Riding the Bus to the Fed Costs Less Than Half as Driving. So Why is the Fed Building Parking?

Recently, the Federal Reserve Bank of Minneapolis proposed the building of an 800-stall parking ramp on land that it bought in April of 2018. The land is currently a 300-stall parking lot that is adjacent to the Fed campus. As my colleague Alex Schieferdecker discussed in his article on Tuesday, the proposed “Heritage Landing Parking Ramp” would very likely increase driving, increased driving increases greenhouse gas emissions, reversing progress on Minneapolis’ climate action goals.

There is a lot to be said on how this proposed parking ramp could set the city and planet back. But what about the people who are being subsidized to drive? What are the direct costs to Fed employees who are incentivized to drive?

A back-of-the-napkin cost-benefit analysis

What is the current cost of driving and parking at the Fed compared to riding on Metro Transit?

For a typical employee who may currently drive, let’s start with a home in Wayzata and a destination of the Fed campus in the North Loop. It happens that Wayzata has a transit center where the 674 express bus stops. From the transit center to the front door of the campus by 8:00 AM is 36 minutes of riding and walking from the bus stop. Driving would take up to 35 minutes, not including time to park and walk.

Wayzata Blvd. & Barry Ave. Park & Ride

Wayzata Blvd & Barry Ave Park & Ride. Photo: Metro Transit

So from a time standpoint, both options are pretty even, depending on traffic conditions. The opportunity cost of punching the clock earlier one way or another is hard to tell.

Other costs for this employee for driving would include gas, parking fees, insurance, and vehicle registration. For a small sedan like a 2018 Ford Focus, gas would cost $1.63 for 25.2 total miles at $2.00 a gallon, the cheapest parking is $5.00 per day, $4.83 per work day for auto insurance, and $0.88 per work day for vehicle registration. That’s a total cost of $12.34 for choosing to use a car to get to work.

What’s the direct cost to ride Metro Transit? There is a great option for everyday commuters: the unlimited rides monthly pass. For $120 per 31-day period, riders can go on unlimited rides up to the rush hour fare of $3.25, but not higher like with Northstar. The cost per work day of using this unlimited pass is $5.42, less than half the cost of using a car. Making things even better, the Fed subsidizes more than 60% of the cost of a Metro Transit cards for employees.

Graphic comparing the direct cost to commute to the Fed

So why is the Fed building parking?

As Alex talked about in his article, it is likely that Fed leadership have a ”windshield mentality“, that they literally see the world through a vehicle’s windshield and don’t experience what employees who ride on Metro Transit experience every day.

The Fed is not building this ramp because there are no other options to accommodate the travel demand of their employees. They are almost certainly building the ramp because the organization’s leadership (who, are demographically more likely to drive) have a “windshield mentality.” They drive and park, and they hear complaints from their immediate staff about the costs of driving and parking. They don’t hear as many complaints about transit (and don’t consider why that makes sense—they don’t run the transit system!) But demand for parking is not a constant that must be met, it is a highly elastic variable that can be manipulated. Providing a lot more convenient parking is a choice, not an obligation, and the research shows unequivocally that it is certain to only increase the incidence of driving, to the detriment of the planet.

But there also is the Fed’s private interest. Like all private banks and government agencies (of which the Fed is is neither), the Fed has a budget and that budget includes revenue from parking. The Fed operates two parking lots right now, a small lot of about 200 stalls on the campus proper, and the 300-stall parking lot acquired in April 2018, which they want to build the ramp on.

The problem facing the Fed’s employees, and neighbors, and the planet is that every time an employee takes the bus, the Fed loses by paying out a subsidy. Every time an employee drives and parks on a Fed parking lot, the Fed makes money in avoiding subsidy and earning rent on the parking stall. Going back to our quick cost-benefit analysis from before, if the Fed is subsidizing 60% of the cost of Metro Transit, and they can charge market rate $5.00 per work day for parking, then for every employee they can convince to switch to drive instead of ride, the Fed marginally makes $8.25 per day per employee who makes the switch.

Unlike private banks, the the Fed mostly holds Treasury bonds, and by law returns the interest it receives on those bonds. For an institution short on ways to increase revenue, building a 800-stall parking ramp looks like a great option. The Fed has a private self-interest in increasing the use of parking on its parking infrastructure.

So what can we do about the Fed’s self interest?

For the answer to this question, I refer you to a quote from the Fed’s own meta-analysis on climate change economics research.

