Parking Management

Photo: parking meter Studies show that approximately 64% of Washington-area workers drive to work alone. Every car needs a parking space, and though it's sometimes free to employees, it can be a major expense for employers. For many businesses, constructing new parking spaces can cost between $1,500 for a surface lot and $17,400 for an above ground garage per space. For an employer to lease a parking spot, costs range from $75 to $150 or more a month per space in Arlington County.

Whether paid for by the company or the employee, parking is an expensive item. For employees, parking can be a financial burden with the cost of daily parking garages, and for employers, high parking costs can limit the appeal of the company to potential employees. Yet, making parking free for employees encourages driving alone and makes less efficient use of a costly company resource. One solution many companies are leaning towards is to implement a parking management program.

Parking programs are strategies used to reduce the demand for costly parking spaces at your worksite. Although many employers provide free or subsidized parking for employees, the goal is to make it economical for employees to use mass transit or other modes instead of driving, thereby reducing the need for parking spaces for employees. That's where parking programs come in. Examples of parking program strategies include:

Offering preferential parking for carpools and vanpools
Providing a parking "cash-out" program (the exchange of a parking space for money which the employee will agree to use for transit)
Instituting a commuting incentive program for those who carpool, vanpool, bicycle, or walk
Offering free or reduced-fee parking for carpools and vanpools (for employers who currently have fee-based employee parking)
Charging a parking fee to discourage single-occupant vehicles (for employers who previously offered free parking)

What are the benefits of a parking program?

Parking programs can lighten the financial burden on employers and employees by promoting more efficient commuting options and lowering parking demand. Every parking space you save because an employee shares the ride means money you can save or more people you can serve. Each space not being used by an employee can be used by a potential client or customer or leased to another business.

What are the benefits of a parking "cash-out" program?

Photo: full parking lot If you provide parking and your employees want to take advantage of public transportation and other alternatives, establishing a parking "cash-out" program may be the appropriate choice. Your employees may forego parking and cash out the value of the parking benefit. The value of the parking benefit will be subject to taxes. However, if up to $125 of the value is converted to transit or vanpool benefits, the amount converted will not be subject to taxes.

If employers are leasing parking spaces for employees, then the cash-out program poses no real cost to the employer. They may simply transfer the cost for the parking space to a direct payment to employees. Should an employee decide to accept the cash value rather than a tax-free transit or vanpool benefit, the amount is treated as additional compensation and the employee would incur payroll and income taxes. If the cash-out value is greater than $125, employees could accept a tax-free transit or vanpool benefit and receive the balance in taxable salary. The employer will have to pay payroll taxes on the taxable portion of the cash-out benefit provided. To offset that cost, simply lower the cash-out amount by the employer's share of the payroll taxes as follows:

Cost of Parking Space: $150
Subtract Payroll Taxes: -$12
Cash-out Offer: $138

The employees could apply the additional compensation towards costs associated with commuting modes that are not considered qualified transportation fringe benefits, such as walking, bicycling, or carpooling to work. A cash-out program provides an incentive for your employees to try other commuting alternatives.

How will Arlington Transportation Partners (ATP) help?

ATP works with you to develop strategies to reduce the demand for costly parking spaces at your worksite and will provide the following services:

Assistance to setup a pre-tax parking program and parking cash-out program
Information on parking programs
Explanations of parking choices
Consultation on designing the best parking program for your needs
Sponsorship of a workshop or seminar to explain parking programs

How can I encourage employee participation?

There are numerous ways to get the word out and encourage employee participation in a parking program, including the following actions:

Sending out email notifications and reminders
Displaying posters and flyers in high-traffic areas of your office
Including information packets with paychecks
Including an article in your company newsletter
Providing information on your company's intranet
Including information in your new-hire packets

For more information, contact Arlington Transportation Partners (ATP) at 703.247.9299 (TDD: 711), solutions@transpartners.com, or request ATP's services by filling out this form.