Parking Benefit Districts Model Legislation

Why Parking Benefits District legislation?

Many commercial corridors and residential neighborhoods struggle with congested parking, neglected infrastructure, and limited resources for upkeep. 

This bill authorizes local governments to create Parking Benefit Districts (PBDs), where a portion of parking revenue must be reinvested back into the same neighborhood. Cities can adjust parking rates to meet demand and allocate funds for amenities like transit shelters, landscaping, and street furniture. The result: better parking management and better-funded neighborhoods.

Several states have created tools for local jurisdictions to allow Parking Benefit Districts to reinvest meter revenue locally including California, Massachusetts, Montana, New York, Ohio, Virginia, and Washington. Austin, Bend, Columbus, Pittsburgh, and Ventura have established local parking district programs to fund neighborhood improvements and support more efficient parking management.

MAP partnered with the Parking Reform Network to develop this model legislation.

Executive Summary

The following model legislation is meant to enshrine the right of municipalities within a given state to create and operate parking benefit districts.

What is a parking benefit district (PBD), and what are the benefits?

A PBD is a designated area within which paid parking funds localized investments. Typically, in places with high demand, such as central business districts, PBDs leverage their attractive location to generate revenue for improvements to the public realm.

PBDs are also useful parking management tools. By charging for parking, municipalities can affect the demand without changing the supply. Many downtowns experience overcrowded parking because it is given for free or far below what many would be willing to pay. Thus, everyone drives, and it feels as though there is nowhere to park. By providing clear funding allocation into local improvements, PBDs soften the political blow of higher parking fees where demand is highest, allowing municipalities to encourage more sustainable transportation options in their densest areas.

The effects of parking management extend beyond parking. When everyone drives, congestion worsens. Cars idling in the street damage the local economy, increase emergency response times, produce excess carbon emissions, and frustrate everyone. In contrast, increases in pedestrian traffic support local businesses, encourage a healthier community, and make commercial corridors safer and more inviting. People are attracted to shops, restaurants, and entertainment, not parking lots. By properly managing the existing parking supply, municipalities can encourage those highest and best uses and keep their downtowns desirable.

Why do they need to be legalized through state legislation?

While a municipality setting parking prices and controlling their budget appropriations are commonplace, most municipal governments in the US have never had a PBD. Those who are interested in implementing one can be dissuaded by the novelty of the process. Setting up a PBD can require research into best practices, infrastructure investment, and parsing of legal codes. The goal of this legislation is to reduce this friction, lowering the barrier of entry for municipalities that want to explore the potential benefits of a PBD. The state government’s explicit legalization of PBDs not only simplifies the process, but it also brings attention to the opportunities it affords municipal governments. Massachusetts and Montana have already passed similar legislation, and in both states, regional planning agencies have since provided publicly accessible guidance for successful PBD implementation. By passing this legislation, a state affirms its municipalities’ right to create PBDs, allowing for a clearer path to implementation.

What does the legislation say?

Section 4 covers the establishment of a PBD. It allows municipalities to create PBDs, allows any stakeholder to propose one, and outlines the pilot and parking study process.

Section 5 covers the management of a PBD. It allows municipalities to designate the management responsibility to a local body and requires the public accessibility of PBD financials.

Section 6 covers the use of parking revenue. It stipulates that a certain percentage of said revenue must be reinvested into the PBD and provides a non-exhaustive list of appropriate uses of funds.

Section 7 covers parking fees. It allows municipalities to set and change fees dynamically to meet their parking management goals.

Section 8 covers accessibility. It stipulates that the PBD should adhere to accessibility requirements and may use an open market parking vendor system.

Section 9 covers enforcement. It allows municipalities to enforce the fees dictated by PBDs.

Section 10 covers financing. It allows municipalities to issue bonds backed by future parking revenue and to apply for grant funding.

Section 11 covers preemptive districts. It allows municipalities to set up a PBD without charging for parking, making charging for parking easier when deemed appropriate.

Section 12 covers the review process. It stipulates that PBDs are subject to review at least every 5 years based on performance metrics.