“The message of these analyses is that decentralized mechanisms are likely to lead to poor outcomes in the presence of global externalities. Some form of collective intervention is needed. This collective intervention can be thought of as limiting property rights or as limiting the extent of voluntariness in transactions.”

The Role of Uncertainty and Risk in Climate Change Economics, Page 6
V. V. Chari
University of Minnesota and Federal Reserve Bank of Minneapolis
Staff Report 576 December 2018

In the forums and on Twitter, many have issues with zoning. The case of the Heritage Landing Parking Ramp is a great example of where zoning can make a positive difference for development and combating climate change.

The lot is currently zoned C3A Community Activity Center District with a DH Downtown Height Overlay District. With those two designations, a mixed-use housing development of up to six stories could be built with no variances needed, and if a compelling project were to come forward, we could theoretically have a far denser development with affordable housing.

Now is the time to get involved. There are upcoming meetings of the City Planning Commission and the Park Board where this proposal will be discussed. I am told that it will be February 25 or March 11 for Planning and February 20 for the Park Board, although those dates are subject to change. Email your local representatives on the City Council and Park Board and let them know how you feel about the proposed parking ramp. You can also email City staff to add testimony to the public record.

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43 Responses to Riding the Bus to the Fed Costs Less Than Half as Driving. So Why is the Fed Building Parking?

  1. Monte Castleman February 13, 2019 at 12:15 pm #

    1) If you live in Wayzata chances are you want a car anyway to make the weekly shopping run to HyVee, haul wood chips home from Home Depot, drive up to visit your relatives in Milaca on the weekend. Insurance, Registration, and such are therefore yearly costs that would be incurred anyway that shouldn’t be included on the direct per-day cost to drive into the city.

    2) People don’t always pick options based on cost alone. Asking why some people might drive when the bus is cheaper is like asking why people eat steak when ramen noodles are cheaper, or for that matter drive a BMW instead of the Ford Focus.

    • Adam Miller
      Adam Miller February 13, 2019 at 1:17 pm #

      I’m not sure you intended to, but your item 2 suggests that people drive because they see status value in driving (as with preferring a luxury car over basic one). I think that is true, but it’s s horrible basis for public policy decision making.

      • jf February 13, 2019 at 4:18 pm #

        Even with good bus service and disincentives to driving, America will need to deal with the cultural/status aspect of driving vs public transit. For decades in most of the country, public transit is seen as a bare minimum handout for the poor to get to work. Until it becomes possible for a middle-class person to take the bus and feel normal about it (instead of being either proud of it, or scared, or depressed), even good policy won’t generate much of a shift, I fear.

        In Vancouver BC I once saw a middle-aged couple in furs on the #14 trolley to downtown. I overheard their conversation and they were going to the opera. I think that was a sign that at least in Vancouver this cultural/status barrier is less severe.

        • Adam Miller
          Adam Miller February 13, 2019 at 7:34 pm #

          Yes, and the very first step to dealing with the cultural issues is making it harder to drive into downtown at rush hour.

      • Monte Castleman February 13, 2019 at 6:19 pm #

        It wasn’t really what I intended, but it’s not a sentiment I disagree with. I was thinking more along the lines that comfort, convenience, luxury, and privacy override financial factors. (I just touched on this yesterday in my TaaS article),
        But upon thinking about it I’m sure for some people it’s partly a status thing too, driving vs the bus or a BMW vs a Focus.

        I think part of the reason that express coaches have reading lights, Wifi, different seats and such is to try to overcome rail bias by making a psychological distinction between a “commuter coach” and a “bus”. During the opening ceremony of the 101 bridge I rode a public bus for the first time since 1987 since they were using commuter coaches as shuttles from the remote parking, and they looked pretty different from pictures I’ve seen of current local buses.

        • Shawn February 14, 2019 at 10:37 am #

          Concur with Monte,

          Can you please include Comfort, Convenience, and Privacy in to your cost-benefits equation?

  2. John Williams February 13, 2019 at 12:25 pm #

    I’d recommend reworking your numbers, especially if you want to use Wayzata as an example. Realistically nobody living out there will not have a car, so it’s a tad disengenous to include the insurance and registration numbers to pad your comparative figures.

    • Monte Castleman February 13, 2019 at 6:21 pm #

      The other thing I wonder if is the average Fed worker lives as far out as Wayzata. A lot of them probably live in Minneapolis and a lot of them that live in Minneapolis probably drive cars, so the cost differential would be a lot less for them, especially if you discount sunk costs due to already having a car for purposes other than commuting.

