An Honest Consultant
By Rick Longinotti, Chair, Campaign for Sustainable Transportation
When I served on a City committee, I remember distinctly when one consultant joked, “Hey, I’m a consultant. I’ll tell you what you want to hear.” He was joking about an unpleasant fact of life. When consultants give advice that runs counter to what an agency is planning, they risk getting the reputation of being too “independent”. The agency may not hire them again. That’s why it’s worth celebrating when a consultant stands up with integrity in spite of pressure to support a pre-determined outcome. This is the story of what happened when a consultant, Patrick Siegman from Nelson\Nygaard, told the City of Santa Cruz staff that the City didn’t need a new parking structure in the Downtown.
Siegman’s life experience prepared him for the moment when his understanding of parking economics would be challenged. In an article published by UCLA’s Luskin School of Public Affairs, Siegman explains the influence of UCLA Professor Donald Shoup, whose writing on parking started a revolution in the way urban planners create parking availability, “I wrote my undergraduate honors thesis on the economics of parking and transportation at Stanford. In it, I argued that it would be cheaper for the University to pay people to leave their cars at home than to bear the heavy cost of subsidizing more parking. Stanford offered me a job to see if it made sense to do that, and that got me started in my career as a transportation planner.” Siegman spent 15 years at Nelson\Nygaard, an agency with a good reputation for transportation planning. While at Nelson\Nygaard, Siegman’s work on parking studies included Berkeley, Chico, Glendale, Hayward, Hercules, Oakland, Oceanside, Oxnard, Palo Alto, Pasadena, Petaluma, San Francisco, San Marcos, Union City, Ventura and Watsonville.
Before Siegman started work on the City of Santa Cruz Downtown Parking Study, City staff heard from three consultants who conveyed the profession’s prevailing wisdom on parking: building new parking structures is the most expensive way to address parking demand and should be a last resort.
At the joint meeting of the City’s Planning and Downtown Commissions in October, 2015, Ria Hutabarat Lo from Nelson\Nygaard told the Commissioners that they could use pricing to create parking availability in the locations where visitors to Downtown need it most. She recommended reform of parking requirements for new development. She noted, “By the look of it your city got its parking requirements in the 1960’s”. One of these reforms would allow residents of new development to opt out of purchasing a parking space (This is called unbundling of parking costs).
Janis Rhodes from JR Parking Associates agreed that the City should adjust the price of parking to manage demand. She warned that construction costs for parking structures are at a level that “No agency will make enough on user fees to pay for that space. All three of us professionals and all my peers in the industry [have become] very conservative. Maximizing existing inventories before we step out into that arena of financing new resources.”
Frederik Ventner from Kimley-Horn recommended investing in technology to allow motorists to find a parking space. He suggested implementation of a bus pass program for working commuters. And he cautioned the Commissioners about the demographic and technological trends that are reducing parking demand.
Janis Rhodes summed up the steps that a city should take before investing in new parking capacity, “You want to have a really good understanding of what your parking demand is. …You want to really maximize all these things that we talked about: your codes, your policies, your technology. You put all of those in place – and it’s not a short term process – because it takes time to put all those things in place and see the results of it.” The video of these presentations is here.
In May, 2016, it looked like the City staff were following these recommendations. City staff signed a $97,997 contract with Nelson\Nygaard to perform a study of parking Downtown. (An additional $3 would have required City Council approval.)
The City motives for doing the parking study included a desire to ease the burden on Downtown businesses that don’t supply their own parking and pay a “deficiency fee”. In this era of online commerce cutting into retail sales Downtown, City Economic Development staff wondered if the deficiency fee could be reduced or eliminated. The contract with Nelson\Nygaard called for the consultant to “comprehensively evaluate parking needs in downtown” and to produce a Downtown Parking Strategic Plan.
At a December 2016 City Council meeting, City staff unveiled a plan for a new library that would be a ground floor tenant in a structure with 640 parking spaces on six levels. At that meeting CFST pointed out that Downtown Parking Study should be completed before any discussion of whether to build a new parking structure. We pointed out that suggesting a new garage disregarded the advice of the three consultants to the City just one year earlier.
