What Will Happen to Center City if There’s Nowhere to Park?

Photo-Illustration by Jamie Leary

In July, the 76ers unveiled a proposal to construct a new arena in Center City, adjacent to Chinatown. Public reaction was mixed and raised a host of big questions: Would the project receive public funding? Would it further gentrify the neighborhood? What will happen to the Gallery, er, Fashion District? 

Another portion of the backlash amounted to something more guttural — WHERE WILL I PARK? One person tweeted, “This stinks for people who don’t live in the city that attend games. Parking and access to the venue will be an absolute nightmare.” Another user summed it up more bluntly: “Parking will be a shit show.” 

It’s a common refrain in many cities, and one that’s only growing in Philadelphia as high taxes and the rising value of underdeveloped real estate, including surface parking lots, have led to a shrinking supply of parking spots across Center City. Parking operators have been selling and developing their lots into office buildings, housing and other projects that are more valuable than a highly taxed parking facility. As construction goes up, these new developments usually include minimal public parking, and in some cases none at all. The economics favor less, not more.

This all puts the city on something of a collision course. As the parking supply continues to decrease, our relationship with parking and transit in Center City will have to change. Some Philadelphians fear the economic ramifications of such a change. And the outcry specifically about parking in response to the Sixers’ arena proposal (despite its location atop one of the region’s busiest transit hubs) suggests that lots of folks around here aren’t quite ready for it. A significant number of city officials and urban studies experts, however, see the decline in parking supply as a feature, not a bug. They believe it creates an opportunity to ­reimagine Philadelphia as a more vibrant, interconnected city that is combating the climate crisis, with less congestion, more expansive public transportation, and a greater supply of affordable housing. 

Philadelphia’s bustling downtown has long been a magnet for those from its surrounding neighborhoods and counties — a hub of arts and dining, business and nightlife. The billion-dollar question seems to be: If you can’t park in Center City, will people still come?

The city has imposed a parking tax on off-street parking fees since at least as far back as the 1950s, when the levy was initially set at 10 percent. The parking tax later fluctuated between 15 and 20 percent before eventually landing at 22.5 percent in 2015. Mayor Kenney and City Council temporarily increased the tax to 25 percent in 2020 to compensate for lost tax revenue during the height of the pandemic, but it has since been reset back to 22.5 percent. This is on the pricier end for a major city, but it’s not a total outlier; by comparison, Seattle charges 14.5 percent; Chicago 26 to 28 percent depending on the time of the week; and San Francisco 25 percent. (If you want a true outlier, look to Pittsburgh, with its whopping 37.5 percent rate.) Off-street parking lots and garages in Philadelphia are also subject to two additional taxes that other businesses face, too — a real estate tax based on the assessed value of the property, and a use and occupancy (U&O) tax, a.k.a. a levy on properties used for business purposes. Businesses subject to the U&O tax must pay 1.21 percent of their property’s total assessed value (minus a $2,000 annual exemption), with all U&O collections going to the School District of Philadelphia. 

Consumers feel the burn, too. During the week, parking for a couple of hours downtown can cost you between 30 and 40 bucks. On weekends, you can be looking at a $25 flat rate. Monthly rates can run from $250 to over $550.

Some Philadelphians, like Robert Zuritsky, believe the city has already arrived at the inflection point. “I love the parking industry,” the president and CEO of Parkway Corporation says, “but I can’t make enough money to maintain the facilities.” 

His industry is dying, and the city is content to watch it careen into the abyss. That’s how he sees it.

He tells me that Parkway, an industry leader founded in 1930 by his grandparents and holding 21,000-plus parking spaces in 80 facilities across the U.S. and Toronto, has had no choice but to close many of its lots and garages in recent years. Parkway isn’t alone; the supply of public parking across Center City is shrinking. According to the city’s 2020 Center City Parking Inventory report, three neighborhoods — Logan Square, Rittenhouse Square and Chinatown/Convention Center — lost roughly 1,600 spaces between 2015 and 2020, a decrease of 13 percent from their base of 12,000 total spaces. 

To combat that, parking-company CEOs have been fighting diligently in recent years to have these taxes lowered, claiming the payments are crushing their businesses. Zuritsky, who’s chairman of the Philadelphia Municipal Parking Authority and a board member of the National Parking Association, has been working through political channels for years to protect his industry. He and his family founded the Philadelphia 3.0 political action committee that has generally supported local politicians and policies friendly to business interests. The Zuritsky family has also donated more than $300,000 to city campaigns since 2014, with top donations going to the likes of Kenyatta Johnson, Bobby Henon, Mark Squilla and Jim Kenney. Last year, Zuritsky and other parking advocates worked with then-­Councilmember Cherelle Parker on a bill that would have significantly reduced the Philadelphia parking-tax rate. Parker argued that the measure would allow parking companies to increase employee salaries, though there was nothing in the proposal to ensure that. The bill had the public support of a majority of Council members, including Henon and Squilla, but it eventually failed to secure enough votes to override an expected veto from Mayor Kenney. 

