As Colorado and major cities target parking rules, will developers build fewer spaces in their projects?

Ask an affordable housing developer for horror stories about parking, and they will rattle off tales of stringent local requirements that have limited how much housing they build — and even sidelining projects.

In Lakewood, Metro West Housing Solutions dropped a plan to build 44 subsidized apartments in part because the city would have required a parking garage costing more than $1 million. Maiker Housing Partners, the Adams County housing authority, scrapped 45 units from one of its recent projects elsewhere in metro Denver because it was required to build a parking space for every unit, and it couldn’t afford any more.

“Parking always drives the conversation,” said Susan Powers, the president of developer Urban Ventures in Denver. “We all hate it. We all have to live with it. We just design to the maximum number of units — and if we have to cut back the units because we don’t have enough parking, we do it. But we don’t like it.”

In cities across Colorado, that frustrated acceptance may soon dissolve. In May, legislators passed House Bill 1304, which generally prohibits Front Range cities from requiring a set number of parking spaces for housing developments near transit stops. In cities like Denver, Colorado Springs and Boulder, such zones cover significant swaths of the urban core, according to maps published by the state.

Some cities are pitching even bolder moves on an issue that generates impassioned opinions. The elimination of parking minimums raises fears of endless circling of blocks and farther walks to reach a destination. City officials say part of their work now is to educate their communities on what is to come.

The reforms offer benefits in the eyes of housing and transit advocates, city planners and developers, and among Gov. Jared Polis and housing-minded legislators. Less required parking offers the promise of more housing, particularly in subsidized projects for low-income people, along with easier approval processes for planners who serve as the entryway to the state’s housing supply. Transit and climate advocates see fewer parking spots as key to building denser, more walkable neighborhoods that decrease Coloradans’ reliance on cars.

Research and success stories from other cities that have eliminated parking minimums, like Minneapolis, have further fortified those aspirations. A recent report prepared for the Colorado Energy Office projected that sweeping parking reforms could drive more urban and transit-focused development than other housing policies recently passed into law.

“Of all the housing reforms to reduce cost and increase supply of housing, eliminating government-mandated parking requirements is really the most impactful change that we’ve made so far,” Polis said in an interview Thursday. “Very tangibly, parking spots add $20,000, $40,000, $60,000 to the cost of the unit. And more importantly, they decrease the number of units that can be built.”

Now, as the state implements its new law and local governments begin adjusting their zoning codes to accommodate it, policymakers and experts wonder how much parking will be built by housing developers released from municipal requirements.

How the market responds to the law, they said, will dictate how impactful it truly is.

Simultaneously, Denver and Boulder may join the growing number of U.S. cities that have eliminated parking minimums entirely. That would go beyond just housing and would also nix requirements for businesses, which have their own specific parking ratios.

Denver city officials presented the idea to a City Council committee last week, though they haven’t yet filed a formal council proposal. Boulder officials are similarly pulling together their plans with the encouragement of city leaders.

“If people need to choose whether to provide a parking space or a (housing) unit,” Justin Montgomery, a senior city planner in Denver, told councilmembers, “we would like them to provide a unit.”

That’s already drawn some concern from Denver Councilwoman Amanda Sawyer. She told Montgomery and city staff that people in her district — which includes heavily residential neighborhoods like Hilltop and Montclair and the rapidly densifying, retail-rich Cherry Creek — want places to park.

“I understand Community Planning and Development’s argument that we have to do it for most of the city anyway because the state is making us,” she said in an interview, referring to the city department involved. “But District 5 is seeing a tremendous amount of new development. Our small businesses are the lifeblood of our community, and if people can’t park near our small businesses, people aren’t going to access them.”

Parking isn’t going to disappear, several developers and housing experts told The Denver Post, even if the city tells developers they don’t need to provide a specific number of spots. The lenders who finance apartment projects typically require a ratio of parking spots to units, no matter what the local government mandates, because parking makes it easier to find tenants.

More fundamentally, developers know that they need to attract people to rent the units. That includes appealing to people who have cars.

“We’re not going to slit our own throats,” summarized David Zucker, the CEO of Zocalo Community Development, which has developed a dozen apartment and condo projects in Denver.

Overparked, underhoused

As developers of subsidized housing projects will readily relay, parking is an underappreciated speedbump in America’s — and Colorado’s — housing crisis.

Cities can require one or two spots per apartment unit, one spot per barstool or one per 500 square feet of certain types of space. When developers look at narrow lots in urban areas that have no surrounding ground readily available for parking, they throw up their hands. When they’re tasked with building 50 spots at $5,000 or $25,000 or $50,000 a pop — numbers that go up if an underground garage is needed — they shave off the number of housing units or drop the project entirely.

That’s particularly true for subsidized developments intended for lower-income Coloradans. Those projects have tighter financial margins, and a dozen or two parking spots may mean fewer units.

For market-rate developers, some base number of spots is needed to attract tenants — but parking also means more costs that must be recouped for investors.

Colorado’s urban areas already have abundant parking, research shows. A study by the Parking Reform Network found that off-street parking takes up 17% of the central city in Denver and 21% in Colorado Springs. A December 2020 study by the Regional Transportation District found that “market-rate properties provide 40 percent more parking than residents use, and income-restricted properties provide 50 percent more parking than residents use.”

