A letter to the editor in Tuesday’s News-Miner sparked a little discussion about the Fairbanks Parking Authority. It seems that a number of people don’t like getting tickets when they park downtown and blame the Parking Authority for excessive zeal. They seem to want parking offered that is free of charge and unrestricted as to duration, place, and manner.
The economist Milton Friedman is famous for saying, “There is no such thing as a free lunch.” I offer a corollary, one that should rile all those who hate government subsidies, and certainly those who hate the subsidy of private goods at the expense of community good:
There is no such thing as free parking.
This may go against the experience so many of us have of driving to a retail or commercial establishment, finding a parking place, and never coughing up so much as a dime. That is because parking is subsidized by community money. An example should help explain this:
Our local Wal-Mart, located near the intersection of the Johansen and the Old Steese, occupies a total area of 1,154,562 square feet. Of this, the building occupies 259,992 sq. ft., or 22.5%, and the non-building area — mostly parking — occupies 894,570 sq. ft., or 77.5%. The total assessed value of Wal-Mart’s local property is $24,864,040. Of this, the structures are valued at $17,359,387, or 69.8%, and the land value (which probably includes the land the building sits on) is $7,504,653, or 30.2%. (These figures are from the 2007 assessment, available at the FNSB Property Database.)
Okay, that was a lot of numbers. What’s relevant here is that the building, which occupies less than a quarter of the land area, accounts for more than two-thirds of the entire property’s assessed value, while the land itself, over three-quarters of which is not built on (and about half of which seems to be parking), accounts for less than a third of the assessed value.
In short, the Borough taxes parking lots far less than it taxes buildings. That is the subsidy. The shame of it is, it’s like this nearly everywhere.
The value of a property to the Borough, it seems to me, is the value of what could be built there. It is like this when we pay for many things that, like land, are finite: we pay more for the use of a scarce resource, and what we pay is based heavily on how much we keep others from using. Wal-Mart, no matter how many square feet their building occupies, still uses 1.1 million square feet. That’s over a million square feet not available to other retail, commercial, civic, or residential uses, a million square feet that has potential value to the citizens of the Interior.
So when Wal-Mart is taxed most heavily on how less than a quarter of its land is used, the Borough is giving their car-driving shoppers a big, wet kiss. I suspect that if land were taxed at the same rate as buildings, Wal-Mart would install parking meters overnight — or at least their “everyday low prices” couldn’t be so low.
Wal-Mart is not receiving special treatment this way. My own house occupies slightly more than a quarter of the land it sits on, yet it accounts for over 92% of the property’s assessed value. The Borough seems to be subsidizing my driveway and my lawn, and I’m not so sure this is fair.
There certainly are land uses that deserve government subsidy, things that are social goods. Agriculture comes to mind as the most worthy. But parking is not a social good: it benefits only the driver and does nothing for those too young, too old, too poor, or too infirm to drive. What’s more, the ease of “free” parking encourages people to drive to their destinations, rather than busing, biking, or walking. Free parking only makes living far away from neighbors and community more desirable. And that’s not a behavior government has any business encouraging.