Lowering taxes would do more than create a hole in the city budget. (Philly raised $84.5 million through the parking tax in 2022.) It would likely shift the tax burdens of non-residents and residents. Historically, the parking tax in Philadelphia has been “paid largely by [non-residents] driving to work or to events,” according to the Pew Charitable Trusts. Residents could end up covering the difference through higher taxes elsewhere.

If Zuritsky has been the face of the pro-parking lobby, Councilmember Helen Gym has led much of the public pushback. “Parking lots are ugly, and they don’t serve as community-driven spaces, so we should tax them more,” she tells me. Gym advocated for raising the parking tax from 20 percent to its current 22.5 percent and led opposition to Parker’s proposed cut. “We should not provide massive tax breaks,” she says, “when working families are in need of investments in affordable housing, green spaces, public services and institutions.”

The high tax costs associated with owning and running parking businesses aren’t solely to blame for lot closures and lost spaces. The incentives to turn parking lots into something else have been growing. Property values in Philadelphia have been rising for years, and demand for housing in areas such as Center City and University City has grown with the influx of millennials over the past decade. The city’s 2022 property reassessment reflects this change, with the values of some homes up as much as 60 percent since the last reassessment, in 2019. Parkway and other operators have incentive to cash in on these rising values. For example, a Parkway lot with about 30 spaces in Rittenhouse Square had an assessed value of $643,000 in 2016. Parkway and its partners developed the lot into a Hilton hotel, and the property is now valued at about $34 million. Those newly developed properties often don’t fully rebuild accompanying parking, either, since that can significantly raise building costs. Philadelphia relaxed its zoning code in 2012, reducing minimum parking requirements for new properties. “Parking is the lowest value that you can attain from real estate,” Zuritsky admits. “We are actively trying to do as much development as we can.” 

Then again, the outlook for Center City parking isn’t all bad. While the city’s 2020 Parking Inventory Report documents the loss of 1,600 spaces in Logan Square, Rittenhouse Square, and Chinatown/Convention Center, there were increases in other Center City neighborhoods totaling roughly 1,100 spaces, including Penn Center and Callowhill. So the net reduction across Center City between 2015 and 2020 was 500 spaces out of a total inventory of about 46,000, or a cut of roughly 1.1 percent. Still, additional lots have closed since the 2020 inventory concluded its survey, indicating that the parking supply continues to slowly shrink. 

But what about the conventional wisdom that scarce parking will threaten the viability of Philadelphia’s entertainment and business center? The thinking is that fewer spaces mean cars circling endlessly around neighborhoods, looking for spots. Congestion and prices will increase, and eventually, people will stop traveling into the city for work and entertainment. But the evidence, here and in other major cities, is encouraging. 

Previous parking inventory reports show that while parking supply has declined, occupancy hasn’t increased. In the city’s 2015 report, which noted losses in parking from 2010 to 2015, the average occupancy rate across public and private parking facilities in Philadelphia was 73.9 percent — lower than the 2010 occupancy rate of 75.6 percent despite a loss of nearly 4,000 spaces over the five-year period. This suggests that commuting and driving are changing and that Philadelphians are, believe it or not, adaptable.

The same pattern holds for privately owned facilities. Parkway reported to the Center City District that its facilities’ usage levels through the end of 2021 were between 85 and 94 percent of what they were pre-pandemic. Tax revenue data supports this conclusion; the city collected $15 million less from the parking tax in fiscal year 2022 than in 2019. Occupancy rate shouldn’t be the only statistic used to evaluate Philly’s parking situation, since any given facility’s usage will fluctuate between days and nights and on weekdays vs. weekends. Overall occupancy could lag because of fewer commuters and more remote work even as garages fill up on nights and weekends. But the trend appears to be that parking use is declining along with availability.

What about the economy? As the city steadily recovers from the depths of the pandemic — Center City District data shows retail and restaurant tax revenues approaching 2019 levels — will a dearth of parking become a hindrance? Christopher Puchalsky, director of policy and strategic initiatives for the city’s Office of Transportation, Infrastructure, and Sustainability (OTIS), isn’t concerned about parking losses affecting Center City’s economy. “There’s pretty strong evidence to the contrary that [parking] developments are pro-business,” he says. “If you look at some of the most economically successful downtowns, there’s almost an inverse relationship between how much a place is devoted to parking and the vibrancy of a place.”