What was behind the City’s move? City staff realized that if the library became a tenant in a City parking garage, the library could spend its Measure S funds on what City Manager, Martin Bernal, called “tenant improvements”. Mr. Bernal told me his main interest was in building a beautiful library that future generations could enjoy. His Public Works staff assured him that more parking was needed Downtown. The stage was set for a clash with Nelson\Nygaard staff, who were finding out that parking demand in Downtown Santa Cruz had peaked in 2008, and had declined by 10% since then, according to the City’s annual parking census.
In September, 2017, Patrick Siegman presented the results of his parking demand projections to City staff. Siegman used empirical studies from other cities of what happens to parking demand when prices are raised. His model estimated that the doubling of parking rates planned by the City would result in a drop in parking demand sufficient to offset the loss of surface parking spaces and increased demand from new development. The studies show that much of this reduced parking demand results from working commuters who shift their modes of travel. Ironically, raising prices to pay for a garage meant no new garage was needed.
City staff responded to Siegman’s results by requesting that he share with them his model for estimating future demand. Using Siegman’s model, but plugging in new assumptions, staff predicted a parking deficit in the Downtown. In February 2018, City staff presented the Downtown Commission with their own results as if they were presenting the results that Nelson\Nygaard had arrived at. They didn’t tell the Commission that Nelson\Nygaard had reached a very different conclusion using this model.
I was at that Downtown Commission meeting and I couldn’t believe my ears. Nelson\Nygaard had produced an estimate of future parking demand that justified a new garage? It was not at all consistent with what the Nelson\Nygaard consultant had told the Planning & Downtown Commissions the year before. I wrote to Nelson\Nygaard and asked what was up. I did not receive a reply, which is not unexpected since the agency was under contract with the City.
Patrick Siegman later told me that when news of City staff action reached Nelson\Nygaard, the CEO and Director of Operations agreed with Siegman that the company should resign from the contract on ethical grounds. However, in a phone call with the City’s Director of Economic Development, Nelson\Nygaard agreed to a contract amendment that would allow the study to be completed quickly. The City agreed not to pressure Nelson\Nygaard to alter their findings. Shortly before the contract revision, Siegman was laid off by Nelson\Nygaard in a move the agency explained as economizing on senior staff salaries.
Documents obtained through my Public Records Act request show that in April 2018, the City and Nelson\Nygaard agreed to downsize the Downtown Parking Study. Instead of a Parking Strategic Plan that included an analysis of future parking demand, Nelson\Nygaard would provide a scaled-back “Executive Summary” of a parking strategic plan.
Patrick Siegman informed me that in spite of the agreement not to pressure Nelson\Nygaard, City staff continued to ask N\N to revise their demand forecast to show that a garage was needed, by assuming that increasing prices would have virtually no effect on demand.
The parking study remained in limbo for over a year. Meanwhile staff presented their version of future parking demand figures to the City Council in June 2018, once again without explaining that Nelson\Nygaard staff disagreed with the way their model was used. Good Times reporter Jacob Pierce contacted Siegman and published Siegman’s account shortly before the September, 2018 City Council meeting considering the staff recommendation to pursue the garage-library project. Siegman also spoke to the City Manager, who nevertheless aligned himself with the Public Works staff’s conclusion that a parking garage is needed. The vote was 4-2 in favor of continuing to develop the project.
The November 2018 election upended Council majority support for the garage. Early in 2019, newly-elected Vice-Mayor Justin Cummings made a motion to have a study session on parking downtown. His proposal to have Siegman speak to the Council, along with parking expert, UCSC professor Adam Millard-Ball won on a 4-3 vote. City Council member Cynthia Mathews questioned the value of having Siegman speak. “We fired him,” she said. Besides Siegman and Millard-Ball, an affordable housing developer was scheduled to speak to the Council regarding his concerns about the project. After receiving a call from Cynthia Mathews the night before the meeting, the developer cancelled his appearance.
On March 19, 2019, Siegman presented to the City Council, along with Millard-Ball. Siegman summarized his analysis, “Santa Cruz has a parking management problem, not a parking supply problem.” The consultants explained that the existence of a waiting list for monthly permits, which are sold at a deep discount off the daily parking rate, is not evidence of a parking shortage. It is only evidence that people who pay the daily rate to park Downtown are interested in a discounted price. Millard-Ball’s slides show his estimate that a parking space in the proposed structure would cost the City approximately $18 per day in financing and maintenance. The daily cost of a permit after price increases would be $3.40. Millard-Ball summarized, “It’s cheaper to pay commuters not to drive than to build more parking.”
