Update January 2022: D.C.’s “Parking Cash-Out” Law: Your Choices Impact Employees
We know commuting is a thing of the past and future at the moment. Luckily, the local D.C. council is still working to make commuting better for now and in the future. Earlier this month, the Washington, D.C. Council passed the Transportation Benefits Equity Amendment Act of 2019.
Free employee parking incentivizes people to drive, even those who could get there in another easy, cheap way. This bill aims to reduce driving to work by making a more level playing field between driving and transit – essentially a parking cash-out bill. Instead of just paying employees to give up their parking spots though, employers need to make more effort. We know government documents can get confusing, so we’ve gone through and translated for you!
Like transportation demand management (TDM) and commute reduction requirements in Seattle, this bill puts the burden on the shoulders of employers rather than property developers. Employers in Washington, D.C., with 20 or more employees and offer subsidized parking benefits, are subjected to make the effort to level the playing field for their entire workforce.
While it’s amazing this bill was passed now, it won’t go into full effect until 2023 due to fiscal planning. However, it also suggests compliance assessment happens before – we’ll touch on that later.
Providing free parking to employees can get expensive – really expensive! When a number of employees are offered free parking while others are paying to commute via non-driving methods, it’s pretty clear who’s getting the greater benefit. In order to, The D.C. Council has come up with three options employers can choose from to make it fair for their more sustainable commuters.
It’s important to note that these requirements are not applicable to employers who own the parking spots used by employees. These requirements are only for employers who pay to lease parking spots used by their employees. Employers are also not required to offer alternative benefits in the middle of a parking lease, but must comply at the beginning of a new parking lease.
Option 1: Clean air transportation fringe benefits
This option requires employers to provide benefits to employees who get to work by the following modes of transit:
Commuter highway vehicle
These are also known as buses or vanpool. The exact definition of a commuter highway vehicle is any highway vehicle with a seating capacity of at least six adults, not including the driver. This benefits can also be used to cover the cost of an UberPool or Via if the vehicle can carry up to six passengers.
This means employers must pay the cost for a company shuttle or bus that transports employees from their residences to the office. It’s not a new benefit, and we work with a few customers in Washington, D.C. who currently offer company shuttles. This just means employers are required to do so if they also pay for monthly employee parking.
This is pretty simple. If your employees ride the bus or metro to work, you will be required to offer them the difference between the cost of the monthly transit pass and what you’re paying for a monthly parking spot.
Qualified bike commuting reimbursement
This would require employers to provide employees who bike to work, reimbursement for doing so. This means employees who bike to work need to be offered benefits equal to the market rate for the parking spots you offer. See the paragraph below to see how employers can make up the difference.
While employers can choose to offer any of these benefits, the one they choose must be equal to or greater than the market rate for parking. For example, if they are paying $220 per month for a parking spot for one employee and paying $180 for a Metrocard for another employee, they must make up the extra $40. How? With additional compensation, increased health care contributions, or a combination of the two.
Option 2: Clean air compliance fee
If an employer decides they aren’t going to make up the difference between the cost of other commuter benefits and the cost of a monthly parking spot, they have to pay. The clean air compliance fee requires employers to pay $100 per month for each employee being offered a parking spot. This may not seem like much, but if you’re already paying $200 per employee per month for each parking spot, then add an additional $100? That can add up pretty fast, especially when we’re talking hundreds of employees.
Option 3: Transportation demand management (TDM) plan
This may just be our favorite option. If employers choose not to pick either of the first two options, then option 3 it is! Covered employers must develop a TDM plan to reduce car commutes by 10% year-over-year. The plan must be in effect and continued until 25% or fewer of their employees commute by car. That means 75% of their workforce will have to commute by public transit, walking, biking, scooter, or any combination thereof — but no driving.
So how will the city know if employers are keeping up with their TDM requirements? Well, let us tell you. Employers must submit their employees’ commute mode data to the District Department of Transportation (DDOT) on an annual basis. If DDOT finds an employer is not in compliance with their TDM plan, they will have 180 days to fix any issues. If they are still not in compliance after the 180-day period, they must choose option 1 or 2 from above.
If an employer decides to create a TDM plan, they will have 90 days to submit:
- Their total number of employees
- The number of employees offered a parking spot
- The number employees using a parking spot
- The number of employees offered clean air transportation fringe benefits
- The number of employees using clean air transportation fringe benefits
After the 90-day period, employers will have to submit this same information every two years. Right now, it’s reported that there are around 4,500 employers currently covered by these requirements. This bill also suggests the mayor should aggregate the findings from the TDM filings and provide an annual report to the D.C. Council starting October 1, 2020. For more information, you can read the final fiscal impact statement.
Option 4: Stop offering monthly parking
This technically isn’t included in the bill and isn’t really required, but it’s a viable option. If any of the three options above don’t sound appealing, you can simply stop offering monthly parking benefits to your employees.