ORCA Card UW Beta Test, by Oran

Recent talk of commercial parking tax (CPT) increases have been largely centered around where revenue would go, but have missed out on the broader implications for both drivers and transit users.  The benefits of the tax are generally twofold: more revenue and more disincentive to drive.  Ironically though, it is because of  increases in the City’s CPT over the past several years that blows have been dealt to the UW’s U-Pass, the University’s primary transportation demand management (TDM) program.

Over the past two years, the price of a quarterly U-Pass has nearly doubled from $50 to $99, largely due to an increased share of parking revenue going to the CPT.  Because parking fees help fund the U-Pass, the costs have drastically risen for both students and faculty.  The University’s student government, ASUW, has been lobbying the City for an exemption from the increase.  From the UW Daily:

Organizations such as hospitals and universities spend a significant amount of their parking revenue on subsidizing programs like the U-PASS, and if the CPT increases, it would make such programs more expensive, Lewis said…

The CPT increase for the UW alone is worth almost $2 million, and would be a huge loss of revenue during a difficult budget period, said Lewis, who has been in discussions with city council members and administration.

More below the jump.

At the current rate of things, the U-Pass program is likely to go insolvent, especially if a CPT exemption falls through.  There are two things I see with this dilemma:

First, as things are, the City should almost certainly exempt the University from the CPT increases.  Part of why transit commuting is much higher in Seattle than other similar-sized cities is because of the city’s TDM programs (on top of geography and density).  The U-Pass program is one of the most successful examples of this; the University has a higher transit commuting share than downtown, and blows the latter out of the water when it comes to the aggregate of non-driving shares with the UW’s 74% over Downtown’s 53%.  It would not help the City’s carbon neutrality goals if the council were to subject UW to the CPT increase.

Second, there are obviously some inherent flaws in the U-Pass funding structure, which ultimately puts the commuting share ratio in a deadlock.  The more people using transit, the less driving, and that’s fewer dollars for incentivizing transit to begin with.  Exemptions from CPT increase can’t last forever, which means the University needs a better funding source for its TDM program.

The situation isn’t starkly different from other discussions about volatile revenue streams for transit and Pigovian taxes, and this is generally a sticky topic for transit advocates.  I haven’t heard any great solutions, but considering that the UW is a state institution, a little help from Olympia wouldn’t hurt.  But seeing as Metro can’t even seize up such scarce resources, no one is betting on that kind of relief anytime soon.  For starters though, delaying a transition to ORCA does not help.

31 Replies to “The Case for UW’s Commercial Parking Tax Exemption”

  1. Given that bus fares themselves have nearly doubled in the past two years, I think it is stretching it to say the U-Pass increase is “largely” due to the CPT.

  2. Why can’t they just raise their parking fees in direct correlation to the increase in tax? If they just cut how much the fund the CPT by the amount of the tax increase, doesn’t that defeat the disincentive to drive part?

    1. Because parking rates are so high already that elasticity of demand means that any increase of rates won’t really bring in any more money because demand will drop, offsetting any gain. At least that is what UW estimates show. The thing with the upass is you need some percent of people driving to help pay for the system.

      1. But you haven’t presented a case.
        UW has lots of pay parking lots.
        Pay parking lots in Seattle are taxed.
        UW pay parking lots should be taxed.

        UPass has a bad funding stream – like WA schools and the “owls vs kids” astroturf campaigns during the 90’s.

        Fix the funding stream rather than carve out massive exemptions. Or just wait, and the problem will stabilize, as the old-growth logging outrage has – to some extent.

        A side issue is that UW has consistently been a bad actor in the U-District, and should really be planning to put something useful in place of those massive surface parking lots.

      2. @psf I don’t follow. Parking revenue goes back into the Upass program so they aren’t making a profit off of this, they are using it to increase transit ridership. UW estimates that any increase in taxes would cut into their revenue because elasticity of demand is such that any further increase in parking rates wouldn’t bring in much more revenue.

        This is based on UW’s financial assumptions (so I can’t vouch for them) but the general results are consistent with the idea of demand elasticity. Make something too expensive and demand will drop off so much that even with the increased revenue per customer your profits won’t change much.

      3. But don’t we want to reduce parking demand? Presumably these people will still be coming to campus, just by other means. The problem I see is that UPass needs a different source of funding that doesn’t depend on cars, not that the parking tax is too high.

      4. “But don’t we want to reduce parking demand?”

        The UW already does that successfully through controlling the price of parking and limiting the number of SOV permits. Increasing the parking tax would limit their flexibility in adjusting prices to meet policy goals.

