associated with crime and other social pathologies.

Though optimistic, Olinger does not understate the challenges. “People talk about infill as if all the infrastructure is in place,” he says. “Yeah, we may have sewers but they’re 100-year-old sewers.” Creating the kind of walkable, bikable streetscapes that Olinger would like also costs money.

The good news is that S&P has just upgraded the city’s bond rating to AA+, giving Richmond cheaper access to capital than, say, Washington, D.C.,  Baltimore, New York or Los Angeles. But the city still falls short of the AAA rating commanded by the likes of Charlotte, Minneapolis and Columbus. And to maintain the rating, Richmond must stick to strict debt management policies that limit debt to 10% of total budgeted expenditures and 4.5% of total taxable assessed real estate values. Capital spending financed by the General Fund (not including utilities) was $112 million for Fiscal Year 2013 but will fall to $41 million by FY 2017.

Another challenge is making the city a desirable destination for families with school-age children. Home builders are creating plenty of product for singles and empty nesters but not much that’s suitable for traditional nuclear families.

Still, says Olinger, the city has great architecture and a great scale. “It’s got good bones. If the bones are good, there’s always the chance that people will come back.”

Finding the Right Formula for Libbie & Grove

Chadwick Antiques

Chadwick Antiques

by James A. Bacon

When last we visited the re-development of the Libbie & Grove neighborhood of Richmond (“The Densification of Richmond“), public opposition had stymied the conversion of a BP gas station into a four-story luxury apartment complex. The proposed facility was just too big — it would have been out of place in a district of one- and two-story shops.

But the neighborhood is too desirable for investors just to tuck tail and slink away. A group of investors led by Scott Boyers, who had pushed the BP conversion, now proposes to add a floor to the two-story Chadwick Antiques building nearby and turn the upper two floors into four apartment/condos that would start at 1$ million or rent for $3,000 per month. This proposal, which would not alter the ambiance of the region as dramatically, won unanimous approval from the Libbie Grove Association of merchants.

The Chadwick Antiques proposal follows the development of the Tiber condominium project on nearby Patterson Avenue. Before construction is complete, 10 of the 15 condominium units, which start at $600,000, have sold already.

What’s remarkable about the interest in the Libbie & Grove area is that the commercial district is nothing special architecturally. This is not Park Avenue in Manhattan or Worth Avenue in Palm Beach. The buildings and storefronts are nothing special to behold.

But the area does do a few things right. First, it has a good mix of restaurants, boutiques and professional buildings, not to mention a small grocery store and a movie theater specializing in independent films. The buildings are set back far enough from the street to make room for a wide sidewalk and ample patio seating for the restaurants; on-street parking creates a barrier from the traffic on the busy streets. The area has adequate parking (just barely) and, critically, much of it is tucked away behind the buildings out of sight. There are few  parking lots to detract from the pedestrian experience, although the BP station is hideous and does cry out for redevelopment.

For the most part, Libbie & Grove is the quintessential walkable neighborhood. I dare say that you will see more walkers, joggers and moms pushing baby strollers on Grove Avenue than anywhere else in the Richmond region (with the possible exception of the highly walkable Monument Avenue). As a consequence, people are willing to pay a premium to live nearby.

How to densify. The logic of metropolitan growth and development dictates that there will be considerable pressure to re-develop places like Libbie & Grove. What we have learned is that Richmonders are open to change — the response to the Chadwick proposal has been very positive — but change has to be incremental. Three-story buildings in the neighborhood are OK; four stories on a large-footprint building that would stand out like a sore thumb are not.

Over time, we’ll see more re-development. I expect to see some tear-downs — the 7 Eleven on Libbie is not only an eyesore but could be converted into a much higher-value property if three-story buildings become the new norm. Some of the smaller, less attractive single-family dwellings along Libbie and some side streets could bite the construction ball as well. Change will be incremental, stretching out over a decade or more. Measured change that occurs property by property is far less likely to inspire a backlash by nearby residents than if a big developer swooped in with grand plans to transform the neighborhood. All’s well that ends well.

Walkable Urbanism Takes Root in Virginia Beach

Intersection of Independence and Virginia Beach Boulevard.

