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Parking Cash-Out Program Case Study
Santa Monica, California
In 1992, the California Assembly enacted a Parking Cash-Out law. The City of Santa Monica is located within an ozone non-attainment area and enforces this law through its Transportation Management Plan ordinance.
The law applies to employers located within a non-attainment area who:
- Have 50 or more employees
- Do not own their parking or a facility (usually, parking is leased)
- Subsidize employee parking by paying the cost and allowing the employee free or reduced-rate parking
- Can separate and calculate the amount paid
- Can reduce the number of parking spaces leased without penalty
If all of these conditions are met, the employer is required to offer its employees the option of a cash allowance equivalent to the parking subsidy. Eligible employees are those to whom a subsidized parking space is available, even if it is not used. The subsidy is equal to the amount paid by the employer, minus any commute-related subsidies otherwise provided to the employee (such as a transit pass or ridesharing arrangements). Employees have the option of receiving subsidized parking, or accepting the cash and making independent arrangements.
Approximately 33 percent of employers with 100 or more employees, and 10 percent of employers with 50-99 employees in Santa Monica are operating a Parking Cash-Out program. The majority of those who do not are covered by one of the exemptions noted above, chiefly because they own their parking or cannot separate out the costs.
Two factors must be kept in mind. First, the Parking Cash-Out Program has a tendency to shift parking from the employer lot to nearby neighborhoods. Since this negates the goals of the program, which are to reduce the number of commuters and trips, the employer is allowed to establish restrictions on spill-over parking (e.g., prohibit parking on certain streets or in certain neighborhoods) as a condition for giving the cash allowance. Second, the cash allowance is taxable income (as is a parking subsidy if the cash offer is not accepted). If the employer is not required to participate, or if an employee is not eligible, subsidized parking is not taxable.
Further Information
For further information on Santa Monica's Parking Cash-Out program, contact Karen Pickett, City of Santa Monica, 310 458-8295.