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Parking Benefit District Model Legislation

Section 1. Title.

This Act shall be known and may be cited as the “Parking Benefit District Authorization Act.”

Section 2. Definitions.

1. “Parking Space” means a portion of publicly owned or managed paved surface approximately twenty (20) feet in length that physically and legally accommodates a vehicle.
   
2.  “Vehicle” means any device in, upon, or by which any person or property is or may be transported upon a public street, except such devices as are used exclusively upon stationary rails or tracks and such devices as are propelled exclusively by human power.
   
3. “Parked Vehicle” means the standing of a vehicle, whether occupied or not, otherwise than temporarily for and while engaged in loading or unloading, or in compliance with directions of a police officer or traffic control device.
   
4. “Parking Fee” means a price charged to a vehicle owner for occupying a parking space for a period of time.
   
5. “Market Rate Parking Fee” means the price of parking that targets a specific occupancy of a given block, typically targeting 85%. The ‘market rate’ can vary throughout a day, as the desirability of the spot at a given time determines it.
   
6. “Parking Benefit District” (PBD) means a parking management tool where parking revenue within a defined area is returned, in whole or in part, to said district. They are meant to address parking challenges presented in congested inner neighborhoods of a municipality, while striving to maintain livability and business vitality in those designated parking districts_¹.
   
7. “Net Parking Revenue” means the monies collected from municipal parking fees after subtracting the cost of operations, maintenance, and loan servicing for the collection system. These sources may include, but are not limited to, on-street meters, pay stations, residential permits, mobile applications, and municipal lots.
   
8. “Pilot” means a probationary period meant to test the feasibility of a PBD.

Section 3. Legislative Findings and Purpose.

The Legislature finds that the proper management of on-street parking is a matter of statewide concern and that PBDs serve the public interest by reducing congestion, supporting local businesses, and improving public infrastructure. This Act authorizes municipalities to create and manage PBDs in order to achieve these goals.

Section 4. Establishment and Study.

1. A municipality may establish one or more PBDs, defined geographically and subject to oversight as provided in this Act. The PBD’s jurisdiction may include, but is not limited to, on-street meters, pay stations, permit parking programs, mobile applications, and municipal lots².
2. A PBD may be proposed to the local governing body by neighborhood groups, residents, business groups, the municipality itself, or anyone who is considered a stakeholder in the area³. Municipalities may define the proposal process to suit their planning objectives.
3. A plan, including goals, methods, and metrics of success for said PBD, shall be included as part of the proposal. This plan shall align with existing planning goals within the municipality. Upon adoption of the PBD, its plan shall be incorporated as part of the statute.
4. A district may be established as a pilot for a defined period with the opportunity for continuation if it meets the municipality’s stated goals.
5. A municipality may conduct a parking study before or after establishing a PBD to assess the existing parking inventory and forecast the effects of potential changes. This study may be conducted internally or by a consultant and made easier by using technology such as parking occupancy sensors.

Section 5. Management and Oversight.

1. A PBD may be managed by a municipality or by a body designated by the municipality, which may include, but is not limited to, a business improvement district or a Main Street organization.
   
2. A municipality or a designated management body may hire staff deemed necessary for the operations and management of a PBD.
   
3. The city shall maintain and keep financial records for each such PBD fund, showing the source and amount of all monies collected, earned, and received by the fund, and each expenditure from such fund, per normal city accounting practices, and at the end of each fiscal year shall prepare a report on each such fund showing such information. The records of such fund shall be open to public inspection in the same manner as other financial records of the city.

Section 6. Use of Parking Revenue.

1. The municipality shall set a percentage of the net parking revenue generated within a given PBD to be reinvested into that district to fund public improvements⁴. This percentage may vary between PBDs within the same municipality.
   
2. During the initial planning and at performance reviews outlined in Section 11, the municipality or its designated management body shall determine uses of funds that align with the goals of the PBD’s statute and may adjust the percentage to be reinvested in the district.
   