  3. Amanda Higgins February 13, 2019 at 12:46 pm #

    Aside from the already stated issues with the numbers listed, this article makes a pretty wild stretch by claiming that the Fed is attempting to build a ramp just to profit. That ignores the land acquisitions costs, taxes, maintenance, and construction costs if their ramp is ever built.

    • Nicole Salica
      Nicole Salica February 13, 2019 at 1:34 pm #

      They already have the land, and are the federal government, thusly tax exempt.

    • Anon February 13, 2019 at 5:05 pm #

      The fed:
      1. “prints” money.
      2. buys bonds with that money; and
      3. earns interest from the bonds.

      They make tens-of-billions doing this every year. They are not in the parking business to make money. They just want a place for their employees’ cars.

  4. mplsmatt February 13, 2019 at 1:10 pm #

    While I agree with some comments that a household in Wayzata likely already owns a car, that doesn’t mean they have (or need) a car available for every person to use for commuting. I have co-workers who use transit to commute so that they don’t need to invest in a second vehicle.

  5. Gordy Moore February 13, 2019 at 1:21 pm #

    This is an interesting analysis (and to be clear, I don’t support this giant parking ramp as is), but your insurance numbers seem unfairly inflated. I did the math and you divided the average insurance cost for MN (which is also not necessarily realistic given suburbanites owning newer cars) and divided it by the number of work days per year. It doesn’t seem fair to only use workdays in this example or generally, since it artifically inflates the daily commute cost—and I would imagine most Wayzata residents use their car every day.

    I own a car and also transit/bike/walk, but I still find it painful when folks say “look you will save 8 THOUSAND or more dollars by going carless!!” I’d reckon that isn’t the case for most people, and it certainly isn’t for me. I’ve looked at the numbers, and I would likely loose money if I didn’t own a car and did only transit/everything else.

    I feel like the climate change argument for non-car transportation, mixed with general societal and personal benefits (less stress, more physical activity, etc.) are more compelling than claiming massive and likely innacurate cost savings. I mean, the potential savings should be a small part, but it’s not strong enough to be the main argument—unless you loop in cost of carbon/climate/health savings, which is also way more compelling

  6. Christa Moseng
    Chris Moseng February 13, 2019 at 1:21 pm #

    Commonly in response to analysis like this, people will take the position that car ownership is a requirement for living in a suburb, and therefore a given and all the sunk/fixed costs of car ownership must be disregarded.

    This is car dependency question begging. For any one use of a car you try to eliminate, one could argue the fixed costs of car ownership are justified and covered by all the other uses. Then, magically, the cost is significantly discounted. Never is it contemplated that you might actually be free of those fixed costs, because, they insist, the costs must be assumed as a given.

    If the costs must be assumed as a given, that sounds like failure—a failure either of the communities responsible, or of the imagination.

    • Jeb Rach
      Jeb Rach February 15, 2019 at 11:26 am #

      Sure, it’s a failure, usually of the suburban land use that makes living without a car significantly more difficult. It doesn’t help that public transit funding in the metro area is generally mediocre, and that most public transit links in the suburbs either shut down completely over the weekend or become significantly reduced.

      However, it’s still a valid point – if you’re needing to have a vehicle to do everything else (including getting to the park and ride to take the bus to work,) then itemizing out costs that are generally fixed for owning a car to each specific use is more theoretical accounting than practical accounting. The bus basically has to win out on the incidental costs instead of the fully-loaded costs.

      That said, there’s plenty of situations where every driver has their own vehicle when often a bit of planning could reduce that car count by one or two. In those cases, it’s worth pointing out that some shift to alternate transportation options could still drop a portion of the fixed costs, even if it’s not 100% of those costs.

  7. Adam Miller
    Adam Miller February 13, 2019 at 1:29 pm #

    It’s super weird that people are quibbling with the numbers. The cost of parking alone makes it a wash (even at the cheapest possible parking). Whatever other numbers you want to use for gas and depreciation (which he wrongly left out) more than make up the difference.

    Put any non-zero price on the externalities and it’s not close, whatever you want to do with the insurance and registration costs.

    • Alessandra February 13, 2019 at 2:08 pm #

      So you’re ok with an article that has flawed data as long as it aligns with your views? This is an article that should have been written and researched better, and you should hold a writer to a higher standard regardless of the content.

