Condo builders are apparently reluctant to build or operate public parking downtown, so Councilmember McCracken wants the City to take up the slack. He claims it will be "cheaper" for the City to build public parking:
McCracken believes they could be financially beneficial for the city because it could lower construction costs by issuing low-interest debt and wouldn't have to pay property taxes on the finished product. The city also would be willing to accept lower profit margins than private developers.
This is pretty shaky accounting. The City's loss of property taxes is part of the cost of operating a City-owned garage, regardless of whether it has its own budget entry. This also ignores the opportunity cost: if the City could sell a lot for a gazillion dollars, but instead builds a public garage on it, the
lost loss of that gazillion dollars is a cost, too.
I'm also skeptical that these will generate enough revenue to cover the construction and operating costs. Developers' land costs and property taxes are more or less fixed costs. The cost to them of adding public parking is just the marginal construction cost. That they don't think public parking will provide a profitable return on this capital investment is a reliable indicator that it is not. This shouldn't really be a surprise, since much of the return from parking is captured by merchants, who benefit from the traffic.
Parking is a problem downtown, and I'm not trying to suggest that the City sit on its hands. But we shouldn't go into this thinking that this will be anything other than a subsidy for downtown property owners and merchants, possibly a deep one. We also need to recognize that this subsidy will fall most heavily on those without cars.
You can think of downtown as a complex ecosystem, with the different inhabitants in a mutually dependent relationship. The condo builders need plenty of street-level retail to make their condos attractive to buyers. The retailers need plenty of condo dwellers. But they also need traffic from outside downtown, because the condo residents alone won't keep them in business. It is a fantasy to think that buses will bring enough traffic downtown, at least anytime soon, so the downtown retailers need parking. The problem is that the condo builders who could build the parking don't want to take the hit for the benefit of everyone else. It's a classic free-rider problem.
The City can do some things fairly easily. It can start by charging what the market will bear for existing parking, particularly street parking. (The price should be set high enough so there is always some free curb space.) This will maximize revenue and encourage those traveling downtown to consider alternative transportation.
Ideally, it would figure out some way of shifting the cost of new parking to downtown property owners. Spending some of the density bonuses on parking would be a better use of the money than some of the others uses that have been proposed. Developers would probably be more receptive to that use, since ultimately it will enhance the value of their property.
Could the City create a public improvement district to fund parking? The district would build the off-street parking and assess the owners. That would eliminate the free-riding problem, and eliminate the subsidy. And if the City put the decision-making in the hands of the downtown merchants and property owners, it could reduce the risk of oversupplying parking -- presumably, downtown owners won't pay to build more parking than they need.
I'm not a local government finance expert. McCracken may have already considered and rejected this possibility. But I'd like to hear that all options have been considered before the City launches into a risky, property-subsidizing enterprise.
P.S. Shilli at Austinist has a similar take (although he appears to be more skeptical of the need for new parking).