In response to Siegman and Millard-Ball, City Public Works Director Mark Dettle told the Council that he does not expect that parking demand will decline as Siegman’s model predicted. He did not present any data to support his claim that Santa Cruz is an exception to the influence of price on parking demand. The City denied my Public Records Act request that the City provide its spreadsheet that forms the basis for its forecast of a parking deficit. Without being able to see the City’s inputs, there is no way a third party could evaluate their work.
Whatever happened to the Nelson\Nygaard parking study? Staff finally presented the study to the Downtown Commission in September 2019, although to this day Staff has never brought the report to the City Council. The dispute between City staff and Nelson\Nygaard over future parking demand was settled: the scaled-down study does not include any analysis of future demand.
Nevertheless, the report’s recommendations align with those that the City received from the three urban planning consultants in 2015: that pricing, commuter incentives, and reform of parking requirements should precede any consideration of constructing new parking structures. The report states:
- The most fiscally prudent approach to accommodating additional demand: Modernize parking management and better align parking prices to the cost of building and maintaining the system.
- Balancing availability in an efficient manner can be achieved through pricing based on demand and location.
- Parking is a valuable resource for improving auto accessibility, but oversupplying parking in a space-constrained area like a downtown can fragment the built environment, creating a less desirable place to work, live, visit, and walk around. City code provisions that require more parking to be built than the market demands increase the cost of development and relegate land that could support jobs, housing, and tax-generating uses to the storage of vehicles.
In March 2020, voters recalled two City Council members who opposed the parking garage. Later that spring the Council approved planning for a mixed use project that includes a 400 space parking garage, library, and at least 50 units of affordable housing.
Epilogue
A decision to invest in a new parking structure has potential financial consequences for businesses Downtown. City staff’s estimates for future parking revenue assumes there will be little impact of price on demand. This assumption cannot be substantiated empirically. This means their estimates of future parking revenue are overstated. If revenue falls short of paying the garage debt, the City will need to either raise parking rates (again, after rates were doubled beginning in 2019) or restore deficiency fees on businesses. Raising parking rates will reduce parking demand further, offsetting the revenue benefit.
In 2018 City staff engaged Economic and Planning Systems (EPS) to look over their revenue plan for the garage. EPS cautioned, “The model does not evaluate a worst-case scenario (for parking revenues) where a major recession occurs or a technological change (and pricing) substantially reduces parking demand.” In 2018 City staff projected that parking price increases would be sufficient to cover an additional $2.9 million annual debt service on a new garage. Thanks to the pandemic, the Downtown Parking District was $4 million in the red in FY 2022. The City predicts a deficit of nearly $3 million in FY 2023 . There is no predicting when/if Downtown parking revenue will support garage debt.
A decision whether to embark on one of the most expensive public works projects in City history should be made with the best information available and with the utmost transparency. If City staff wanted to challenge the findings of Mr. Siegman, they should have done so openly, supplying evidence to support their challenge. Instead they kept the Downtown Commission and the Council in the dark about Siegman’s conclusions.
When Patrick Siegman informed the City Manager about City staff misusing his parking model, the City Manager should have put the brakes on the process. He should have made sure the Council would get the information that the City paid for.
One would expect that all Council members would want to inform themselves before making a decision of such import. Yet three Council members (Mathews, Meyers, Watkins) voted against putting Siegman and Millard-Ball on their agenda.
The information from the parking experts in March, 2019, has not shifted the thinking of former Councilmember Cynthia Mathews. She has co-founded the group, Downtown Forward, that advocates for a new garage to “respond to current and future demand for parking.” The information from Downtown Forward reads as if the analysis and recommendations of the experts does not exist.
The good news is that many many Santa Cruz citizens and Downtown business owners are deeply suspicious of a proposed garage. They understand that we are at the threshold of a revolution in transportation, ushered in by Uber and Lyft, to be followed by autonomous vehicles with little need to park. They understand that we need to stop investing in auto-centric projects if we want a walkable Downtown and a low carbon footprint. They don’t want to see their beloved Farmers Market moved to an inferior location on Front St. They love their library, but don’t want to sacrifice deeply held values in order to get a bigger library. The good news is that with a fraction of the millions saved over 30 years from not financing a garage, parking funds could build affordable housing. This policy will be adopted if Measure O passes on November 8, 2022.