Intersection of Independence and Virginia Beach Boulevards.

by James A. Bacon

Back in the pre-PowerPoint days when people used slide projectors, New Urbanist evangelist Andres Duany traveled around the country with a carousel of slides to illustrate the horrors that poor planning had inflicted upon the urban landscape. One of those slides, I recall, was an aerial shot of the intersection of Independence Boulevard and Virginia Beach Boulevard where 22 lanes (11 for each road, by my count) collided in a jumble of lanes. Making matters worse, the buildings on all corners were surrounded by acres of parking lots. It was a classic case of planning dedicated to the “care and feeding of automobiles,” in Duany’s phrase, that created terrain utterly inhospitable to walking. It made quite an impression upon me that one of the nation’s leading architects had singled out a corner of my home state as a paragon of poor planning.

But times change, and a group of architects, property owners and businessmen have spent the past two decades extricating the so-called Pembroke area of Virginia Beach from the clutches of auto-centric design. To date, they have carved out a walkable, mixed-use district of nine or 10 blocks, designated Town Center. The goal always has been to expand from this nucleus into neighboring blocks, with a vision of creating an urban “downtown” for Virginia Beach, which, outside the resort area, is as shapeless and formless as an amoeba.

So, it comes as encouraging news that the City of Virginia Beach, presumably after long and bureaucratic deliberation, is on the verge of implementing new zoning regulations for the CBD. As Gabriella Souza describes the thrust of the new zoning regs for the Virginian-Pilot:

Shops and restaurants should sit close to the street. Signs should convey an urban ambiance. And don’t even think about constructing buildings with windowless, blank walls. … The goal is to encourage more urban development in the area, to move away from strip malls and parking lots.

Think more walkable areas, public art and buildings that rise up rather than sprawl outward, said city planner Ashby Moss.


Area of the Central Business District Core.

City staff will make a presentation about the updated zoning regulations at a public hearing tonight. Judging from the comments under the article, there is a lot of hostility to the idea. As one resident commented:

If you look to the south you can catch a glimpse of the used car lot and garage that is the iconic entrance to Town Center. Or if you prefer, look north and see the historic site (now a parking lot) where the famed Beacon building once stood. Each of these debacles cost the taxpayers $5 million. You’ve got to love that “vision” thing. … You really can’t make this stuff up.

Density is bad, developers are greed-heads, City Hall is squandering tax dollars, etc. Clearly, city officials and the CBD business leaders have a major public relations challenge overcoming the Not In My Back Yard syndrome. In response, I would emphasize a couple of points:

  1. If you don’t like the idea of living in a compact urban environment, then don’t. Nobody’s making you move there. But other people want to partake in walkable urbanism. Who the hell are you to deprive them of that choice?
  2. Compact, mixed-use development creates five to ten times more revenue-per-acre than conventional suburban subdivisions and shopping centers — but they actually cost less per acre to maintain and provide with city services. Properly done, mixed-use development can augment the tax base and reduce the pressure for higher taxes.
  3. Mixed-use development can support mass transit such as buses and, possibly, an extension of the Tide light rail line. The more people who live and work within walking distance of the station, the more people who will use it… and pay fares… and reduce the rail line’s operating costs. When more people walk and ride transit, there are fewer people clogging the roads.

I would side with the anti-urbanism populists on one issue: City policy could generate windfall profits for wealthy landowners. If the city decides to extend the Tide as far as Pembroke, and if it decides to increase development densities there, then land owners will see a surge in property values that they did nothing (other than lobby legislators) to create. To help finance the rail line, the city should set up a Community Development Authority within a 1/4-mile walking radius of the station, taxing property owners to help pay back the bonds used to finance the rail project. Perhaps a formula could be devised so that the tax would vary in direct proportion to which land owners benefit from increased density allowances.

While the city should bend every effort to encourage the private sector to re-develop the area, it should not do by shifting the burden of building and maintaining infrastructure to the general public.

Now, if the planners can just figure out what to do with Virginia Beach and Independence boulevards, those uncrossable asphalt causeways that divide the district into hermetically sealed quadrants. Converting them into so-called “complete streets” by shaving off a couple lanes each direction for bicycles and pedestrians could make Pembroke a really exciting place to live and do business.

PARC Tackles Parking

Aerial view of the Palo Alto Research Center (PARC). Note the vast space dedicated to free parking. Ironic, huh?

The Palo Alto Research Center (PARC). Note the vast space dedicated to free parking. Ironic, eh?

by James A. Bacon

A couple of years ago, the creative geniuses at Xerox’s renowned Palo Alto Research Center (PARC) labs were brainstorming ways to shake up one of the stodgiest sectors of the American economy: parking. A new wave of technologies made it possible to do things never thought possible before, such as adjusting the charge for parking spaces in response to real-time changes in supply and demand. New smart phone apps were making it possible for drivers to search for empty spaces on the street and even in driveways garages, and to compare prices. Who knows, maybe people even would take to the idea of “reserving” parking spots ahead of time, to ensure an empty spot on an important occasion.