        If anything the city should raise the parking tax in the surrounding area and funnel that money into supporting the UPASS program. Being able to park in a private lot adjacent to the campus for half the cost of parking on campus limits the UW’s ability to discourage SOV travel to the U-District.

  3. I’ve seen lots of general “parking fees go to upass” but does anyone have the actual breakdown? Is it that all revenue above the parking operations/maintenence goes to the UPass program, or does some of it go to other programs or the university’s general fund?

    If I was the university and wanted to avoid ponying up two million Upass seems like a better political weapon then just a general “we don’t want to lose 2M in revenue in tight budget times”.

  4. Sorry, but no organization should be exempt from it. That would not be fair to the private companies around Seattle who offer parking as well. Yeah, the UW “supports” transit (I would tend to disagree), big deal. My company gives us subsidized annual transit passes for $100 and ate the other $1000 because it was in their best interest, but they don’t get any exemptions from taxes.

    The UW should do what we at WSU do: require students to pay a mandatory transit fee (we don’t need to fight about Pullman Transit vs. Metro). That way EVERYONE gets a bus pass so there is more incentive to use it. Universities don’t seem to mind tacking on random fees and charges. Plus, not everyone is going to use it so the non-users will help subsidize the users!

    1. Upass the is the *most* successful TDM program in the state and has become a national model or universities. I don’t know how you can say that the UW doesn’t support transit. It doesn’t do what I like all the time but UW knows it can’t function without good transit service.

      Also private companies have parking lots to make money, UW puts most of its parking revenue back into Upass. Should the city, that wants to be green in all ways tax it’s largest success story?

      I tend to agree that everyone should be required to have a Upass but keeping the cost down (by subsidizing with parking revenue) is the best way to make sure that people use the systems in the abscess of a requirement.

      And finally employers do actually get tax benefits from providing transit passes.

      1. To green things up, the tax SHOULD be applied to UW’s parking lots, thus discouraging SOV use and encouraging transit use. We here all know higher parking costs leads to higher transit usage. Kind of a stupid situation where the UPass’s survival seems to rest upon people not using transit.

    2. UW is working on different funding models, and unofficial word is that the cross-the-board transportation fee is gaining ground. There should be an announcement on the final decision before next school year.

  5. I know someone that has a bus pass to UW so she can pay reduced parking rates but always drives. how does that fit into this issue?

    1. It’s the other way around, if I’m not mistaken. All quarterly parking passes at the UW tack on the price of a U-pass. The thought is that this will encourage other means of transportation on occasion for those who mainly depend on driving.

      1. That’s true for quarterly parking, but single-day carpool parking in the E1 lot is only available if 3+ people in the car have a UPass.

      2. No, I looked on the UW Facilities website. Everyone gets charged for the U Pass and if you don’t want to use it you have something like seven days to claim a refund; doesn’t matter if you’re buying a parking pass, live on campus or row across the lake. At $99 for students it’s still a screaming deal at the same price as a monthly pass for two zone riders plus Sounder is thrown in for free and there are other perks.

        My question is how much does the UW pay Metro? That is how much of the actual cost of the pass has to be supplemented from other University funds? I think the deal WWU worked out with WTA is they collect $10 from every student and the student ID is valid as a bus pass.

      3. It seem you don’t need to buy a parking permit to take advantage of this so called wavier (although the Parking fees section seems to make it out that way). Everyone gets automatically charged and everyone has the right to a refund if they return it within the first week of the quarter:

        blockquote>Returning the U-PASS: Students
        Regular students, students in self-sustaining programs, evening degree students

        If you do not wish to retain the U-PASS and do not wish to be charged:

        * Do not affix the U-PASS to your Husky Card. Return the U-PASS unused on its paper carrier card by the tuition due deadline (third Friday of the quarter).
        * You may return it by mail in the blue business reply envelope that comes with the U-PASS sticker mailing from the Registration Office, or by dropping it off in person at Student Fiscal Services (129 Schmitz Hall) or the ID Center (ground floor of OUGL).

        It really seems like the UW is trying to obfuscate the fact that you’re not in any way obligated to pay for a U-Pass. What other employer can get away forcing you to buy something and then make you jump through hoops to return it.

      4. Bernie: I wouldn’t say you have to jump through hoops. As the website says, you get a Business Reply envelope with your U-PASS sticker. So all you do is put the U-PASS sticker sheet in the envelope, seal it, and drop it in the mail. Not very onerous.

