How to improve the San Rafael apartment proposal

On Wednesday, news broke that San Rafael could soon find itself home to another 162 households, thanks to a proposed redevelopment of the Third Street garage and a couple ancillary buildings. This is the kind of development San Rafael needs more of, and the unique parking situation means it could get even better.

The basics

Lennar Multifamily Communities wants to build a 60-foot, 162-home building on Fourth Street across from Courthouse Square. Of these, 11 percent will be affordable. This is within the scope of downtown zoning and height limits, as well as within the realm of San Rafael’s place as Marin’s urban core.

Thanks to parking minimums, the lots where Lennar wants to build – 1001 Fourth Street and 924 Third Street – are too small to fit homes, businesses, and parking all on-site. To make things work, Lennar wants to incorporate and rebuild the 180-space Third Street garage, fulfilling San Rafael’s long-time goal of rebuilding the old structure.

This is on top of the minimum parking requirements for the apartments themselves, which comes to 194 spaces.

Parking is hella expensive

The Third Street garage is curiously expensive. The cost to tear down and rebuild has been estimated by the town to be about $10 million, or about $55,556 per space. This is well above the average for above-ground parking garages. Although some of the cost may be in demolition, it is still over 3.5 times the national average (PDF) ($15,552), and well over twice the cost of construction in San Francisco ($19,253) and New York City ($20,326).

If this is the cost of building a parking garage in downtown San Rafael, then over $20 million of development cost will be absorbed by parking alone - $10 million for the garage, $10 million for the additional spaces. The rest of the construction will probably cost around $14.3 million*, which means 60 percent of the cost of construction will be taken up by parking. It speaks to the huge demand for homes in Marin that this is even considered feasible.

Parking reform

Given the astronomical cost of parking in this project and the eminently walkable nature of downtown San Rafael, this may be a good place to eliminate parking minimums for affordable units, and to unbundle parking rental from apartment rent.

About a month ago, Dick Spotswood proposed eliminating parking requirements for affordable housing. Although I don’t believe he was serious – he regularly backs car-centric activists, politicians, and thinkers – perhaps we should take him seriously anyway.

Doing so here, with the current 11 percent affordable ratio, would eliminate 23 spaces from the project. That would shave $1.3 million from construction costs. If the affordability ratio were raised to 20 percent, it would cut 40 spaces, shaving $2.2 million from construction costs.

For the developer, that’s huge. Affordable housing is a legal requirement, after all, and its costs are subsidized either by taxpayers (in the case of nonprofit housing) or by market rate renters (in the case of for-profit housing). In this project, the parking requirements add $694 per month to the rent of one- and two-bedroom apartments and $1,042 to the rent of three-bedroom apartments.** Cutting out that cost would be nearly enough to subsidize the apartments on their own. Indeed, it may be enough to improve the ratio of affordable homes to 20 percent or higher.

Another concept that San Rafael should pursue is unbundling the cost of parking from rent. Providing the parking space as a benefit of renting encourages car ownership. Whether they want a car or not, renters would be paying for an extra 270 square feet of space in the garage.

Unbundling would allow car owners to pay for a space to park if they want it and lower rents for those that don’t, putting these homes within reach of more people and keeping more of renters’ money in downtown.

Indeed, there would be a multiplier effect of encouraging car-free living within downtown. People who walk or bike to retail tend to spend more money per month in their own neighborhood. And, by encouraging car-free living, new residents would be incentivized to stay downtown, raising sales tax revenue for the city, reducing traffic costs, and adding revenue to downtown businesses.

Further reductions could be made with transportation demand management strategies, such as providing residents and employees with subsidized Clipper cards and ZipCar memberships, and providing bicycle parking.

This will be a much-needed infusion of new homes to Marin and downtown San Rafael. The city has hardly grown at all in the past five years despite a crushing need for new revenue and new homes. This is precisely the right place, and the right form, for these homes to take.

*San Rafael has a floor-area ratio of 2.0 along Fourth Street, and the three parcels that will be part of the Lennar development have an area of about 59,900 square feet. If we assume the 70,686 square feet dedicated to parking will not be included in the floor area calculation, then the structure will be 119,800 square feet. Given its size, it can be wood frame construction on top of concrete, which costs $119.77 per square foot to construct. $119.77 * 119,800 square feet = $14,348,446.

**This assumes each parking space costs $55,556 to build and a market capitalization rate of 1.25 percent.