Puchalsky’s views are supported by a 2018 study published in the book Parking and the City in which researchers studied car-trip and parking-supply data over decades in six mid-size cities as they added parking to compete with growing suburbs. They found that cities with higher proportions of parking saw increases in traffic, pollution, and opportunities for crashes; added fewer residents and jobs; and lost out on tax revenue. “[B]y making more room for cars, policymakers hoped to avoid traffic congestion,” the researchers argued. “Ironically … these efforts likely increased vehicle traffic in places that once thrived without it.” 

Parking also affects the price of new housing. As Michael Fichman, a lecturer at and interim director of Penn’s Weitzman School of Design’s Master of Urban Spatial Analytics program, describes it, “You buy the parking, whether you want it or not.” Another study from Parking and the City showed that developers in San Francisco were able to “build dwelling units 30 percent cheaper” after parking construction minimums were relaxed — a decrease that “allow[ed] for market-rate housing that is more in line with the typical San Francisco household’s income.” 

With less parking and fewer cars in the city but a rapidly growing population in Center City (it grew by 30 percent between 2010 and 2020, per the CCD), Philadelphia’s public transportation would have to fill the gap. That would require a significant investment from the city and state to make service more expansive, frequent and accessible. The city appears to sincerely want to make this shift; whether it actually can is less clear. 

Last year, Philadelphia’s OTIS partnered with SEPTA and other city departments to publish a detailed public transit improvement plan. The plan outlined how the city could realistically revitalize its transit by 2045, arguing that upgrading the current transportation system would be “critical” to Philly’s recovery and future, with a key goal being “to reduce the need for car ownership for as many Philadelphians as possible.” 

“We’re not trying to force anybody not to drive,” says Puchalsky, “but we are trying to provide high-quality alternatives to driving.” 

Philadelphia’s public transit ridership had been in decline since 2013 even before the pandemic hit, further discouraging communal transit. While the transit plan points to relatively slow bus service and relatively cheap car financing, Puchalsky attributes declines in ridership mostly to the growth of ride-share apps, which don’t utilize the parking inventory but do create more emissions and congestion. (Philadelphia’s street grid was designed more than 300 years ago — and hasn’t handled the rise of Lyft and Amazon trucks very well at all.)

It’s fair to be skeptical of SEPTA’s ability to fill the breach. Currently, there isn’t enough weekend service or ADA-approved accessibility across its network. And the agency’s largest modernization attempt over the past several years — implementation of the SEPTA Key card fare system — has been characterized by bugs and frustration. Then again, SEPTA is underfunded compared to peer transit operators like those in Boston and Seattle. 

Perhaps SEPTA’s biggest challenge is a public perception that it’s unsafe and the mode for those who can’t afford a car. Yet public excitement about proposed extensions to the Northeast and the Navy Yard suggests those hurdles can be overcome. The transit plan’s calls for better lighting, more frequent service to reduce wait times, and greater involvement from social services to aid the unhoused at transit hubs would certainly help.

 “With investment and focus, Philadelphia has the infrastructure to make SEPTA  a modern, green and accessible public transit system,” says Councilmember Gym. Which would go a long way toward further de-emphasizing the need for downtown parking.

Philadelphia’s past and present reality have given many of us a car-centric point of view. Parking lots are seen as absolutes rather than as an unoptimized use of limited space. But there are other ways to look at mobility in cities like Philadelphia; in response to an article about new transit experiments this summer, New York Times columnist Jamelle Bouie tweeted, “[O]nce you re-conceptualize streets as tools for moving people as opposed to moving cars, you open up a lot of possibilities for transportation and mobility,” like opportunities for bikes, scooters, even golf carts, along with “nice wide sidewalks for people to walk.”

Center City’s parking inventory does appear set to continue its decline, since Zuritsky and Gym seem to have arrived at an unlikely point of consensus: There’s a better use for a parking lot downtown. (This September, Parkway announced the creation of a $100 million investment fund for acquiring parking lots and converting them to a “higher and better use.”) The parking decline seems to be by design, and there’s evidence from other cities, at least, that it can be an economic boon rather than a bust. People in Philly ought to think of this current period as transitional. But what happens next is important. There hasn’t been a major investment in transit infrastructure here since the completion of the Center City Commuter Connection tunnel in 1984. With financial incentives continuing to encourage parking companies to develop their properties and shrink the public parking supply, and a moral imperative to reduce emissions, this may be the moment to invest in a future that’s less dependent on cars. 

Published as “But Where Will I Park?!?” in the October 2022 issue of Philadelphia magazine.