      • Christa Moseng
        Chris Moseng February 13, 2019 at 2:16 pm #

        The data aren’t flawed, just disputed.

        • Alessandra February 13, 2019 at 4:41 pm #

          So apparently the rule is that if you disagree with Chris or this article then your comment is deleted.

          • Sean Hayford Oleary
            Sean Hayford Oleary February 13, 2019 at 6:31 pm #

            Webmaster here. Chris is not a moderator and does not have the ability to delete comments.

            If a comment was deleted, it would have been done by a member of our moderation team. If you disagree that your comment was in violation of our comments policy, please email moderators@streets.mn and I am sure whoever deleted it will be willing to briefly explain why a comment was removed.

            Speaking of which, please avoid sarcasm per our policy.

  8. Andrew Evans February 13, 2019 at 2:00 pm #

    Parking is terrible in the North Loop lately, and it’s not going to get any better with the development underway. Also the lot behind Bachlor Farmer went contract only, or at least it wasn’t open to the public last Dec. A ramp like that would be great for visitors and residents to the area, assuming it’s open to the public.

    $5 a day parking wouldn’t be bad, even $10 a day, depending on how much time that saved and what flexibility it offered a person for errands after work.

    As far as costs. My 911 costs me around $100 to $140 a month for insurance, no matter if I drive it once or every day, or even now in the winter (My partner has the winter car and our truck under their policy, so I can’t take off coverage on the car, which would leave me uninsured when I drive their car or rent a car). Registration costs, although low, are there all the time and don’t depend on me driving it at all. Same goes with any payments on it, they would be there no matter if it was driven or not. The only real added cost of me driving it to work is any wear and tear, any value lost due to putting miles on it (the car very well may appreciate or I could at least get my money back), and gas.

    As far as the cost of parking, it’s really a cost of leaving when you want and going where you want. Yes, if someone lives right on a high speed bus line it may not make sense that they pay for parking. Someone who would add an hour on their commute by taking transit, or has errands or places to go after work, may find that extra money is well spent for the time they save. Or, they are making enough where they don’t really care about a few hundred a week.

    • Sarah February 14, 2019 at 10:08 am #

      It’s inaccurate that you’d be uninsured if you took your car off insurance for spans of time – or at least you could set it up so that you wouldn’t be. What do you think one car households with multiple drivers do? My partner and I share a car, and have a policy in which we’re both insured drivers. There is no one driver per car rule for car insurance.

      Also, winter car? Wat?

  9. Nicole Salica
    Nicole Salica February 13, 2019 at 2:17 pm #

    One thing I like to center in the discourse around “but my kids! my convenience! my particular job needs!” is a reminder that we live in a society. It’s not about you. It’s about us.
    The choices we make on a large scale matter. And a parking ramp in downtown is large scale, it does matter. The particulars of your commute for the next week/month/year don’t.

    • Andrew Evans February 13, 2019 at 3:41 pm #

      There are tests going on in Canada for carbon capture that would in the end create a carbon neutral fuel. There is also a push by the luxury car companies to create battery powered vehicles, and a charging network for them (more so in Europe from what I gather, but could come here). There are also advancements going on with solar that could ease the burden of these cars on the power grid, among other cleaner power options. Not even to mention that newer cars are more or less getting better mileage, and polluting less.

      So the answer isn’t “ban the ramp” it’s much deeper than that and in fact a positive change on the environment may not even be dependent on this ramp.

      I’d also argue that the choices China and India make have much more of an impact on the climate than anything we can do here in the US, and that we are doing things here anyway.

      So I’m sorry that yours and others line in the sand is this ramp, or that this will be the tilting point where society can never return from.

      • Adam Miller
        Adam Miller February 13, 2019 at 4:17 pm #

        And again, even if you can end the pollution costs of a car-centered transportation system, a thing that is technologically a long way off in this country, you aren’t solving the carnage or space inefficiency problems.

        Very much apart from the carbon costs of the cars that will use this ramp: it will take up valuable city space that could be used by people for housing and/or by businesses for offices, operations or retail. This is a terrible, low-value, use of urban land immediately adjacent to our central business district, within a half block of transit and in one of our faster growing neighborhoods. Allowing this to be built as proposed, as single-use car storage is a thing the city will look back on with regret.

        But sure, we can keep using India and China (which, btw, is making massive changes) as an excuse to keep doing the same thing we’ve always done.