Much of the thinking was based upon classical economic theory. The Xerox team figured a city should aim to keep the number of vacant, on-street spaces between 10% and 25%. Raise parking charges when too many spaces were filled and drop the fee when there were too many empty spaces. That would strike a nice balance, ensuring that the spaces were close to fully utilized while leaving enough vacancies so drivers could always find an empty space (if they were willing to pay the price). Prices could be adjusted on a block-by-block basis to optimize outcomes.

However, theory often collides with reality. Humans can be unpredictable or downright perverse. Among the challenges in persuading them to act like economically rational agents is making it easy for them acquire and process usable information.

James Glasnapp, a senior researcher with PARC, discovered that there can be a wide gap between theory and reality. As an ethnographer — a researcher who studies the behavior of people in natural settings — he and his team members conducted close-up studies of parking in California communities that allowed the PARC parking team to fine-tune its product both before and after commercializing it last year in downtown Los Angeles.

Using a combination of simple observation, videotaping and personal surveys, Glasnapp and his team spent many days in the urban wild. “We wanted to understand from the parker’s point of view how they make decisions about how to park.” It turns out that people were eager to express themselves. “Everyone loves to complain.”

Glasnapp got an earful. Much to the dismay of classical economists and parking apps, most people had no idea what the parking prices were. Few realized that prices varied from street to street. “They were completely surprised that parking might be cheaper catty corner to where they were. Very few people knew about the smart apps.”

People don’t think in advance about where they’re going to park. They just decide upon a destination then start looking around for a space when they get there. The Xerox ethnographers showed people the marvelous things the parking apps could do but it took some convincing to get them to accept the value proposition that paying a small commission to extend the parking time beats fishing for coins and running out of the office to feed the meter.

Another problem the ethnographers uncovered is that people can’t use the apps when they’re driving. It takes focus to choose between open spaces in different locations and weigh that against different prices. “There’s a lot of complex information to take in,” says Glasnapp. “You need a co-pilot in the car to direct you to the cheaper parking.”

The Xerox research also showed that people do crazy things when looking for parking — like making illegal U-turns in the middle of the street, sometimes even driving over a curb, to reach an open space. Glasnapp thinks there is a tremendous potential market for reserving on-street parking, although he concedes people will have to get accustomed to the idea of driving past a seemingly empty space that someone else has reserved.

It will take time for drivers to learn how to use the parking apps and change their behavior before dynamic pricing has the effect that classical economists say it should. But Xerox is learning from experience. Among other tangible contributions, the ethnographers have made progress in simplifying oft-indecipherable parking signage. With more observation and tinkering, Glasnapp is optimistic that people will incorporate the technology into their routines and change the behavioral dynamics of parking. Says he: “These are the things we have been thinking about.”

Time to Consider New Downtown Parking Models in VA


Cost of parking in downtown L.A., 5:21 p.m., July 1, 2013. (Click for larger image.)

In May Richmond City Council voted to increase the hourly rate for street  parking downtown from $.50 to $.75 per hour with the goals of netting an additional $250,000 yearly in revenue and helping downtown businesses by increasing the turnover in parking spaces. By way of market research, according to the Times-Dispatch, city officials had surveyed ten other comparably sized cities and found that Richmond’s hourly rate was lower than any other.

Think about that: City council acted based upon the experience of other cities rather than upon any insight into local supply and demand conditions. Furthermore, by setting a uniform rate for the central business district, Council almost ensured that the rate will be too high in some locations and too low in others.

There’s no excuse for such ill-informed decision making and such one-size-fits-all parking policies anymore. New technologies are making it possible to adjust parking prices based on street-level changes in supply and demand in order to ensure optimal results. If Richmond wants to remain a competitive business location, it needs to explore such “smart cities” technologies more aggressively.

To get a better sense of state-of-the-art thinking in the parking world, I chatted last week with David Cummins, vice president-parking solutions for Xerox Corp. Xerox was the systems integrator behind L.A. Express Park, an $18.5 million overhaul of on-street parking in downtown Los Angeles.