3. Eligible uses of these funds include, but are not limited to:
   1. Maintenance of existing parking facilities;
   2. Operational costs deemed necessary to administer the PBD, including debt service and staff salaries
   3. Bike lane construction and maintenance;
   4. Sidewalk construction or improvements;
   5. Street beautification projects;
   6. Transit shelters and street furniture;
   7. Transit wallets or subsidies for local employees and/or residents;
   8. Parking enforcement;
   9. Marketing and branding campaigns;
   10. Public events such as festivals;
   11. Upkeep of public spaces such as parks or gardens;
   12. Signage identifying improvements funded by parking revenue⁵.
4.  A municipality may establish a special revenue fund to hold PBD revenue⁶.
5. Any yield on such accounting fund into which the fees are deposited shall accrue to that fund and shall be used for the purposes specified for such fund.

Section 7. Rate Setting and Fee Collection.

1. A municipality may set parking rates within the PBD to meet parking management goals. If the municipality has delegated management of the district to an external body, it may set the parking rates per said body’s recommendations.
   
2. Rates may vary according to time of day, demand, and location to achieve a target occupancy rate⁷.
   
3. Parking fees shall apply to all vehicles, barring those exempted by federal or state law.

Section 8. Accessibility.

1.  Municipalities shall take measures to ensure that the parking payment system meets the accessibility requirements legally applicable to the area in which it operates⁸.
   
2. When available in the US, municipalities with mobile payment applications may utilize an open market system that allows users to choose a vendor to process their parking payment.

Section 9. Enforcement.

Parking regulations within a PBD may be enforced through administrative citation or civil penalty, as authorized by local ordinance.

Section 10. Financing.

1. A municipality may utilize other financing sources to fund the initial capital, operations, and maintenance costs of establishing a PBD or the place-based improvements for which the PBD’s revenue has been earmarked. 
2. A municipality may apply for a state, federal, or private grant to support the establishment and/or operations of a PBD.

Section 11. Preemptive District Designation.

A municipality or its designated management body may establish a PBD even if it does not intend to charge parking fees in the immediate future, to allow for rapid implementation when needed.

Section 12. Review and Accountability.

1. Each PBD shall be subject to a performance review at least every five (5) years to assess outcomes against stated goals and to determine whether to continue, modify, or dissolve the district. Metrics of success may be, but are not limited to, achieving targeted parking occupancy levels within the district or meeting revenue objectives after costs.
2. The statute that establishes the PBD shall be amended to reflect the results of said performance review.

Section 13. Severability.

If any provision of this Act is found to be invalid or unenforceable by a court of law, such provision shall be severable and the remainder shall remain in full force and effect.

^[1]PBDs are typically located in central business districts, where demand for parking exceeds the supply. PBDs manage parking by charging a ‘market rate’ for parking. The market rate depends on the demand at a given time and place. Typically, this demand is measured in parking occupancy per block, or the number of spaces with a car parked in them divided by the total number of spaces. An occupancy of 85% is considered optimal, with most of the parking utilized, while there are still one or two spots on every block. By calibrating the cost of on-street parking to demand, municipalities can achieve more control over their parking supply while generating revenue for the temporary private use of publicly owned land. In many places, this calibration results in higher parking rates. This phenomenon is due to most central business districts vastly undervaluing their parking, which incentivizes driving causing there to be more congestions and fewer open spaces.

^[2]Residential permit programs (RPP) are an often overlooked aspect of parking management. They are often used to protect residents in neighborhoods near central business districts from spillover parking taking over their street. Similar to the PBD model, RPPs are only effective at parking management when permit prices are set at a market rate. They are unique in that only residents of a certain area are allowed to apply for them, limiting the market. Our ideal model would charge a market rate price determined by a uniform price auction. Residents interested in receiving a permit would bid the most they are willing to pay for it. If there are 100 on-street parking spots, the top 100 bidders receive a permit, paying the lowest winning bid price. Just as with PBD meters, these funds would be reinvested into the RPP area in various ways, benefiting all residents by charging drivers for the public resources they use. The RPP could act as an extension of the PBD, spending revenue on public improvement projects. The city could also redistribute revenue to the residents through direct payments. This strategy eases the burden of the permit price for drivers and reimburses nondrivers for the public land dedicated to parking in their neighborhood. In a mixed-income neighborhood, this dividend will support low-income households to a greater extent as it is a greater proportion of their overall income. Even still, to assure that permits aren’t distributed along a class divide, we suggest that cities offer low-income residents a bidding credit in the permit auction.

