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Spaced out 

Each parking space lost to development costs at least $45,000 to replace

LOOK ELSEWHERE :  These parking spaces will soon be gone. - PHOTO BY STEVE E. MILLER
  • LOOK ELSEWHERE : These parking spaces will soon be gone.

  How much does a downtown San Luis Obispo parking spot cost?

That seems like an easy question: $1.25 an hour to park on the main downtown streets, or less in a parking structure. But a parking spot is worth a lot more than pocket change when none are available, which will soon be the case for more and more shoppers, because developers are planning to build on several current public parking lots.

The way a city government regulates parking shows how it balances the needs of the public versus the power of business owners and developers. It can also reveal a city’s priorities and give insight about the future of a town. Perhaps the best answer to the question of how much parking costs is how much the city must spend to replace a public parking space.

When a public parking space disappears due to development or the extension of a sidewalk, the city government tries to replace it with one in a parking garage, preferably blocks from the city center. These parking garages are expensive: the city estimates in its latest parking fund review that it will spend $20 million for 445 spaces when the next one is built at Nipomo Street and Palm Street. That boils down to $45,000 per space.

The city does earn money from parking spaces. Each curbside space brings in around $1,500 a year; all metered parking accounted for $1.4 million in the 2007-2008 fiscal year. Combined with $774,100 in fines and forfeitures, the city squeezed a little more than $4 million out of parking during that period. The money doesn’t otherwise help the city pay bills; the cash goes into a fund to maintain and create more parking.

When developers want to build in downtown San Luis Obispo, they inevitably have to use land that a surface parking lot occupies. The builders are required to pay the city the replacement cost of the lost public parking, an in-lieu fee. What they pay varies greatly. The Chinatown project, the most recently approved development, which will devour two city parking lots, will cost the developer nearly half as much per space as developers of the upcoming Garden Street Terraces project will pay. Neither outfit will pay the city as much as it will cost to replace the lost parking spaces.

The city doesn’t require developers to pay the full price for  replacement parking spaces; the standard fee is 40 percent of the cost for replacement. According to city officials, it’s assumed new businesses will pay for the remaining 60 percent in sales and property taxes over time. The city in-lieu fee is currently $17,072, a figure based on the cost of the latest city parking structure, 919 Palm St., built in 2006.

Other cities deal differently with the loss of public parking to development. Some ask for less than the San Luis Obispo standard of 40 percent; some ask for compensation of the total cost of replacing a parking space. Ventura, Pismo Beach, and Arroyo Grande require 100 percent of the cost of replacing public parking. It costs developers $36,000 per space in Pismo Beach and $24,000 in Arroyo Grande, according to a 2008 San Luis Obispo study.

The city has had the 40 percent guideline since the late 1980s. As large developments became more frequent, the city made deals that were sometimes higher, sometimes lower, than the 40 percent.

The Court Street project developed by the Copeland family eliminated 132 spaces and they had to pay $4,000 for each space. Soon after the in-lieu fee for the project was agreed upon, the in-lieu fee was raised to $11,000. The Copelands are slated to pay $3.2 million in in-lieu fees for 188 spaces for the Chinatown Project—$17,072 per space. (Their expense could rise; the final in-lieu fee will be determined for some of the spaces when the building permit is issued). This is on top of the $1.1 million price they paid for the land, which had been appraised for far more.

The Chinatown project will include parking but most people won’t have access: 74 underground spaces are dedicated to guests at a boutique hotel and residents of the exclusive condominiums to be built on the site.

The Garden Street developers agreed to pay much more than the 40 percent rate for the 22 spaces they will eliminate. They are set to pay $30,000 for each space they consume, however the city will be a financial partner in the venture and is loaning money to the developer to build a garage.

Allowing developers to pay less than full price for replacing a parking space is part of a strategy to create a pedestrian-friendly downtown.

“The city’s long-standing policy is to discourage parking in the downtown areas,” said San Luis Obispo Mayor Dave Romero, speaking of the Downtown Concept Plan and the General Plan. “So we don’t have a bunch of little parking lots everywhere. This is better than having projects building large garages as part of their development.”

City leaders have been trying to create parking in the outskirts so that the downtown area becomes similar to pedestrian-dominated European towns. However, developers can include large parking garages in  projects, instead of paying in-lieu fees, Vice-Mayor Andrew Carter pointed out.

“The assumption is that development of the surface lots leads to a more enjoyable pedestrian-oriented downtown, plus the sales tax and Transit Occupancy Tax (hotel tax) generated by new development more than make up for any loss to the Parking Fund,” Carter said in an e-mail.

Donald Shoup, a UCLA professor, said he admires San Luis Obispo’s handling of its downtown. He is one of the nation’s leading experts on city parking, writing the definitive book on the subject. He has spent much of his life advocating city plans that make urban centers relatively free from cars.

“It’s most desirable to take what’s distinctive about your town and preserve it,” said Shoup. “It’s more of a trend with older cities to preserve what they have inherited and it puts the car in the right place: out of the city center.”

More parking structures are likely in San Luis Obispo. A city study concludes there will be a need for more spaces—250 spaces every five years. That works out to a new parking structure every five to 10 years.


Staff Writer Robert A. McDonald can be reached at


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