The parking meter was introduced in Oklahoma City in 1935 and parking technology barely changed until the late 2000s, says Cummins. Then all hell broke loose. He counts at least 20 new technologies and innovations that are roiling the world of parking. Indeed, he asserts, “Parking has been the most innovative of all the transportation sectors in the past five years.”

Xerox parking systems can help cities boost ticket collections, if that’s their goal, by installing sensors in parking spaces, notifying meter enforcers and even optimizing their routes. But Xerox also can help cities make parking a more pleasant experience that makes people more comfortable doing business downtown.

Says Cummins: “Parking is a painful process, from the moment you think about where you’re going, to looking for empty parking spaces, understanding the signage, figuring out if you have enough coins in the glove box, going to a restaurant and having anxiety over whether you’ll have a ticket on your car when you get back. Our goal is to take the pain out of parking … to make parking a non-event.”

The key feature of L.A. Express Park is dynamic pricing that varies block by block. The goal is to keep street parking spaces between 75% and 90% full. If occupancy drops below 75%, Xerox’s proprietary algorithm drops hourly rates to encourage more people to park on the street. If occupancy exceeds 90%, the system raises rates. The algorithm recognizes seasonal and time-of-day variations as well as spillover effects from one part of downtown to another.

It is critical, says Cummins, for people always to be able to find an open space. Otherwise, they will cruise around looking for one, contributing significantly to traffic congestion. “Parking is tightly integrated with congestion. If you have parking congestion, you will have street congestion.”

In L.A., apps such as Parker, Parkme and ParkMobile allow drivers to locate empty spaces and compare prices for street, lot and garage parking. New pay-by-phone and other payment systems make it easier than ever to pay for parking, “feed” the parking meter remotely and, if necessary, pay parking fines.

Xerox stores all the parking data in a data warehouse. “As you build your data over time, your algorithms get better,” Cummins says. Xerox mines that data to recommend performance-enhancing tweaks to the system.

While L.A. is a pace setter in smart parking, Cummins predicts the technologies will spread. As citizens see the system at work in L.A., San Francisco, Washington or Indianapolis, they will demand the same convenience in their own cities. Retrofitting an entire downtown can run into the millions of dollars; a federal grant covered most of the cost of L.A’s pilot project. One way other cities may be able to justify the investment based is through improved ticket collections. The City of Los Angeles was hoping in 2012 to boost parking-ticket collections by $8.4 million yearly.

Admittedly, writing more tickets is not calculated to engender warm and fuzzy feelings for your downtown. But Xerox contends that new technologies also can drive down the cost of enforcement and billing. Ideally, in my book, those administrative savings would finance the smart-parking upgrade, giving a municipality what amount to free tools to manage its parking assets more effectively.

In closing, I asked Cummins if he sees “smart parking” as a natural adjunct to “smart growth.” It’s a possibility, he says. “From our perspective we’re making more livable and sustainable communities” by optimizing parking space utilization, reducing parking congestion and, by extension, reducing traffic congestion and pollution. Some people think that anything that makes parking and driving more attractive is counter to smart growth goals such as walkability and mass transit. But Cummins is confident smart parking can advance smart-growth priorities like car sharing and bike sharing.

A conservative philosophy of smart growth, like that espoused by Bacon’s Rebellion, recognizes that automobiles and parking are likely to remain part of the urban fabric for a long time. Smart growth thinkers should jump on parking technologies like those used in L.A. Express Park to advance their vision.

Parking Drove Richmond’s Gateway Plaza Participation

gateway_plaza_renderingThere’s a bit more to the Gateway Plaza than I blogged about yesterday. I caught up with Larry Chapman, a partner in Clayco, the company developing the $110 million office tower in downtown Richmond, and asked him why the City of Richmond needed to chip in $11.25 million to make the project happen.

It’s all about competition, says Chapman — in this case, competition with Richmond’s suburbs. The lead tenant, the McGuire Woods law firm, is willing to pay a premium rent to locate downtown… but there is a limit. A key sticking point is the cost of parking. In the ‘burbs, employers don’t have to charge their employees for parking. In downtown Richmond, there is an expectation that $120 month is a reasonable price to pay for parking. But, given the cost of building structured parking downtown, the actual charge would be closer to $350 per month. McGuire Woods has to ask itself, would its employees be willing to pay that much of a premium to be able to work in Richmond?

Clayco went to the City of Richmond and said, “We need some assistance,” Chapman says. “If we bring more taxes to the table, will you help finance and own the garage? When they weighed it all out, they said, ‘Yes’.”

