The taxman cometh

Steinbrueck's proposal would make parking pay.

HE’S HARDLY had time to warm up his new seat, but Seattle City Council President Peter Steinbrueck already has started lighting fires under the downtown business community.

In a couple of weeks, Steinbrueck will unveil a proposal to levy a new 15 percent tax on commercial parking lot revenues to pay for transportation improvements throughout Seattle. Steinbrueck figures the tax could raise about $18 million a year for road and bridge maintenance, mobility improvements, and infrastructure support for public transportation. And he’s armed with reams of studies, statistics, and stories that he says show that parking taxes, hated though they may be, can raise money without diminishing business for parking lot owners or the retail community.

Needless to say, parking lot owners and retailers aren’t buying what Steinbrueck is selling. They haven’t mobilized a solid front against his levy, but that doesn’t mean they’re ready to concede. Sylvia McDaniel, marketing director for the Downtown Seattle Association, says the group hasn’t responded because it hasn’t seen the draft legislation, which won’t be ready until next month. But, McDaniel adds, the association opposes parking taxes in general on the principle that higher parking costs will keep people from coming downtown, where most of Seattle’s commercial lots are clustered. “If they do increase the taxes, that may very well be passed back to the customer,” McDaniel says. “We want to make sure that the rates are affordable. If it’s going to impact customers, I don’t think it’s a good idea.”

Seattle parking lot owners are less circumspect: They hate the proposal, and they’ll fight it with all the clout their $120 million business can muster. “It’s a bad idea; it’s just not fair,” says Ken Phillips Jr., vice president of U-Park, which owns about 100 lots around Seattle. Phillips believes people will shop in Bellevue or Lynnwood to avoid paying an additional 15 percent on top of already elevated parking rates. “We can’t pass [the increase] on to customers, because they’re extremely price sensitive,” Phillips says. “They’ll drive 20 miles to save five dollars.” The tax, Phillips adds, would be doubly unfair because it would benefit the entire city—everyone who uses roads, sidewalks, or public transportation—but would be funded by a relative few. “A commercial parking tax is only going to reach a tiny fraction of the people that actually use the roads,” Phillips says. “It’s like singling out espresso stands for a coffee tax but not charging it in the supermarket.”

But Steinbrueck says lot owners have just gotten spoiled after years of porking up their already bloated profit margins. “Their rates are incredibly high—just half a block from my building, there’s a lot that charges six dollars an hour,” Steinbrueck says. “When they’re jacking up rates by five or 10 percent a year, I don’t have a whole lot of sympathy. Their profit margins can absorb this.” Indeed, parking lot owners have pulled in healthy revenues over the past decade, with annual rate increases peaking at more than 10 percent during the late-’90s downtown buildup.

But when the economy took a dive, says John Diamond, president of Diamond Parking, so did commercial parking rates, which fell as much as 30 percent in many downtown lots. Now, to hear him tell it, parking lot operators are barely holding on. “When downtown is struggling like it is now, the last thing you’d want to do is raise the rates on people who are already struggling,” Diamond says. If Steinbrueck’s levy passes, Diamond adds, “we’ll have to go back to our landlords, who are already getting a lousy return on their investment, and have to get our rates lowered because we can’t afford to pay as much as in the past.”

Steinbrueck says he’s sensitive to businesses’ concerns about levying a new tax during an economic downturn. But, he points out, they’ve opposed the tax in times of plenty, too. “There never is a good time” to propose a new tax, Steinbrueck says. “During the boom times, they’d say, ‘What do you need this for? The money’s pouring into city coffers,’ and during downturns, they say, ‘Don’t do this, you’re hurting us.'”

Steinbrueck also brushes aside concerns that a parking tax would place too heavy a burden on downtown shoppers and car commuters, noting that for some, the tax could be an incentive to ride the bus or to carpool. “I don’t like to be proposing new taxes, but I think this has the dual benefit of meeting the backlog of transportation needs, including for downtown, and the benefit of establishing good, progressive public policy,” says Steinbrueck, who until recently rode the bus to work every day (he says his new duties as council president make his schedule too unpredictable.) “I don’t think we can wait any longer” for others to solve Seattle’s transportation problems, Steinbrueck says. “Seattle has to take its transportation destiny into its own hands.”