      5. The Daily article confirms that anyone can opt out (lets see if I can remember all of the point brackets this time):

        Students are automatically charged the $99 U-PASS fee as part of their quarterly tuition. In order to get the $99 back, they can mail in the envelope included with the U-PASS sticker, or if they’ve already applied the sticker to the Husky Card, they can opt out by visiting the Commuter Services Office located on the Ave.

        But it doesn’t say what the cost to the UW actually is. Does Metro just get to charge full fare (I doubt it) or do they calculate how many passes would equate to that number of rides. Worst case is if Metro is allowed to charge UW the average cost of boarding for each ride which is almost what the article implies. Nobody pays the full cost of boarding; it’s highly subsidized. What’s more, each boarding may be part of one trip covered by transfers so the cost of the fare is closer to about 20% of the cost of the service. It’s a bit infuriating that Metro is just allowed to pass along (cost plus) it’s years of digging to the bottom in efficiency vs it’s peers. How is it Metro can double the cost of service for the UW when their cost per operating hour has “only” gone up 13%? Even if you figure in a 30% increase in ridership (which is very different than a 30% increase in marginal cost) a U-Pass should only be about $75 based on cost increases. I find it hard to believe that the contribution from parking revenue has dropped more than 50% in three years. Aren’t the lots still pretty damn full?

      6. Bernie,

        First, the fee waiver from my earlier link means that you get to keep the U-Pass but not pay the fee if you purchase a parking permit. This is not the same as returning the U-Pass.

        Second, returning a U-Pass isn’t at all obfuscated. You can either stick your U-Pass sticker onto your Husky Card or into the postage-paid envelope that’s included with the U-Pass and registration. I don’t know of anyone who hasn’t been able to figure this out.

        Third, the chart from The Daily article has a y-axis of “dollars;” this is the total cost to the UW of the U-Pass program. As of 2010, UW paid Metro about $25 million.

  6. Does that mean if some private business downtown funded some of their employees’ bus passes with income from parking that they should be exempt from the parking tax? Heck no, and UW shouldn’t be exempt either.

    1. What if that private business paid for the upkeep and policing of a square-mile of downtown?

      Since the University benefits everyone shouldn’t we being doing as much as possible to minimize their operating expenses? They already do a better job of managing travel demand with the UPASS program than what the city could do, so why divert money away from it? The city will just flush it down the black hole of government anyways.

  7. I agree with the comments above. Threatening to increase the price of bus passes is just a ploy to get out of the tax. They can subsidise bus passes as much as they want through other means. Removing the tax removes their incentive to replace parking with buildings. Which would be a good thing, right next to a light rail station.

    1. The UW already has such high needs for space I’m sure the extra cost of this parking tax wouldn’t do much to affect how they view their parking lots.

      1. It’s still an incentive. A parking tax won’t convert anyone’s land on its own. There’s nothing particularly special about the UW.

    2. I know at least one UW employee who doesn’t purchase a U Pass because he bikes to work most days. On days that he takes the bus, he uses an ORCA pass with an E Purse.

      It seems like the UW could argue for cycling facilities improvements into the campus if they are subject to the tax.

      Raise the parking fees to decrease driving – raise the cost of a U pass if you must. With improved cycling facilities, people have another far more cost effective option.

      (And for the record, this guy commutes about 8 miles in each direction with hills)

  8. Cigarette taxes fund vital anti-smoking education programs, so we must exempt cigarettes from sales tax increases. If we don’t, demand for cigarettes will fall and anti-smoking education will suffer. If we want to keep these successful anti-smoking programs, we must subsidize cigarettes!

  9. Just curious: Is the Port of Seattle charged City commercial parking tax on its facilities in Seattle?

    How about NOAA (both Lake Union and Sand Point) and the Army Corps (Ballard Locks)?

    And (what’s left of) Fort Lawton?

    USPS facilities?

    The Federal Building parking garage?

    Just wondering how the City of Seattle treats other entities that could claim to be exempt.

    1. They are all taxed. The City collects the parking tax at its own facilities too – Pacific Place Garage, SeaPark, etc.; the State also collects the tax at the WA State Convention Center. The tax is paid by the driver, collected by any entity operating a pay-for-parking lot, then remitted by the operator to the City. No exemptions, no exceptions… as it should be. If you choose to drive, you should pay for the privilege. If you choose to operate a profitable parking operation (as the UW does), you shouldn’t whine when the City taxes those operations – doesn’t matter what good thing you choose to use your profits for.

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