Clayco will finance as much of the parking deck attached to the Gateway Plaza office tower as can be supported by market rates for parking, Chapman explains. The city will finance the rest. Clayco and the city will share ownership of the facility. The city will recoup its investment from the roughly $1.3 million revenue stream thrown off by the project’s property taxes. An intangible benefit, as I argued in the last post, is that the project will improve walkability at the heart of the city’s central business district, supporting property values in the area.

From the city’s perspective, Chapman concedes, forking out $11 million may not be the ideal arrangement. But that’s the reality of the marketplace today. “This is the kind of thing you see all over the country. If the economy was fine, you wouldn’t do this.” But the economy is how it is, so you do. As it is, the city still comes out ahead, with tax revenue exceeding debt payments. “If the project didn’t get built, they wouldn’t get any new taxes at all.”


Richmond’s $11.25 Million Investment in Gateway Plaza Seems Justified

gateway_plaza_renderingby James A. Bacon

Richmond City Council has approved $11.25 million in general obligation bonds to build a public parking garage for the proposed Gateway Plaza, a $110 million office tower in downtown Richmond.  I’m often skeptical of municipal “incentives” to stimulate “economic development” projects, but I think this undertaking will withstand scrutiny.

Chicago-based Clayco has contracted to purchase two lots — currently used for surface parking — in the heart of Richmond’s central business district. In their place, the developer would erect a 275,000-square-foot tower with the McGuire Woods law firm as the anchor tenant and a structured parking deck immediately adjacent.

From a high-altitude perspective, this deal looks favorable to the city. Not only does the project add $110 million to the tax base, which should yield $1.3 million in tax revenue at the current tax rate, it will repair a gaping hole in downtown’s urban fabric.

Judging from the design details released by Clayco, the project will be conducted with an eye toward appropriate urban design. The building will not resemble the monstrosity next door (seen in the upper-left hand corner of the photo below), owned by Dominion, an example of the “radiant city” school of architecture that glorifies the office tower — a pedestal set upon an empty plaza — at the expense of human scale and street connectivity. Aloof and isolated, the Dominion building sits there like an undigested lump.



By contrast, the base of the Gateway Plaza building will extend to the sidewalk, inviting interaction with the city. The ground level will include 10,000 square feet of retail, including a cafe-bistro and amenities such as dry cleaning and shoe repair. As a gold-level, LEED-certified building, Gateway Plaza also will provide electric car chargers in the parking deck and bicycle racks.



Perhaps the project’s greatest contribution will be eliminating an eyesore — a surface parking area lacking redeeming features of any kind — that deadens the walking experience along Cary Street. The project will go a long way to improve walkability in the heart of downtown Richmond, which will make neighboring properties more desirable and valuable. It’s the kind of project that could stimulate more investment, market conditions permitting, in the surrounding area.

The city is financing construction of the parking deck to the tune of $11.25 million and raising the cash by selling general obligation bonds that will be paid by incremental gains in real estate taxes, as well as a separate performance-based grant to be repaid by gains in BPOL and personal property taxes, according to Tammy Hawley, press secretary for Mayor Dwight Jones. “It is not a subsidy.”

Subsidies are in the eye of the beholder, I suppose. When Bacon’s Rebellion pays taxes on its office building (I don’t really have an office building, but go with me here), Henrico County doesn’t take 10% of the revenue in added tax revenues to, say, add curb and gutter along my property, and my property only. I would be getting a benefit that others don’t get.

On the other hand, let’s assume the city issues 20-year bonds at the current interest rate of 3.5%. The financing costs would be roughly $780,000 a year, leaving a positive cash flow from real estate taxes of about $500,000 a year. That does not include tax revenues from the ground-level retail sales or incidental expenses incurred making street improvements to accommodate the new traffic flow. Clearly, there would be a net benefit to the project. And, just as important, there would be little risk to the city. Regardless of how the developer fares financially, the bump to the tax base does not go away.

Gateway Plaza is not like the City of Norfolk’s borrowing $31 million to build a cruise line terminal, the success of which was contingent upon cruise liners home porting in Norfolk. (See “Norfolk’s Cruise-Line Gamble Could Turn Up Snake Eyes.”)

My only question is whether the city really had to chip in the $11.25 million subsidy to make the deal work. In situations like this, developers will always ask for the money. They would be negligent if they didn’t. I would be interested to know what kind of due diligence city officials conducted to assure themselves the deal would have cratered without the contribution.

Note: I have edited the original post to incorporate information provided by the City of Richmond.