At the same time, metro Denver is short tens of thousands of housing units, according to a recent study by the Common Sense Institute, a free-market think tank. The legislature’s recent land-use reforms — which included efforts to add density in urban areas and to allow for accessory-dwelling units to be built in backyards or above garages in Front Range cities — were all aimed at bolstering the housing supply in a bid to lower prices.

Of the most sweeping land-use reforms passed in the legislature earlier this year, the parking measure kicks in the fastest: Local governments are required to comply with it by the end of June.

Will Toor, the executive director of the Colorado Energy Office, said state modeling showed that “while all of the policies had meaningful and significant impacts on making more housing units economically viable, the parking (bill) was by the far largest in terms of its impact.”

Denver and Boulder both had previously considered eliminating their minimum parking requirements, planners from the two cities said. Denver’s current minimums exempt single-family homes and don’t apply to downtown, as well as to some specific neighborhoods, while affordable housing projects can face reduced minimum per-unit ratios.

Research from Minneapolis, which fully eliminated parking minimums in 2021, indicates that fewer spots were included in projects and housing development increased. Seattle, which lowered its requirements, also saw a decrease — but not a seismic elimination — of spots.

Powers, of Urban Ventures, said the actual impact of eliminating the requirements will depend on the location and type of project. People living in subsidized housing may have fewer cars, needing fewer parking spots. The same is true for a new apartment building nestled in a walkable neighborhood with RTD stops all around.

But it may not hold for an expensive high-rise, where incoming residents are likely to own cars already, or in areas that aren’t walkable.

“I think it’s a really important policy statement for the state to make and for the city to make that we want to minimize (parking),” she said. “But we also need to be cognizant that we need to rent these places to people, and we want that population to move into the city.”

Will the market respond?

Even under the state’s changes, residential parking in urban parts of Front Range cities largely will be determined by developers.

There are multiple factors to consider there, developers said, including Powers’ point that location will influence decisions. So, too, will the “invisible hand” of financing: Lenders typically require that a certain number of parking spots be included, even for subsidized housing developments, because it’s in investors’ interest to ensure people actually will want to live in the units.

Zucker, who was adamant that developers won’t “slit our own throats” by abandoning parking altogether, pointed to some of his past projects as evidence.

His firm wasn’t required to build any parking for its Edit development in the city’s River North Art District, but its planners chose to build 0.64 spots per unit. The Cadence tower near Union Station was required to build fewer than 100 spots for 219 units. Because the development was more pricey and would attract wealthier tenants, Zucker said, developers built more than 200 garage spots in all — double the requirement.

Still, he said, the prospect of less parking is alluring simply because of its expense.

If it costs $60,000 per parking stall and your investors expect a return of at least 6.5% on the project, then that spot has to earn nearly $4,000 every year from renters to pull its own weight, he said.

The likely outcome of Denver’s and the state’s efforts, he and others said, is that the supply of new parking will likely decrease, particularly for subsidized developments with tighter margins and more low-income residents. But the change will be modest: While developers are more likely to listen to their equity investors than to the neighborhood they’re seeking to move into, they — like residents — don’t want their tenants endlessly circling for parking, either.

“It’s just really a question of the location,” Powers said. “In many neighborhoods, you don’t have to have that many on-site spots. Other locations, it’s just not available, so you have to provide it.”

But she also gave a nod to the reality that cities have to accommodate some drivers. “I just wish none of us had to have cars and (could) just walk to everything,” she said. “It’s just not realistic to expect that for large families.”

Skyler McKinley, the chairman of the board for Transportation Solutions, a transportation demand management association, said it would be smart for Denver to do away with its parking minimums. He, too, was confident that the private sector would continue to provide parking on residential properties.

But he predicted that it would become more of an added amenity, like a pool or fitness center.

Denver officials hope to have their proposal to eliminate all parking minimums approved by the City Council in June, said Libby Kaiser, a principal city planner. Sawyer, the councilwoman, has already told colleagues she plans to vote no, and she worried that allowing the market to determine parking levels would not benefit all Denverites equally.

During the committee meeting last week, Councilman Chris Hinds was more enthusiastic about eliminating the requirements, including because of the staff time it would save. It would help show, he said, “if developers really are thinking about the best interests of the city or if they are intentionally trying to maximize their own gain.”

Sawyer wondered if the city could pursue parking “maximums” instead to ensure that while some spots were included in projects, they would be within a prescribed limit. Some advocates have also called for maximums, albeit to ensure that developers actually focus on what policymakers want: fewer spots, more housing.

Kaiser told The Post that city staff members weren’t proposing maximums — yet.

“We don’t anticipate that there will be a major shift in how much parking (developers are) going to provide from this,” she said. But officials will “be keeping our eye closely to that, to see how the market responds to this. We may pursue maximums down the road in order to really start to shift the behavior and create more space for housing and less space for cars.”

Staff writer Joe Rubino contributed to this story.

Stay up-to-date with Colorado Politics by signing up for our weekly newsletter, The Spot.