Spokane eyes 12% commercial parking lot tax, half-rate for parking garages

Parking in a paid lot in Spokane is likely to get more expensive next year as the Spokane City Council considers a 12% tax proposed by City Hall.

The tax is being pitched as yet another angle of attack in city leaders’ long-standing battle to reduce the number of surface parking lots and encourage their redevelopment, along with a redevelopment tax incentive approved in 2023. But it would be parkers, not parking lot owners, who would have to pay the tax.

The proposal also offers another potential source of revenue amid a budget crunch – though state law limits a parking tax’s revenue to transportation projects – that Mayor Lisa Brown has already baked into her proposed 2026 city budget.

The tax would hit hardest for surface lots like those owned by prolific operator Diamond Parking, though almost all commercial lots would be taxed to some extent. Parking structures with at least two floors or underground lots would only have to charge customers half the tax rate, or 6%. Parking lots could also qualify for the lower rate if the owner has an accepted building permit with the city to imminently redevelop the lot into a residential or commercial building.

Several exemptions would also allow a driver to avoid paying the tax. Designated employee parking and student parking would be exempt. Qualifying carpools, government workers and drivers with disability placards also would not have to pay.

On-street parking, which is operated by the city, would also be exempt.

Parking occupies 30% of the city core, which includes downtown, the University District, the Gonzaga University area and around the hospitals to the south.

About 85% of the parking spots are in privately owned lots or garages, leaving just 15 % on the curb.

At peak use in 2018, about 56 % of spots were occupied. At the absolute busiest times of day, there were still more than 16,000 parking spots available.

Jon Snyder, the city’s transportation and sustainability director, presented the tax increase to the City Council on Monday. He argued that a tax increase would help discourage surface lots, which are an inefficient use of the land.

Councilman Michael Cathcart questioned that calculus, noting that parking lot owners would only have to pass along the taxes collected from customers and may not feel the pinch themselves.

“Unless we see a lot of people say, ‘We’re not going downtown to park’ and those lots lose money, …what’s truly going to incentivize conversion of these lots?” he asked Snyder.

“Can I say to you by February we will see a parking lot redeveloped just because of this policy?” Snyder replied. “Probably not,” but the tax will be added to existing redevelopment incentives, residential development incentives and other policies to move the needle, he argued.

In a brief interview, Snyder noted that the tax revenue will help fund street repair and projects currently strained by soaring inflation in the construction sector.

“Our current programs are so pinched by inflationary pressures right now that the dollar that came from the streets levy or transportation benefit district is buying a whole lot less than it used to,” he said. “We’re really trying to get back to the level of surface residents have come to expect from us.”