        • Mark February 13, 2019 at 4:31 pm #

          I’d recommend you actually visit the site before continuing to pontificate about it’s potential uses. Retail? On what street frontage? Residential would be great, though again access would be a sticking point. There’s a reason the sale price, the absolute key indicator of lands value, paled in comparison to many other surface lots just a block or two away. The Maverick apartments still has vacant retail and it has the benefit of being on Hennepin Ave.

          • Adam Miller
            Adam Miller February 13, 2019 at 7:40 pm #

            Mark, I’ve been to the site many times. It would be a great place for housing or offices with with river views (the latter just like the fancy Fed building next door). “Access” would be no different than for this parking structure.

            There’s retail right next door too, although I’ll grant you that’s harder than housing.

      • Anon February 13, 2019 at 5:22 pm #

        Carbon capture tests have been going for nearly 30 years now. Worldwide we have 18 subsidized plants capturing about 40 million tonnes a year. We need to remove 700 billion tonnes to be safe. Maybe we’ll figure out how to get carbon capture to scale to a planetary level, but let’s not bet our future on it.

        The “someone else is worse” argument is bizarre and can be used to justify doing or not doing literally anything.

      • Christa Moseng
        Chris Moseng February 14, 2019 at 11:16 am #

        Don’t worry, I can cobble together enough parking to oppose to make it big enough to make it worthwhile.

  10. Adam Miller
    Adam Miller February 13, 2019 at 2:17 pm #

    I believe the Fed has reserved the lot for it’s employees since it the acquisition it (maybe also before, I don’t recall).

    But among the developments in the North Loop are a just-completed parking garage (3rd and 10th) and under construction parking garage (plus some office or retail, I think, at 5th and 3rd) and parking is currently so hard that I know someone who drives and parks daily for $8.

    • Julie Kosbab February 13, 2019 at 4:25 pm #

      You know me. I park for $25 PER MONTH. M-F 6AM-6PM dedicated contract spot.

      • Mark February 13, 2019 at 4:32 pm #

        Which is clearly subsidized as the market rate for the NL is nowhere close to that.

        • Julie Kosbab February 13, 2019 at 9:17 pm #

          Indeed it is. The subsidy I am offered to park is twice what transit users at my employer are offered.

          It is really hard not to hold that up as ridiculous.

          At a prior employer, a parking spot roughly a block away from my current spot ran $105/month. This is still cheaper than it should be.

  11. Tim February 13, 2019 at 3:23 pm #

    It feels like there is an awful lot of assuming going on regarding the reasons for building the ramp. I haven’t seen any data about where the Fed’s employees live, what hours they work, how often visitors come to the building, etc. Do they have different needs than other downtown employers? I honestly don’t know, but these would be useful things to find out.

  12. Daniel M February 13, 2019 at 7:28 pm #

    Here’s my big issue with the article, it asserts that the Fed is looking to profit by incentivizing employees to drive to their new ramp, but the numbers don’t support that.

    Let’s take the authors $8.25 profit number and assume the 800 stall ramp would be at 100% capacity, that’s $6,600 generated per day. Multiply that by 250 working days in a year and you get an annual income of $1,650,000. Now this ignores operating expenses, utilities, but it also doesn’t factor in if the ramp will be occupied evenings and weekends.

    Let’s look at the ramp costs. Yesterday’s article stated the average cost to build a ramp is $20,000 per stall, so an 800 stall ramp is $16,000,000 add in the land acquisition cost and you’re at $23,500,000.

    Based on that it will take them almost 15 years to even break even, so again the numbers just don’t add up to support the authors theory.

  13. Tom Basgen
    Tom Basgen February 13, 2019 at 9:14 pm #

    Hello beloved Streets Commentors, it’s me, your friendly Mod. There’s a lot of disagreement in these here comments, and I think there’s gonna be some more disagreement going forward. So if we could skip all the reports to the mods and just make sure none of our comments go all Ad Hominem on each other. That would make a much more peaceful evening for me. Big thanks. Have a good one.

    • Janne February 18, 2019 at 9:45 pm #

      Best comment of the thread, Tom. Thank you.

  14. Allen` February 18, 2019 at 8:30 am #

    The question is cost but what value do they get from it. Approach it as value proposition and one can start to understand why transit ridership has been falling since the first Sears store opening in Mexico ( 1947 ).

    • Allen February 18, 2019 at 8:32 am #

      The quesiton is NOT about cost. It is a matter of value.

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