^[3]By expanding the ability to propose a PBD to as many people and groups as possible, the process cannot be monopolized by a single interest. Austin’s West Campus PBD faced early complications as the statute only allowed residential groups to propose a PBD.

^[4]While potentially the most politically viable, returning 100% of the net parking revenue to the district may exacerbate inequities between different areas within the municipality. Some municipalities have opted to return 51% of the net revenue to the district and allocate the remaining 49% to similar goals within the broader municipality. Another option would be to start at 100% revenue return and to phase it down to 51% over a set period.

^[5]The revenue returned to the district should be allocated toward improving it for its residents, visitors, and/or businesses and their employees through infrastructural and/or programmatic means. Spending this revenue on transportation improvements can be especially effective for reducing parking demand. Parking demand management strategies are bolstered by these investments in alternative modes; those who want to drive encounter less traffic and a parking spot on the same block as their location, while the cost of using the space makes it easier for employees to take transit to their jobs or lunchgoers to bike to the restaurant. Parking revenue is often spent to build more parking, however this creates a cycle of increased parking revenue leading to more parking, which encourages more people to drive. More parking uses valuable space that could have supported several businesses that attract people downtown and support the tax base. Municipalities can become dependent on parking revenue to maintain their existing stock, rather than spending it on more productive investments that benefit all users.

^[6]As Kasia Hart writes in an MAPC memo cited at the end of this document, “it is recommended to have a proposal for a parking benefit district prepared in conjunction with the request to establish the special revenue fund…the actual budget could be established after the special revenue fund is created, but it is helpful to at least have a ballpark estimate of the total annual revenue that will be allocated to the fund.”

^[7]Current parking technology allows for real-time occupancy monitoring and dynamic pricing If a municipality understands when demand peaks, it can calibrate pricing to manage said demand. A Friday in a central business district with this system in place might look like the following: Before the stores open in a commercial corridor, parking would be cheap as fewer people want to park at that time. The price increases a level midday, as people want to grab lunch or run an errand. If there is a weekly event in a nearby park that evening, the cost of parking may be the highest for its duration. As dynamic pricing manages parking demand, it mitigates the impact of any removals necessary for widening sidewalks, adding a bike lane, and other improvement projects. It is important that these pricing changes are calibrated to manage demand effectively while remaining static enough to be predictable. This predictability allows residents to accurately weigh the cost of each mode as they are planning their trip.

What are the benefits of demand-based parking management?

• The revenue generated is directly reinvested into the community, hopefully making it easier to travel by foot, bike, or transit
• Driving is disincentivized during the most congested times, encouraging people to consider other modes
• Drivers no longer circle the block because there is enough parking for the demand, decreasing congestion while looking for parking
• Parking turnover is incentivized in prime locations

^[8]The fee collection system should prioritize convenience and efficiency for users while minimizing street clutter. When Austin was planning the West Campus PBD in the early 2010s, residents were concerned that the street would be lined with ugly parking meters. The city used multi-spot pay stations to quell this concern. While many municipalities have moved past the parking meter to pay stations and apps, we typically recommend that the parking payment experience within the district should operate uniformly with that of the municipality in which it exists. This reduces the friction felt by users who may already be frustrated with increased prices.

Resources

• Parking Benefit Districts: A Guide for Activists by the Parking Reform Network
• Parking and the City by Donald Shoup
• Massachusetts General Law Legalizing PBDs
• Boston Metropolitan Area Planning Council Memo Explaining PBD State Law
• Montana Code Legalizing PBDs
• MDOT Webpage Explaining PBDs